The African tech startup funding space witnessed an impressive run in May 2024 as the continent was able to attract $187 million in fresh funding. This was disclosed in a report by the African startup funding analytics platform, Africa the Big Deal. The impressive run was powered by the $51 million raised by Kenya-based financial technology company, M-KOPA, and the $50 million raised by electric vehicle manufacturing company, Spiro.
The sum raised in May represents a nearly 150 per cent increase from the $75 million attracted to the continent in April 2024. The impressive raise also makes May the second-highest fundraising month in the last six months, marking what many in the space would hope to be an awakening from the funding slump that has since slowed down the space in the continent.
“With $187m of fresh funding announced by start-ups in Africa, May 2024 marked a serious rebound compared to what was – let’s say it – a pretty bad month of April ($75m), making it the second-highest month in terms of fundraising in the past 6-month period,” the report states.
The total funding was raised by 64 startups that received at least $100,000. This was an impressively high number compared to the previous monthly average of 38 startups between January and April. It is important, however, to note that 40 of the overall number were startups that received $100,000 in grants during the month. These include 12 startups that obtained grants from CcHUB and 12 from iHub as part of the Mastercard Foundation EdTech Fellowship.
17 startups raised at least $1 million. Of the total funding announced in May, 4 per cent ($7.5 million) came in the form of grants, 31 per cent ($58 million) was attracted in equity funding, while 65 per cent ($121.5 million) came in the form of debt financing. This includes both the $51 million and $50 million raised by both M-KOPA and Spiro respectively.
In addition, the month of May 2024 also witnessed 3 exits. South African financial technology company, Lesaka acquired Adumo for $85 million. Ground-level booking platform, Busbud acquired South Africa’s Ratality for an undisclosed sum, and the much-discussed takeover of Brass by a consortium comprising Paystack, Future Africa, Piggyvest, and others.
African tech startup funding still struggling despite improvement
Despite the resurgence in funding recorded in May, the African tech startup funding space is still suffering from a paucity of investment inflow.
In 2024 so far, the continent has attracted $729 million between January and May. This is a huge decline compared to the $1.1 billion recorded within the same time frame in 2021, $2.7 billion in 2022, and $1.7 billion recorded in the same time limit in 2023.
But despite this slump, it is encouraging to know that the funding in 2024 has been as equally distributed as in previous years, indicating that the right amount of startups are still getting much-needed funding even though the funding they have been getting has been reduced.
The number of startups that have raised at least $1 million in 2024 is 90 and this so far compares rather well to some previous years: 95 startups raised more than $1 million between January and May 2023, 91 in the same time frame in 2021, while 2022 attracted an exceptionally higher number with 200 startups raising $1 million in the same time frame.
It is also noteworthy that climate tech startup funding has continued to record impressive growth, attracting 44 per cent of the total funding between January and May 2024. This is impressive considering that it attracted 19 per cent of funding raised by startups on the continent between January and May 2021. This percentile grew to 23 per cent in 2022, and 32 per cent in 2023.
See also: Global fintech funding declined by 16% in Q1 2024, its lowest quarterly slump in 7 years
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