Africa’s Start-Up Funding Was $780 Million in H1 2024, Lowest Since Late 2020

According to a report by Africa: The Big Deal, the first half (H1) of 2024, marked the quietest period for startups in Africa since late 2020.

Startups in the region raised $780 million (excl. exits), representing a 31% drop compared to H2 2023, and an even more pronounced 57% decline compared to H1 2023, highlighting a significant slowdown in venture capital activity on the continent.

Of the total $780 million raised, two-thirds were secured through equity, while the remaining one-third came from debt financing, marking a notable increase in the proportion of debt funding compared to previous years, where debt accounted for an average of just 17% of start-up financing since 2019.

Part of the report reads,

“Two-thirds of this funding was in the form of equity, and a third was debt. As for 2023, this is a much higher share of debt than what we’d been seeing in the past (17% on average since 2019). 4 out of 5 dollars invested in startups in Africa went to ventures based in the Big Four. This is high, but not the highest we’ve seen 92% back in H1 2023). A third of all the funding went to Kenya alone”.

In terms of regional distribution of funding, the “Big Four” countries – Nigeria, Kenya, South Africa, and Egypt attracted most of the funding in the region. These nations collectively accounted for four out of every five dollars invested in African start-ups during this period. While this concentration is significant, it is slightly lower than the 92% seen in the first half of 2023.

Notably, East African country Kenya, was the most favorite in terms of funding, accounting for one-third ($244m) of all funding in H1 2024, underscoring its growing prominence in the African start-up ecosystem. Nigeria accounted for $172 million representing 23%, Egypt attracted $101 million representing 13%, while South Africa attracted $85 million, representing 11 percent of the total funding raised.

Collectively, the Big 4 tech startup ecosystems raised $602 million of the total $780 million raised on the continent in H1 of 2024, representing 79% of total funding. Other African countries attracted at least 10 million in funding, which include, Benin Republique ($50 Million), Ghana ($29 Million), Uganda ($19 Million), Morocco ($14 million), and Senegal ($11 Million).

In terms of the sector that attracted the most funding, there was an unusual twist with the Transport & Logistics sector displacing the fintech sector to emerge as the top recipient of start-up funding, attracting 28% of the total investment.  Transport sector dominance was bolstered by two of the three largest deals announced in the first half of the year, involving (Moove and Spiro).

Fintech occupied the second position in terms of amount raised, but led in the number of startups securing $1 million or more, with 30 deals recorded.

Despite ongoing discussions about gender equity in the African startup ecosystem, the distribution of funding remained heavily skewed towards male-led ventures. Only a fraction of the funding continued to go to female-focused and female-led startups with 85% of the funding going to ventures without a single female founder and 92% to companies with a male CEO. This funding disparity further highlights the persistent challenges female entrepreneurs face in accessing capital.