How startups can survive and thrive
Global venture capital funding has contracted significantly since the peak of 2021. While Africa has been somewhat insulated, the continent is not immune. The "funding winter" has arrived, and startups across East Africa are feeling the impact. But this challenging period also presents opportunities.
The Reality:
Global VC funding declined by 40% in 2023-2024, and while Africa saw record deals in 2024, 2025-2026 has been characterized by smaller rounds, longer due diligence periods, and more investor scrutiny.
In a funding winter, investors prioritize sustainable unit economics over growth at all costs. Startups that can demonstrate a clear path to profitability are better positioned to secure funding.
Action: Analyze your customer acquisition cost (CAC), lifetime value (LTV), and gross margins. Identify areas for improvement and optimize your business model for efficiency.
Cash is king during a funding winter. Startups that can extend their runway have more time to weather the storm and emerge stronger.
Action: Cut non-essential costs, renegotiate contracts, and explore revenue-generating opportunities. Aim for at least 18-24 months of runway.
Investors are more selective during a funding winter. A compelling story that demonstrates market opportunity, traction, and differentiation is essential.
Action: Refine your pitch deck. Focus on problem-solution fit, market size, competitive advantage, and team strength. Use data to back up your claims.
Investors appreciate honesty. Startups that communicate transparently about their challenges and plans build trust and credibility.
Action: Provide regular updates to investors. Be honest about performance, challenges, and changes in strategy. Seek advice and support.
Traditional VC isn't the only option. Consider debt financing, grants, crowdfunding, strategic partnerships, and revenue-based financing.
Action: Research and apply for relevant grants and programs. Explore partnerships with corporations that can provide capital or revenue.
At NHL Ventures, we take a long-term view. We understand that building great companies takes time, and we're committed to supporting our portfolio companies through market cycles. Our hands-on approach, strategic mentorship, and ecosystem support help startups navigate challenging times and emerge stronger.
"The current market conditions are a test of resilience. The startups that survive this funding winter will be leaner, stronger, and better positioned for growth."
— NHL Ventures Investment Committee
NHL Ventures provides the capital, mentorship, and support startups need to survive and thrive.