Startup funding to Nigeria, South Africa, Egypt, Kenya and other parts of Africa dropped by 31 per cent in the half year of 2024. This is according to an analysis by Africa: The Big Deal, in its half-year report on startup funding. It noted that overall start-ups in Africa have raised $780 million, which represented a -31 per cent drop compared to the corresponding period of last year and an even starker – 57 per cent decline compared to H1 2023 if seasonality is to be noted.
It said two-thirds of this funding was in the form of equity, and a third was debt. The report stressed that as of 2023, this is a much higher share of debt than what was seen in the past (17 per cent on average since 2019).
Accordingly, four out of five dollars invested in start-ups in Africa went to ventures based in the big four. It stressed that is high, “but not the highest we’ve seen (92 per cent back in H1 2023). A third of all the funding went to Kenya alone.”
“Geographically, the big four – Nigeria, South Africa, Kenya and Egypt—continued to dominate the funding landscape, attracting four out of every five investment dollars. Within this group, Kenya emerged as the frontrunner, securing a third of the total funding.”
Although the concentration of funds in these key markets is significant, it is slightly below the peak of 92 per cent observed in H1 2023.
Out of the $780 million secured, Kenya garnered $244 million, representing 32 per cent of the total funding raised, while Nigeria received approximately $172 million. Egypt took a share of $101 million while South Africa secured $85 million.
Over the last five years, from 2019 to 2023, Nigerian startups received the largest portion of funds raised by African startups, accounting for 29 per cent of the $15 billion total investments.
Specifically, Nigerian startups received $4.4 billion out of the $15 billion that flowed into Africa during this period.
Africa: The Big Deal observed that the sector to attract the most funding was Transport & Logistics (28 per cent), with two of the three largest deals announced in H1 (moove and spiro). While Fintech came only second in the amount raised, it stayed in the lead in terms of number of start-ups raising $1 million or more during the period.
In terms of gender-led startups, the report said only a fraction of the funding continued to go to female-founded and female-led start-ups with 85 per cent of the funding going to ventures without a single female founder and 92 per cent to companies with a male CEO.
