In the first half of 2024, Africa saw a significant decline in blockchain venture funding, with investments plummeting by 74% compared to the same period in 2023. This stark downturn was documented in a recent report released by the Swiss blockchain venture capital firm CV VC on July 16.
The report revealed that African blockchain ventures secured only $34.7 million in funding during H1 2024, a sharp decline from the $135.4 million recorded in H1 2023. Despite this reduction in funding volume, there was a notable increase in the number of deals, which rose by 9% year-on-year.
Contextualizing the Decline
This decrease in funding is part of a broader downturn observed globally in the blockchain sector:
- Global Funding Trends: The entire blockchain space experienced a reduction, with global funding dropping from $10.66 billion in the first half of 2023 to $5.74 billion in the same period of 2024, marking a 64% decline.
- Deal Volume: The number of deals globally also decreased significantly, with only 678 deals recorded in 2024, compared to 1,306 in the previous year, a 49% decrease.
African Market Performance Relative to Global Trends
Despite the overall downturn, the African blockchain sector showed some relative strengths:
- Deal Share: African blockchain ventures accounted for 6.4% of all global blockchain venture funding and 12.5% of regional deals, suggesting a growing interest and investment in blockchain solutions within the continent.
- Comparative Analysis: Globally, blockchain funding constituted only 3.5% of all venture funding and 5.9% of total deals. The proportionately higher activity in Africa indicates a stronger regional focus on blockchain technology, likely driven by unique challenges that this technology can address.
Potential Drivers of Blockchain Focus in Africa
Several factors contribute to the heightened interest in blockchain solutions in Africa:
- Economic Factors: Many African countries face unique economic challenges, such as high inflation rates and unstable currencies, making blockchain solutions particularly attractive for ensuring financial inclusion and stability.
- Technological Leapfrogging: Africa has a history of leapfrogging traditional infrastructures in favor of digital solutions (e.g., widespread adoption of mobile money), suggesting a fertile ground for innovative blockchain applications.
While the decrease in funding highlights challenges such as market volatility and regulatory uncertainty, it also opens up opportunities for strategic investments and innovations that could drive future growth:
- Regulatory Environment: Clearer regulations and government support could enhance investor confidence and stimulate more robust funding flows.
- Innovation and Adaptation: Local startups could leverage blockchain technology to create solutions tailored to African markets, addressing issues like remittances, supply chain transparency, and secure voting systems.
| Description | Africa | Global |
|---|---|---|
| Total Funding | $34.7 million | $5.74 billion |
| Funding Decline from 2023 | 74% | 64% |
| Number of Deals | Increase by 9% | Decrease by 49% |
| Deal Share of Global Funding | 6.4% | 3.5% |
The first half of 2024 has been challenging for blockchain ventures in Africa, reflecting broader global economic trends. However, the relative increase in the number of deals and the higher proportion of venture activities suggest that the continent may yet play a pivotal role in the future of blockchain technology. As stakeholders navigate through these turbulent times, the lessons learned and strategies adapted could pave the way for a resurgence in blockchain investments and innovations across Africa.
Featured image credit: Freepik
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