- Africa’s startup funding ecosystem experienced a decline in 2024, with total investments dropping by 25% to $2.2 billion amidst a global economic slowdown.
- However, a strong rebound in the second half, driven by two unicorn deals, highlighted the sector’s resilience and potential.
- Regional leaders Kenya, Nigeria, and Egypt continued to dominate, signaling sustained investor interest despite the challenges.
Africa’s startup funding ecosystem experienced a notable decline in 2024, reflecting the broader global funding drought that defined the year. Startups on the continent collectively raised $2.2 billion in equity, debt, and grants (excluding exits), a substantial amount but a sharp 25 per cent drop compared to the $2.9 billion secured in 2023.
Despite the downturn, the year was marked by pockets of resilience, strategic wins, and a glimpse of recovery in the latter half, an annual analysis by Africa: The Big Deal shows.
Startup funding in Africa
In 2024, an estimated 188 startups managed to raise $1 million or more, a decrease of just 10 per cent from 2023. This highlights that while funding amounts shrank significantly, the number of funded ventures remained relatively stable.
On the exit front, the year saw 22 deals disclosed, up slightly from 20 in 2023, signaling cautious optimism in investment returns amidst a challenging environment.
The year’s funding trajectory revealed two contrasting halves. The first six months of 2024 were particularly challenging, with just under $800 million raised—a figure reminiscent of pre-pandemic funding levels in 2020.
However, the second half of the year saw a dramatic rebound, with startups raising $1.4 billion. This represented a 25 per cent year-on-year growth and an 80 per cent increase compared to H1, marking it as the second-best half-year since the onset of the global funding downturn in mid-2022.
Mega deals drive a late-year surge
According to Africa: The Big Deal, the recovery in H2 was driven in part by two significant deals involving Moniepoint and Tyme Group in Q4, both of which minted new unicorns—companies valued at over $1 billion.
These back-to-back achievements were the first of their kind since early 2023, underscoring the importance of large deals in revitalizing Africa’s startup funding ecosystem.
While equity financing experienced a relatively modest decline of 11 per cent year-on-year ($1.5 billion in 2024 versus $1.7 billion in 2023), debt funding took a more significant hit, contracting by 40 per cent. This shift reflects changing investor strategies, with a stronger focus on equity amid tightening credit conditions globally.
Regional performance in startup funding
The usual suspects in attracting startup funding in Africa continued to dominate the market. In Eastern Africa for instance, Kenya continued to attract the lion’s share of startup funding, solidifying its position as a regional hub for innovation and entrepreneurship.
Africa’s largest economy Nigeria maintained its dominance as the largest recipient of startup capital, reaffirming its role as a cornerstone of the African tech ecosystem in Western Africa.
In the Central Africa region, the Democratic Republic of Congo (DRC) emerged as an unexpected leader in startup funding within the region, reflecting growing investor interest in untapped markets.
For Northern Africa, Egypt was the prime destination of choice for startup capital, leveraging its strategic location and growing ecosystem. In the Southern Africa base, South Africa remained the largest destination for startup funding, driven by its mature market infrastructure and vibrant entrepreneurial culture.
Read also: African startups hit by funding drought in 2024, but innovation persists
Broader implications for Africa’s startup ecosystem
The decline in funding underscores the challenges African startups face in navigating the global economic slowdown and tightening investor confidence. The so-called “funding winter,” which began in mid-2022, continues to cast a long shadow over the ecosystem.
However, the resilience shown in H2 2024 offers a glimmer of hope. The rebound not only highlighted Africa’s potential to attract significant investment but also demonstrated the ability of startups to adapt and innovate in the face of adversity.
Africa’s growing ecosystem remains an attractive proposition for investors seeking high-growth opportunities. The emergence of new unicorns, coupled with steady growth in regions like Eastern and Northern Africa, signals that the continent’s startup scene is still brimming with potential.
While 2025 remains fraught with challenges, Africa’s startups have proven their mettle in navigating turbulent times. The sector’s ability to attract $2.2 billion in funding during a global downturn is a testament to its resilience and untapped potential.
Unlocking further growth will require a combination of strategic investments, government support, and innovative solutions to address infrastructure and funding gaps. As the global economy stabilizes, Africa’s startup ecosystem is well-positioned to bounce back, leveraging its unique strengths and vibrant entrepreneurial spirit.
