Despite 2 new unicorns, venture funding into Africa declined by 25% in 2024

Venture funding into Africa witnessed a boom at the tail end of 2024, powered by Moniepoint and Tyme Bank’s mega deals. Despite this, venture funding into the continent during the year fell short of the previous years as startups only raised $2.2 billion. This is according to a report by African venture funding analytics company, Africa the Big Deal.

This represents a 25 per cent drop from the $2.9 billion total raised in 2023. The total sum is also dwarfed by the $4.6 billion raised in 2022 and the $4.3 billion raised in 2021- representing 52.2 per cent and 48.8 per cent declines respectively.

The sum accounts for equity funding, debts and grants but excludes exits. It covered 188 African startups that raised $1 million or above during the year. This is 10 per cent less than the 209 startups that raised $2.9 billion in 2023 and 47 per cent less than the 353 startups that attracted $1 million or above in venture funding in 2022.

2024, however, towers above the previous year in terms of exits as 22 startups announced exits in 2024. This is more than the 20 announced in 2023.

Slow start, drop in debt financing responsible for funding decline

The $2.2 billion venture funding raised in 2024 fell just short of the $2.9 billion raised in 2023, a situation attributable to the slow start recorded at the beginning of the year.

For emphasis, only $800 million, representing 36.3 per cent of the total, was raised in the first half of 2024, making it the slowest half since the turn of the decade.

This means $1.4 billion, representing 63.7 per cent of the total $2.2 billion raised in 2024 was raised in the second half of the year. This represents a 25 per cent year-over-year growth compared to the second half of 2023, a 75 per cent growth compared to the $800 million raised in the first half, making H2, 2024 the second-best half since the start of the funding winter back in mid-2022.

“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 $800m raised in H1, the slowest semester since 2020. However, there was a serious rebound in the later part of the year as $1.4b was raised in H2 alone (+25% YoY and +80% compared to H1), which made it the second-best semester since the beginning of the ‘funding winter’ in mid-2022,” the report reads.

The boom recorded in the second half of 2024 was powered majorly by the two unicorn-making deals of Moniepoint and Tyme Bank.

In October, Moniepoint, regarded as Africa’s fastest-growing financial institution, successfully raised $110 million in a series C equity financing round. The investment also meant that the fintech soared beyond its previous $400 million valuation attained when it raised $50 million, shooting it to unicorn status.

The funding round was led by Development Partners International’s African Development Partners (ADP) III fund – a premier fund focused on Africa. The round was further supported by preexisting investors like QED Investors, Novastar Ventures, Lightrock, British International Investment, Global Ventures, Endeavour Catalyst, and New Voices Fund.

The round also welcomed new investors including Google’s Africa Investment Fund and Verod Capital – a leading African private equity firm.

In December, Tyme Bank became Africa’s 10^th unicorn when it raised $250 million in a Series D funding round. The digital bank controlled by South African billionaire, Patrice Motsepe, saw its valuation rise to $1.5 billion following the capital raise which includes a $150 million investment from Latin America’s most valuable financial company, Nu Holding.

Another reason for the decline in venture funding is attributable to a decline in debt financing. In 2024, only 30 per cent of the total venture funding is debt financing. While it is not such a significant drop, it is, however, an impressive development as it indicates the return of investor confidence in the African startup space.