In a recent report by Africa: The Big Deal, African startup funding dipped in the month of August after record-breaking funding in July, which emerged as a landmark month for startup fundraising across Africa, which saw an impressive $443 million raised.
In July, a total of 47 ventures secured at least $100,000 in funding, making July the second-best month of the year in terms of the number of deals closed, trailing only behind May, which saw 40 grant announcements from major players like DEG, CHub, and iHub. Among these, 16 ventures managed to raise over $1 million, consistent with the monthly average during the first half of the year.
The surge in fundraising activity was heavily influenced by two major deals that dominated the headlines in July which include global leader in solar energy solutions d.light, which secured a massive $176 million securitization facility, and leading Egyptian fintech company MNT-Halan which raised $157.5 million.
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The impressive performance observed last month had raised expectations, but the unexpected decline materialized in August, with start-ups on the continent raising only $56 million in funding. This marked a dramatic drop from the amount raised in July, a decline of nearly eightfold and a stark contrast to the $234 million recorded in August 2023, making August 2024 the second-slowest month in four years, following June 2024, which saw just $42 million in funding.
The bulk of the funding in August 2024 was secured as equity, accounting for 87% of the total, with debt representing 9%, and grants making up the remaining 4%. A total of 27 start-ups announced funding rounds in August, a figure significantly below the monthly average of 40+ over the past year.
The three largest deals of the month were Dutch DFI FMO’s $10 million investment in Ghanaian fintech Fido as part of its Series B round, a $9 million investment in South Africa’s Solarise Africa (Energy sector), and Nigerian fintech Waza, which emerged from stealth mode with $8 million in funding, consisting of $3 million in seed funding and $5 million in debt.
No exits were recorded during the month, and overall funding activity for 2024 continues to lag behind recent years, with a 40% year-over-year decline compared to 2023. However, there is a silver debt representing 9%, and grants making up the remaining 4%.
However, despite the August slowdown, the ecosystem’s robust performance in July has ensured that the total funding raised in Q3 2024 (with one month still to go) has already surpassed the totals for Q1 and Q2.
While August’s funding decline presents a challenge, the resilience and potential of Africa’s start-up ecosystem remain evident, as the region continues to attract significant investment despite periodic fluctuations in funding activity.
