In this interview, Founding Partner at Ajim Capital, Eunice Ajim, speaks to Temitayo Jaiyeola about how rising issues in the global economy may impact investment into the start-up space in 2023
first half of 2022 was good for African startups, but things started to slow down by the second half of the year. What do you think was the cause of this?
The public market has been bloody because of economic instability around the world. All of these affect how much money VCs can invest. In fact, there has been so much talk about a recession in the US. And when anyone hears recession, they would want to be sure that they have enough cash at hand, and a lot of time, investing in the private market means going illiquid for at least five to ten years.
I know a lot of African-focused managers, me included, who are still fundraising. Even though the beginning of last year started well, it has been affecting VCs as well. If we don’t have enough cash to be able to invest, it also affects the number of investments we can put into these companies.I wish I knew. I am also learning from the experts, and I am getting two different opinions.
When the pandemic happened, a lot of people had so much dry powder, a lot of people held on to their money. In 2021, all that dry powder had to be deployed and people started investing a lot of money at high valuations. If you were raising in 2021, you probably would have raised a lot because VCs had money to deploy. But what happened with everything then was that things were growing fast and quickly, which was not scalable, in some instances.
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