- African tech VC funding declined 51% YoY in Q1 2024, with startups raising $369 million across 64 deals
- Equity funding dominated with 67% of deals, while debt funding and mixed deals made up the rest
- Mobility sector led funding in Q1 2024, with Nigeria’s Moove securing a significant share
- “Big Four” markets of Nigeria, Kenya, South Africa, and Egypt secured over 90% of Q1 2024 funding
- Early-stage funding prevailed in Q1 2024, while growth-stage funding saw a notable drop due to foreign investor dependence
African Tech Funding Decline in Q1 2024
In the first quarter of 2024, African tech funding faced a significant decline of 51% year-over-year, according to data from BD Funding Tracker. Despite this plunge, African startups managed to raise a total of at least $369 million across 64 publicly announced deals. This downturn reflects the ongoing impact of the global funding crunch on the African tech ecosystem.
Shifts in Funding Composition
Equity funding, which has traditionally been dominant in the African tech scene, still accounted for 67% of the deals in Q1 2024. However, there was a noticeable increase in debt funding, which rose to 14.90%. Additionally, a portion of funding came from undisclosed mixed deals, combining equity and debt, capturing the remaining 18.43%. This shift in funding composition indicates a diversification in the types of investments being made in African startups.
Dominant Sectors and Market Dynamics
The mobility sector emerged as the leader in Q1 2024 funding, capturing a significant 31.17% share with just six deals. This dominance was largely driven by Nigerian mobility startup Moove, which secured $110 million through a combination of equity and debt deals. Other sectors that received notable funding included cleantech, healthtech, and fintech, showcasing the growing diversity of investment opportunities within the African tech landscape.
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Africa’s “Big Four” markets—Nigeria, Kenya, South Africa, and Egypt—continued to dominate the funding pie, securing 91.22% of the total funding in Q1 2024. This concentration of capital in established markets highlights investor preferences for regions with larger potential returns, leading to disparities in funding allocation among emerging markets in Africa.
Challenges and Opportunities for African Startups
The persistent funding crunch has pushed African startups towards consolidation as a means of survival. This trend is reflected in the increasing number of mergers and acquisitions within the tech ecosystem, with approximately seven exits recorded in Q1 2024. While some startups have successfully navigated consolidation, others have been forced to close down operations due to compliance issues and market challenges.
Despite the challenges faced in Q1 2024, there remains optimism within the African tech community for future funding prospects. The minimal funding raised in the first quarter of 2023 indicates a potential for growth and recovery, with opportunities to surpass the $3.2 billion raised in the previous year. As the ecosystem continues to evolve and adapt to changing market dynamics, African startups are poised to capitalize on emerging trends and opportunities for sustainable growth.
While African tech funding experienced a decline in Q1 2024, the resilience and innovation of the continent’s startup ecosystem remain strong. By navigating challenges, embracing consolidation, and seizing opportunities for growth, African startups are well-positioned to overcome funding constraints and drive continued progress in the dynamic tech landscape of the region.
Links to additional Resources: 1. https://bdtechtalks.com/ 2. https://techcrunch.com/ 3. https://www.disrupt-africa.com/