Some will argue that Nestcoin’s popularity skyrocketed right after the announcement that it lost significant capital in Sam Bankman’s now-defunct empire, FTX. The idea that African crypto upstarts were cash-strapped in the FTX aftermath took over the crypto conversation on the continent, and the global drop in venture funding didn’t help matters, considering that local funding for the blockchain industry remains nascent. Since then, the ecosystem has seen shutdowns, selloffs, layoffs, and even more shutdowns. What we have not seen much of, until Nestcoin’s last week announcement, are local blockchain startups raising above the $1 million mark to build or ship products to their next life-cycle. Nestcoin may have sourced this “strategic round” to scale Onboard, its payment app, but its win means much more for the broader crypto ecosystem, ecosystem watchers have said.

Eghosa Omoigui, whose VC firm announced an $8 million fund for Africa-focused blockchain startups this year, told me earlier that he faced challenges in raising the fund. “The market for crypto funds was clearly more bearish than we liked,” he said. If Omoigui, with over 15 years of investment experience, found it daunting to convince investors that African crypto startups were a sure bet for their monies, how better could budding crypto upstarts have it?

Not so well, the statistics have shown. The first three quarters of 2023 saw a sharp global decline in investors’ interest in web3 startups, but it was markedly worse in Africa. Within the first eight months of 2023, no publicised deal for a local web3 upstart crossed the $1m mark. Payment gateway Ivorypay and e-commerce firm Nyayomat were some of CV VC’s accelerated startups which got about $135,000 in funding earlier in the year, topped by Skrmiish’s $700,000 raise in July. Skrmiish is a blockchain gaming startup operating out of South Africa.

Within the same period, Shield and Fedi, two ambitious web3 projects raised almost $20 million combined, but while some of their founders may have African roots, both businesses largely remain US-focused. Shield is a member of the Crypto Startup School powered by Andreessen Horowitz’s a16z.

The opening of an ecosystem

September 2023 brought some fresh air to the African crypto ecosystem, with news of Nestcoin’s $1.9 million raise and Kotani Pay’s $2 million announced in the first week of the month. As both announcements, in succession, became headlines in some of the continent’s leading publications, it became clear to many that crypto funding is neither dead nor “drowned by the AI noise.”

“There are opportunities for [Web3] startups building lasting solutions. We’ve found that investors who buy into [a startup’s] mission and have confidence in the team’s abilities are likely to invest, despite the difficult times,” Nestcoin’s communications lead, Toyin ‘Liza’ Jolapemo, said in a chat with NODO.

Ernest Ndozie, an Investment Analyst at Mirco Capital, told NODO that these announcements may very well preempt an upward interest in blockchain funding on the continent. ”Most investors act like sheep,” he said. “They look out for sectors that other players are investing in and throw their monies in. That’s how we found ourselves in an AI craze this year.”

While Ndozie does not speak for the investor ecosystem, and is certainly not prescient enough to tell what trend funding in the African crypto ecosystem will take, he makes a solid point about investors' behaviour around “hot sectors”, which, typically, are those already recording mass inflows of investments. This is why a funding announcement by Nestcoin, despite having made the news for its FTX losses, is a big deal for the crypto ecosystem. It highlights the resilience of builders in the space and augurs well for the African web3 space.

Feature Image Source: Billionaire Africa