No rebound for start-up investments in Africa

By Max Cuvellier Giacomelli

In 2024, start-ups in Africa raised a total US$2.2 bn in equity, debt, and grants (excluding exits), a 25% drop compared to the US$2.9 bn raised in 2023. A total of 188 ventures raised US$1 mn or more last year, which is just 10% less than in 2023. On the exit front, there were 22 exits made public, compared to 20 in 2023.

The relative underperformance of 2024 is mostly due to a slow start of the year, with just under US$800 mn raised in the H1, the slowest semester since 2020. However, there was a significant rebound in the latter part of the year, with US$1.4 bn in H2 alone, a 25% year-over-year increase and an 80% increase compared to H1. This made it the second-best semester since the beginning of the 'funding winter' in mid-2022. The numbers were driven in part by the two mega deals of Moniepoint^[1] and Tyme Group^[2] in the fourth quarter, minting two new unicorns back-to-back, the first such events on the continent since early 2023.^[3]

The year-over-year decline in funding is mostly attributable to a decline in debt funding. While the share of debt in the overall funding announced remained high in 2024 (30%), it was not as important as it was in the previous year (38%). Debt funding contracted by 40% YoY, while the total equity raised in 2024 (US$1.5 bn) was only 11% below 2023 levels (US$1.7 bn). It is encouraging to see equity levels stabilizing after taking the hardest hit in 2023 (-57% YoY).

Kenya attracts the largest share of the funding

Nigeria, Egypt, and South Africa - known as 'the Big Four' - attracted 84% of all start-up funding in Africa in 2024, just like in 2023 and the average since 2019. East Africa claimed the most funding for the second year in a row, with US$725 mn in total (-18% YoY), representing one in three dollars raised on the continent in 2024. Kenya alone (US$638 mn) made up 88% of the total raised in the region and 29% of all the money raised on the continent. Large deals in the climate tech space - such as d.light^[4], SunCulture^[5], and Basigo^[6] - boosted the numbers in particular.

Western Africa claimed the second spot in 2024, with US$587 mn (27%), after ranking fourth in 2023. Nigeria attracted just over US$400 mn in funding last year, roughly the same amount as Egypt and South Africa. Western Africa continued to be the most balanced region, where the regional lead represents the smallest share of the total (70%). Western Africa was also home to four of the seven countries that attracted between US$10 mn and US$100 mn in funding last year (Ghana, Benin, Côte d’Ivoire, and Senegal). Overall, the region only registered a minor drop in funding in 2024 (-3% YoY).

In Northern Africa nonetheless, funding (US$478 mn, 22%) fell by 35% between 2023 and 2024, mostly due to a 37% YoY contraction in funding in Egypt, which represented 84% of all the funding raised in the region last year. Southern Africa (US$397 mn, 18%) suffered a similar drop in funding in 2024 compared to 2023 (-36% YoY); South Africa, represented 99.4% of all regional funding. Only a handful of deals were recorded in Central Africa.

Fintech dominated the fundraising scene

Fintech is the sector that attracted the most start-up funding in Africa in 2024, with over US$1 bn in totla. The sector’s share grew year-over-year from 42% in 2023 to 47% in 2024, the highest since 2021. Four of the ten biggest raisers in 2024 were fintech players: Moniepoint and Tyme, but also MNT-Halan^[7] and M-Kopa.^[8] The second sector in terms of funding in 2024 was Energy, with US$440 mn, or 20% of the annual tally. This number was driven by two of the year’s ten top raisers: d.light (US$192 mn) and Sun King^[9] (US$87 mn). Year-over-year, the total fell -42%, one of the steepest sectorial drops along with Agri & Food and Healthcare. Logistics & Transportation held the third spot and attracted more funding in 2024 (US$288 mn) than in 2023 (US$271 mn). Three of 2024’s ten top raisers were in this sector: moove^[10], Basigo, and Spiro^[11]. All in all, 80% of the funding invested in start-ups in Africa in 2024 went to these top three sectors. Most other sectors suffered a loss in both absolute and relative terms.

Climate Tech – which straddles multiple sectors - represented 32% of the total invested in start-ups in Africa in 2024, slightly less than in 2023 (36%). This decrease is mostly due to the drop in funding going to the energy sector. Indeed, in 2023, Energy had made up 72% of all Climate Tech investments, but its share dropped to 59% in 2024. On the positive side, non-energy Climate Tech investments were almost stable between 2023 and 2024.

Large ventures attracting big tickets

Africa’s nine unicorns^[12] have raised US$3.9 bn in funding since 2019, almost a quarter (23%) of all the funding raised on the continent in the past six years. 28 start-ups have raised US$100 mn or more since 2019 (including the nine unicorns), out of 2,000+ ventures that have had some fundraising activity over US$100k in the period collectively, they have raised US$7.8 bn since 2019, almost half (47%) of the total invested.

The top 10 raisers in 2024 concentrated 51% of the funding, the highest proportion since 2019, and pretty much in line with 2023 dynamics. They were Moniepoint and Tyme, of course, but also two other fintechs (MNT-Halan and M-Kopa) and four ‘climate tech’ ventures (either solar: d.light, Sun King; or EV: Basigo and Spiro); plus moove and nuitée.^[13] Unsurprisingly, eight out of ten were located in a ‘Big Four’ country.

A male-dominated landscape

Female CEOs attracted only US$48 mn in funding in 2024, over four times less than in 2023. Comparatively, nearly US$2.2 bn went to their male counterparts. Absolute levels so low hadn’t been registered since 2020. In relative terms, female CEOs received only 2% of the total invested last year, a share that had never been so small.

Only US$123 mn went to gender-diverse founding teams, and US$21 mn to solo female founders or all-female founding teams. In comparison, solo male founders raised US$430 mn and all-male founding teams US$1.6 bn. The gap is even more striking in relative terms: 1%, 5.5%, and 95.5% respectively. In other words, 99% of the funding was invested in start-ups with at least a male founder, versus 6.5% in start-ups with at least a female founder.

A shrinking investor pool

There were at least 520 investors involved in one US$100k+ deal or more on the continent in 2024, not as many as in 2023 (610+), or 2022 when 1,000+ investors had participated in at least one such deal. Investors are also less active: the share of investors who participated in only one US$100k+ deal (69%) during the year is at its highest since at least 2021. While there had been up to 28 investors participating in more than ten US$100k+ deals on the continent in 2022, this number fell to eight in 2024, in line with 2023.

The most active investor last year, and the only one to take part in more than 20 US$100k+ deals, was 54 Collective (previously Founders Factory Africa) with 26 transactions, i.e. more than two deals a month on average. Another two Top 8 investors had already made the list in 2023, 2022, and 2021: Techstars and Launch Africa*. To these, we can add Catalyst Fund*, which was one of the Top 8 investors in 2023 as well. Apart from 54 Collective, they all participated in fewer deals in 2024 than in 2023. However, the other four investors that make up the rest of the Top 8 increased their activity over the period: Digital Africa, Baobab Network, Renew Capital, and EdVentures.

Despite the decline in investor activity, there is still a strong community and a lot of ‘dry powder’ to be deployed, with quite a few new Africa-focused funds announced in the past couple of years. Some investors have also been less active in 2024 because they have been raising their next fund.

A potential still mostly untapped

Comparatively, Africa’s performance in terms of equity fundraising in 2024 versus 2023 (-11% YoY) was better than APAC’s (-27% YoY), where the numbers were pulled down by China’s particularly poor performance (-56%) – according to CB Insights.^[14] However, India had a very strong year, boasting some 40% YoY growth. Overall, equity start-up funding in Africa contracted 11% YoY in 2024, while it grew 4% YoY globally. Looking at longer-term trends and comparing pre-heatwave funding levels (2020) to 2024, Africa is doing well with a 62% increase over the 2020-2024 period (US$1.5 bn versus US$0.9 bn), better than all other regions. During the same period, equity fundraising has declined 54% in APAC (-78% in China and +1% in India).

With US$1.5 bn in equity raised in 2024, Africa represented 0.6% of the total globally (US$275 bn), to be compared to Africa’s contribution to global GDP (PPP) (~5%) or global population (~18%).

* Africa: The Big Deal’s co-founders are LPs in Launch Africa, and one of the co-founders is an operating partner of Catalyst Fund.