According to a recent report from Africa: The Big Deal, investor activity in Africa has seen a significant decline this year. The report reveals that 5 investors have done at least a deal a month on average in H1 2024, not far from H1 2023 (7) but much behind H1 2022 (33).
Nearly 300 investors were involved in at least one deal worth $100,000 or more during H1 2024. This represents a 27% decrease from the same period in 2023, which saw around 400 investors, and is less than half the number of active investors in H1 2022, which reached approximately 700.
One notable trend is the decrease in repeat investments. In H1 2024, just under 18% of investors participated in more than $100k+ deals, a drop from previous years. In 2023 23%, in H1 2022 29%, and in H1 2021 25%. This suggests that investors are taking a more cautious approach amid changing market conditions.
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However, despite the overall slowdown, a few firms have maintained strong activity in Africa. At the top of the list is Launch Africa, which signed a deal almost every other week during H1 2024. After a brief slowdown in 2023 due to the transition between their Seed Fund I and Seed Fund I1, launch Africa is back on track and is poised to surpass their 2023 total of 19 deals if they maintain their current pace.
Techstars followed as the second-most active investor in H1 2024, though its activity has notably slowed compared to last year. In 2023, the venture capital firm completed an impressive 56 deals- more than one per week on average. However, they only announced 9 deals in H1 2024, a significant drop from the 28 deals made in H1 2023. It remains to be seen whether they will match their previous performance by the end of the year.
Notably, three firms, 54 Collective (formerly Founders Factory Africa), Catalyst Fund, and Renew Capital each completed 7 deals in H1 2024. Both 54 Collective and Catalyst Fund are on track to meet their 2023 totals of 16 and 13 deals, respectively. Renew Capital has already outperformed its 2023 numbers, completing 7 deals in H1 2024 compared to 5 throughout last year. Meanwhile, two firms- DFC and Baobab Network completed 5 deals each in H1 2024, already surpassing their 2023 totals. Y Combinator, another active player in the African market, has also made progress and may match its 12 deals from 2023.
However, several venture capital firms that were highly active in 2023 have slowed their deal-making pace this year. Ventures Platform and Norrsken, both of which averaged more than a deal per month last year, completed fewer than 5 deals in H1 2024. Additionally, Flat6Labs and Loftylnc–both known for their previous serial investments- have been relatively quiet but are actively raising new funds, hinting at a potential resurgence in activity.
The decline in investor activity in Africa for H1 2024, is coming after August marked the lowest funding month of the year, despite a record-breaking $443 million raised in July.
As the African investment landscape continues to evolve, the second half of 2024 will be crucial in determining whether investor confidence and activity will rebound or if the cautious trend will persist across the continent. With some investors already outperforming their 2023 benchmarks, there may still be room for optimism in the African startup ecosystem.
