African Tech Startup Funding Sees A Decline of Over 45% in Q1 of 2024
In a recent report funding for African startups in the first quarter (Q1) of 2024, plummeted by more than 45%, amounting to $466 million.
Despite the funding downturn, logistics startups led the pack, securing $151 million in investments. Notably, fintech, which although experienced a decrease, retained its status as the sector with the most funding deals.
In response to funding constraints, several startups implemented several strategic measures to keep the business afloat. Apart from the downsizing of the workforce, reports reveal that some of these measures implemented varied from business model shifts to exploring asset-light approaches.
Notably, there were no surprises around funding destinations, with the usual region known as the “Big Four”, Nigeria, Egypt, South Africa, and Kenya, taking home 82% of the funding.
Although funding remains low, there has been steady month-on-month growth. With $70.7 million raised in January, there was a slight dip to $67.8 million in February, with the numbers rising again in March to $190 million.
Despite challenges, success stories emerge, with mobility achieving profitability for the first time. These milestones are credited to diligent cost-cutting measures, divestments, and a sharp strategic focus.
It is worth noting that much of the funding activity in Q1 occurred at the later stages, although undisclosed funding rounds accounted for the majority of the funding ($140.5 million) in this period.
With the funding drought that has impacted several startups across Africa, forcing some to take the hard route of shutting down, more funding is crucial at this point to reduce the effect of the funding decline, and to ensure more startups stay afloat.
