The funding winter for African startups is set to get even tougher in 2024, with African tech startups raising $780 million in the first half of the year, according to a H1 fundraising report by Africa the Big Deal, an African funding analytics firm.
According to the report, total funding in the first half of 2024 is 31 percent lower than the total funding raised in the second half of 2023. However, when viewed side-by-side with the total funding raised in the first half of 2023, it gets even worse, with the 57 percent drop appearing even steeper.
In fact, funding for African tech startups from January to June 2024 was the lowest half-yearly funding recorded since late 2020, demonstrating how funding on the continent continues to decline.
Of the total $780 million in funding, 66%, or two-thirds ($513 million), was provided in the form of equity, an improvement compared to just 60% in 2023. 33% was provided in the form of debt, a decrease from 38% in 2023. 1% of the total funding was provided in the form of grants.
“Two-thirds of this funding was in the form of equity and one-third was debt. For 2023, this is a much higher debt share than seen in the past (average 17% since 2019).“,” the report states.
Kenya overtakes Nigeria as top funding destination for tech startups in Africa
According to the report, Kenya was the top funding destination for African tech startups, accounting for $244 million of the $780 million total startup funding in the first half of the year, or a third (32%) of the total funding, followed by Nigeria with $172 million, or 23% of the total funding.
Egypt accounted for $101 million of the total funding, equivalent to 13 percent, while South Africa raised $85 million, equivalent to 11 percent of the total, rounding out the big four.
Of the total $780 million raised on the African continent between January and June 2024, the Big Four tech startup ecosystems collectively raised $602 million, or 79% of the total funding.
“Four out of every five dollars invested in African startups went to venture firms based in the Big 4. This is a high figure, but not the highest it has ever been (92% in the first half of 2023). A third of the total funding went to Kenya alone.” the report noted.
Other African countries that raised at least $10 million include Benin ($50 million), Ghana ($29 million), Uganda ($19 million), Morocco ($14 million) and Senegal ($11 million).
The transportation and logistics sector continued to lead the financial technology sector, raising $218 million, a staggering 28% of total funding in the first half of 2024. This figure was further boosted by two of the three largest deals announced in the first half of the year being in this space (Moove and Spiro).
The Fintech sector raised $186 million, or 24% of the total, while Energy and Water raised $132 million, or 17% of the total. Although Fintech only came in second in terms of amount raised, it maintained the lead in the number of startups that raised over $1 million during the period (30).
Male-led startups dominate African tech startup funding in first half of the year
Despite the best efforts to achieve gender equality in the African tech startup funding space, it appears that male-led startups continue to dominate the space: in the first half of 2024, 85% of funding went to startups with no female founders on their team.
Similarly, 92 percent of funding went to startups with a male chief executive officer (CEO). Overall, 98 percent of funding went to startups with at least one male founder, and only 15 percent went to startups with at least one female founder. Only 8 percent of funding went to startups with a female CEO. This imbalance needs to change.
reference: Climate tech to overtake fintech to grab 45% of African startup funding in 2024
