ACQUISITIONS are becoming more frequent in Africa’s technology ecosystem, showing signs of a maturing market, a latest report has shown.
The report by Africa’s foremost digital economy consultancy, TechCabal Insights, indicates that year 2021 saw 32TechCabal Insights deals on the continent.
By the end of third quarter 2022, there were about 43 acquisition deals, signaling a consolidation trend.
“Startups have resorted to cutting costs to extend their runway, and acquisition deals have become necessary for survival, particularly with startups operating in the same market,” reads the report that has been distributed by pan-African media consultancy, APO Group.
“The number of acquisitions between startups operating in the same market increased from 31 percent in Q2 to 52 percent in Q3 2022.”
The report compiled by TechCabal Insights, also found that the average seed ticket size remained stable at $2.5m in Q2 and $2.7m in Q3.
“A new narrative has emerged in Africa in recent years, embodied by the exponential growth of funding for technology startups,” it said.
“Investment in African startups grew 18x between 2015 and 2021 and 2x faster than global rates between 2020 and 2021. However, beyond the funding stories, there are the quieter tales of exits.
“By the end of H1 2022, African-focused private capital investors had already made 22 full exits, representing about a 29 percent increase compared to the 15 exits made in 2021 H1.”
Commenting on the findings of the report, Olanrewaju Odunowo, head of TechCabal Insights, said: “When it comes to Africa’s evolving tech ecosystem, appropriate context and nuances must be taken into account.
“Data without context is imbalanced and misleading and can lead to the wrong outcomes. Beyond crunching the numbers, we have gathered robust insights drawn from primary interviews with leading industry experts.
“Our aim with this report is to present easy-to-digest insights and data points that anyone — from founders to investors — will find valuable. ”