Africa Represented Less Than 1% of Global Startup Funding in Q1 2024
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In a recent report by research firm Africa: The Big Deal, startup funding in Africa remains a marginal fraction of global investment flows and experienced a more pronounced decline compared to most other regions in the first quarter (Q1) of 2024.
Africa represented less than 1% (~ 0.5%) of all the funding raised globally in Q1 2024, in line with previous quarters. When compared to the U.S, Start-ups in Africa attracted 100 times less funding.
In terms of Quarter-on-Quarter (QoQ) evolution, start-up funding in Africa contracted slightly, recorded (-9%) while it grew in the two top regions (+33% in the US and +8% in Europe) and therefore globally (+11%). Meanwhile, Africa still performed better than Asia (-20%) and LatAm in particular (-38%).
In terms of Year-on-Year (YoY) evolution, Africa is by far the continent that performed most poorly, with Q1 2024 funding representing just over half of Q1 2023 funding (-47%). However, globally and across all regions except Europe (+3%), double-digit decrease was also the norm.
It is worth noting that after bucking global trends in a record-breaking 2022, African startups saw a some forms of reset in 2023, as the global capital shortage began to bite. The number of funded ventures, and the total funding raised, declined for the first time since 2016, though not as dramatically as many had feared.
For the coming quarters, with global inflation and interest rates still at record highs, there are expectations of similar declines in African startup funding versus the previous year’s equivalent quarter.
African startups have been urged to focus on generating revenue and strengthening financial management amidst the decline in VC funding. Meanwhile, in response to the funding crunch, several startups have implemented several strategic measures to keep their 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.
