This archive report was first published on 12 June 2020.
According to a report by Baobab Insights, African startups raised $2.1 billion in funding in 2019, a significant milestone in the continent's startup ecosystem.
However, the COVID-19 pandemic has brought about a significant dip in funding for East African tech startups, with investment totaling $63.974 million USD in 2020, compared to $362.642 million USD in Q1 and Q2 2019.
As part of their report, Baobab Insights' Nairobi-based insights team found that the average number of funding rounds required prior to securing Series A investment has increased, with the average age of a company securing a Series A stage in East Africa growing from 2.7 years to 6.3 years since 2015.
While it is still early days, this trend suggests that founders in East Africa are not taking longer to achieve product-to-market fit, but rather require more funding to reach this stage.
As Maria Inziani, Data Scientist at Baobab Insights, noted, 'The impact of COVID-19 on business across the globe is severe, and East Africa is no exception. For some tech founders the implications mean that they have to shift their focus from getting enough funding to grow, to getting enough funding to potentially survive the lockdown.'
