African startups collectively raised $2.2 billion in 2024, marking a 25% decline from the previous year, according to a report by Africa: The Big Deal. This downturn reflects a broader global trend of reduced venture capital investments, influenced by rising interest rates and economic uncertainties.
- Leading Countries: Kenya emerged as the top destination for startup funding in Africa, attracting $638 million, which accounts for 29% of the continent’s total. Nigeria, Egypt, and South Africa collectively secured $1.2 billion in investments.
- Sector Focus: Fintech remained the dominant sector, receiving 60% of the total equity funding, amounting to $1.3 billion. Other notable sectors included cleantech (9%), e-commerce (7%), business services (7%), and agritech (4%).
- Investment Types: Equity funding remained stable at $2.2 billion, mirroring 2023 figures. However, debt financing experienced a significant decline, dropping by 17% to $1 billion. This decrease is attributed to rising interest rates and the strengthening of the U.S. dollar against African currencies, which increased the cost of loans for startups.
Despite the overall decline, the African startup ecosystem witnessed the emergence of two new unicorns in 2024:
- Moniepoint: A Nigerian fintech company that achieved a valuation exceeding $1 billion after raising $110 million in a funding round led by Development Partners International, with participation from Google’s Africa Investment Fund.
- Tyme Group: A South African digital banking platform that also reached unicorn status during the year.
The report noted a decrease in investor participation, with only eight investors involved in over ten deals exceeding $100,000 in 2024, compared to 28 in 2022. This reduction underscores a more cautious investment climate, as global economic conditions prompted investors to reassess their risk appetites.
While the decline in funding presents challenges, it also highlights the resilience and adaptability of African startups. The sustained interest in sectors like fintech and the emergence of new unicorns indicate that the continent remains a fertile ground for innovation and investment opportunities.
As the global economic landscape continues to evolve, stakeholders in the African startup ecosystem are optimistic that strategic investments and supportive policies will foster renewed growth and attract increased funding in the coming years.
Read more on Tech Gist Africa:
How Africa is Positioning Itself as a Key Player in the Global Tech Economy
How Africa’s Tech Ecosystem is Attracting Global Investors and Technology Giants