Capital raised by African startups dropped by 25% to $2.2 billion in 2024 – Report

• Capital raised by African startups dropped by 25 per cent to $2.2 billion in 2024, according to a report
• The decline was attributed to a slow start in funding in the year
• African startups saw a rebound in the second half of the year, driven by the emergence of two unicorns within the period

Data from Africa: The Big Deal shows that capital raised by startups in Africa dropped by nearly 25 per cent to $2.2 billion in 2024.

The startups’ capital raises from equity, debt, and grants (excluding exits) saw a decline in 2024 compared to the $2.9 billion that was raised in 2023.

The data further revealed that a total of 188 ventures raised $1 million or more in 2024 (excluding exits), which is 10 per cent less than what was recorded in 2023.

The report stated that there were 22 exits made public in 2024 compared to 20 in 2023.

The 2024 report follows the same trend that was recorded between 2022 and 2023 when funding for African startups saw a 39 per cent drop.

Not all gloomy for African startups in 2024

In his comments on the report, Max Cuvellier Giacomelli, a co-founder of Africa: The Big Deal, said despite the funding drop, African startups recorded notable wins.

Cuvellier Giacomelli said the poor funding recorded among African startups in 2024 was due to a slow start in the year, while the second half (H2) of the year saw a rise in funding.

He said, “Indeed if we zoom in a little, we realise that the relative counter-performance of 2024 is mostly to be blamed on a slow start of the year: just under $800 million raised in H1, the slowest semester since 2020.”

According to the report, funding for African startups saw a rebound in H2 2024 as $1.4 billion was raised in H2 alone, a 25 per cent year-over-year increase and 80 per cent rise compared to the first half of the year.

Decline in debt funding is another win for African startups

Cuvellier Giacomelli added that another win for African startups is the recorded year-on-year decline in debt funding.

“Another reason to remain positive is that the YoY decline in funding is mostly attributable to a decline in debt funding.

“You may remember we’d dubbed 2023 ‘The Year of the Debt,’ and while the share of debt in the overall funding announced remained high in 2024 (30 per cent), it was not as high as it was in 2023 (38 per cent),” Cuvellier Giacomelli said.

The report found that while debt funding dropped by 40 per cent YoY in 2024, the total equity raised in 2024 ($1.5 billion) was only an 11 per cent decline from the $1.7 billion recorded in 2023.

Two unicorns emerged in Africa in H2 2024

The report also highlighted that the emergence of two unicorns in Africa in H2 2024 was a major factor responsible for the uptick in funding recorded in the year.

Recall that on October 29, 2024, Nigeria-based Moniepoint Inc. raised $110 million in equity financing to become Africa’s eighth startup to have achieved unicorn status.

Moniepoint joined Africa’s unicorn league that already had the likes of Interswitch, Opay, Flutterwave, Wave, Andela, Chipper, and MNT-Halan.

The Series C financing round further boosted the fintech’s valuation to at least $1 billion, increasing from around $400 million in a 2022 funding round where it raised $50 million.

On December 17, 2024, South Africa’s Tyme Group raised $250 million in a Series D round to reach a $1.5 billion valuation, becoming Africa’s ninth unicorn.

The funding round was led by Nu Holdings, the parent company of Latin America’s most valuable fintech, Nu Bank, as it invested $150 million for a 10 per cent stake. M&G Catalyst Fund and existing investors also participated in the round.

7 African AI startups founded by Nigerians

Meanwhile, TheRadar reported that the Artificial Intelligence (AI) revolution brought about innovations and startups leveraging technology to address pressing human needs.

The African continent is not left behind in this wave of revolution. The continent boasts a handful of startups changing the world, most of which are founded by Nigerians or located in Nigeria, including these seven.