Written by: Richel Plange
The Ghanaian startup ecosystem faced funding challenges in 2023, yet it demonstrated resilience and adaptability in navigating these obstacles. With continued support from both local and international stakeholders, Ghanaian startups are poised to leverage emerging opportunities and drive innovation in key sectors, contributing to the overall economic growth and development of the country.
In 2023, Ghanaian startups experienced a 69% year-on-year decline in total funding raised, amounting to $65.7 million across 34 funding rounds. This decline reflects the global market downturn affecting startup ecosystems worldwide.
Venture Capital Dominance
Venture capital remained the primary funding source for Ghanaian startups, with 98% of funding sourced from VC firms. Incubators and accelerators contributed to the remaining 2% of deals. This trend indicates a strategic shift towards solutions-oriented businesses, particularly those catering to business-to-business (B2B) markets.
Stage and Sector Analysis
The majority of funding (51%) went to early-stage startups, primarily at the pre-seed to pre-Series A stages. Notably, agritech emerged as the most funded sector, experiencing a 70% year-on-year growth. Key players in this sector include Degas, Farmerline, and Complete Farmer.
Gender Diversity
A significant paradigm shift was observed in funding distribution to female CEOs, with their share increasing from 8% in 2022 to 25% in 2023. This indicates a positive trend towards gender diversity in startup leadership. Notable Female CEOs that collectively raised over $16 million in funding include Miishe Addy (Jetstream), Valerie Larbi (Wahu), Marie-Reine Seshie (KOLA Market) and Augusta Addy (BoostMate).
Employment and Expansion
Despite funding challenges, funded startups collectively employ over 1,200 individuals. Expansion efforts primarily focused on deepening presence within the West African subregion. Companies like Farmerline, Zeepay, Wahu Mobility, and Jetstream expanded operations into neighbouring countries such as Cote D’Ivoire, Togo, and Nigeria.
Interventions and Future Outlook
Timely interventions such as the Africa Growth Fund and the YESS Fund, along with support from international development finance institutions and local initiatives, aim to bridge the funding gap and unlock additional capital sources for startups. These interventions are critical for sustaining and accelerating the growth of Ghanaian startups amidst evolving market dynamics.
Conclusion
Looking ahead, in 2024 it is anticipated that the establishment of fund-of-fund investment vehicles by various entities in Ghana will provide local startups with the necessary capital to scale operations and drive innovation.
The government’s plans to incentivize electric vehicle (EV) adoption, along with tax waivers on EVs, are expected to lead to a moderate uptake in EVs, benefiting sectors like e-commerce and logistics.
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