African tech startups face funding setback as Mobility startups take the lead with a 62% drop in Q1 2024

• Funding to African tech startups fell by 62% year-on-year in Q1 2024
• Mobility startups, particularly Moove, led the way in funding raised
• Only $38 million was raised by fintech startups in the same period
• Climate tech startups are expected to see increased funding in 2024
• Nigeria, Egypt, South Africa, and Kenya received 82% of the total funding

African Mobility Startups Lead Funding Despite Overall Drop in Q1 2024

In the first quarter of 2024, funding to African tech startups experienced a significant decline of 62% year-on-year. Despite this decrease, African mobility startups emerged as the frontrunners in attracting investment during this period. The total funding raised by startups across the continent amounted to $329.5 million in Q1 2024, a stark contrast to the $873.9 million raised at the same time last year. This decline was largely attributed to the absence of mega-rounds like MNT-Halan’s $400 million raise in February 2023.

Moove Leads the Way in Mobility Sector Funding

Mobility startups took the spotlight in Q1 2024, with Moove securing a substantial $100 million Series B round led by Uber in March. Moove’s innovative model, which allows ride-hailing drivers to access vehicles without upfront payment, garnered significant attention. This funding round marked a significant milestone in the partnership between Moove and Uber, which commenced in 2020. Despite Moove’s success, the startup faced challenges in Nigeria, where drivers raised concerns about the repayment plan amidst escalating operational costs.

Aside from Moove, other notable players in the mobility sector secured funding in Q1 2024. Planet42 received $16 million from Standard Bank, while Ampersand raised $12 million in January. Collectively, mobility startups raised a total of $178.6 million during the quarter, showcasing the sector’s resilience and attractiveness to investors.

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Funding Landscape for Fintech Startups and Climate Tech Innovations

While mobility startups dominated the funding scene, fintech startups faced a relatively subdued period, raising only $38 million across the first three months of 2024. The low funding figures in the fintech sector hinted at a shift in investor focus towards other emerging technologies and industries.

Conversely, the climate tech sector showed promise, with expectations of continued funding growth throughout the year. Maelis Carraro, Managing Partner of Catalyst Fund, expressed optimism about the increasing investor interest in climate solutions in Africa. Despite limited funding for climate tech startups in 2024, the sector emerged as the third-most funded category in Q1.

New Funds and Initiatives Aim to Boost African Tech Ecosystem

Recognizing the vital role of funding in sustaining and growing African tech startups, various firms and individuals have launched new initiatives to support the ecosystem. Partech’s $300 million fund, specifically targeted at African startups, stood out as a significant boost to the funding landscape. The fund, spanning from seed to early growth stages, aimed to fuel innovation and growth across the continent.

Satgana, focusing on climate tech investments in Africa and Europe, raised $8.6 million to support startups in this critical sector. The launch of Accelerate Africa by Iyinoluwa Aboyeji, backed by a grant from the United States Agency for International Development (USAID), highlighted the collaborative efforts to nurture and accelerate African startups. Additionally, P1 Ventures’ $35 million fund expansion signaled a growing interest in supporting tech ventures in Senegal and Kenya.

Despite the overall decline in funding to African tech startups in Q1 2024, the resilience and innovation of mobility startups, alongside emerging sectors like climate tech, indicate promising opportunities for growth and investment in the continent’s tech ecosystem. With new funds and initiatives coming to the fore, the trajectory of African tech startups appears poised for further expansion and impact in the global market.