Startups in Africa raised $645m in May 2023

Startups in Africa raised $645 million in May 2023 through at least 50 $100,000 deals. This is recorded as the best month of May the ecosystem has ever experienced, according to a report by Africa: The Big Deal.

This is a vast improvement compared to April 2023, which was a quiet month, just as January was. Only $129.8 million was raised on the continent in April – a 68% decline compared to April 2022, and also less than in April 2021.

We should, however, not buy the flowers yet as March 2023 experienced a funding drought (when compared to February 2023) – startups raised only $66 million. This made March 2023 the worst month in 2.5 years (since August 2020) and the first time the monthly amount of funding raised by startups in Africa dropped below the $100 million mark since 2020.

The total funding raised by African tech startups in February, at $700 million, was the least the month has seen in two years. It dropped by 29% when compared with February 2022, according to data from Africa: The Big Deal. But, analysts are optimistic.

Now, is it the light at the end of the tunnel? As always, it’s hard to say. While the numbers are certainly encouraging, they could also give false hope, as we experienced in February.

Max Cuvellier, founder, Africa: The Big Deal

The largest contributors to the May 2023 numbers are two energy and one fintech companies: M-Kopa ($200 million debt + $55 million equity), Sun King ($130 million) and TymeBank ($78m pre-Series C).

From a number of $100k+ deals point of view, there was very decent progression compared to April (+61% MoM) through we’re still far from May 2022 levels (50 vs. 86, -42% YoY). A similar trend can be found if we look at $1m+ deals (+57% MoM, -51% YoY).

Africa: The Big Deal

Startups in Africa May 2023 funding

The total amount raised was up significantly from both May 2022 and April 2023.

East African startups led the way in terms of funding, raising about $414.7 million, or 64.6% of the total funding. This was led by M-Kopa’s $255 million raise, and Sun King’s recent $130 million raise.

“There’s a huge demand for life-enhancing products like smartphones and solar systems, which are difficult to afford, but we’ve made them affordable and accessible to our customers,” said M-KOPA co-founder and CEO Jesse Moore.

“Our next category in R&D right now is electric motorcycles. We’re very excited about electric mobility and we’re sure that in the next couple of decades, there will be a big switch in ownership where electric motorbikes will scale when there’s financing to go with them,” he said.

South African startups raised $129.1 million, or 20.7% of the total funding. This was led by digital bank TymeBank’s $77.8 million pre-Series C round.

TymeBank’s funding is intended to further operations in South Africa and the Philippines. The company is also planning for future expansion in Southeast Asia.

The company reports a revenue run rate of over $100 million per year. Across two markets, the bank is adding 300,000 new customers per month. It reports a 70%, 30-day account activity rate.

For West Africa, Nigerian startups raised $58.1 million, or 9.3% of the total funding. This was led by logistics startup Sabi’s $38 million Series B funding.

Per Sector

Fintech was the top sector for funding, raising $442 million, or 68.9% of the total funding. This was led by M-Kopa, Sun King, and TymeBank.

Cleantech was the second-highest sector for funding, raising $130 million, or 20.3% of the total funding. This was led by Sun King.

Mobility/logistics was the third-highest sector for funding, raising $39 million, or 6.1% of the total funding. This was led by Sabi.

Ultimately, the uptick in tech funding witnessed in May 2023 holds immense promise for Africa’s socioeconomic development.

This trend of strong tech funding in Africa is expected to continue in the coming months and years. The continent has a large and growing population, a young and entrepreneurial workforce, and a rapidly expanding middle class. These factors make Africa an attractive market for investors, and they are likely to continue to drive investment in the African tech ecosystem.