In a recent report by Africa: The Big Deal, the third quarter (Q3) of 2024 witnessed a remarkable surge in funding for African startups, which raised more than $600 million across various funding channels, including debt, and grants (excluding exits).
This amount was more than double what was raised in Q2, making it the best quarter of the year so far, and nearly matching Q3 2023 levels. Together, these two deals accounted for over half of the total funding raised during the period. The surge in fundraising activity was heavily influenced by two major deals that dominated the headlines in July which include the 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.
Overall, 44 start-ups in Africa secured $1 million or more in Q3, a notable improvement from Q2, which saw the lowest funding levels in four years. However, this figure is still below the quarterly average of 55 start-ups seen in 2023. Looking at the year-to-date (2024YTD) numbers, African start-ups have raised a total of $1.4 billion.
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While this is significantly better than the favorable pre-heatwave levels of 2020 and 2021 pre-2021 levels, it falls short when compared to the past three years. So far this year, funding is down by 38% compared to the same time in 2023, as cautious sentiment amongst investors is likely to persist until broader global and local economic conditions stabilize.
However, despite these concerns, there are still signs of optimism, as many investors continue to view Africa as a high-potential market for long-term growth, especially in sectors like fintech, clean energy, and logistics. On a brighter note, the number of start-ups securing $1 million or more has only declined by 6% year-over-year, indicating that despite the funding dip, strong entrepreneurial activity continues across the continent.
As revealed by data, start-ups in Africa have already raised more funding in 2024 than in the entirety of both 2019 and 2020. However, it is unlikely that the total for 2024 will surpass 2023 figures, as that would require raising more in Q4, than in the first three quarters combined-a scenario seen only in 2019, but not repeated since. Ending on a positive note, when considering the past 12-month period rather than just 2024YTD, there is some cause for optimism.
For the first time since mid-2022, African start-ups have raised more in the past four quarters than in the preceding period. Although the growth is modest, this trend may signal the start of a brighter future for the continent’s start-up ecosystem.
With Q4 around the corner, all eyes are on how the year will conclude, but the recent uptick in funding suggests a resilient and dynamic ecosystem that continues to attract significant investment despite broader global challenges.