African Startups Raise $187 Million in May 2024, Marking Significant Rebound

In a notable rebound from the previous month, African startups raised $187 million in funding in May 2024, according to a report by Africa: The Big Deal. This marked a substantial increase from the $75 million raised in April, representing a 149% surge in funding for the continent’s startups.

Second-Highest Fundraising Month in Six Months

The $187 million raised in May made it the second-highest month for fundraising in the past six months. A total of 64 ventures secured at least $100,000 in funding, a significant increase compared to previous months.

Breakdown of Funding

The funding in May was distributed across different financial instruments:

• Grants: 4%
• Equity: 31%
• Debt: 65% ($122 million, including $51 million for M-KOPA and $50 million for Spiro)

Notable Exits

May also saw three notable exits:

1. Lesaka’s Acquisition of Adumo: Lesaka acquired the online payment platform Adumo for $85 million.
2. Busbud’s Acquisition of Ratality: Busbud, a travel booking platform, acquired Ratality in South Africa to integrate revenue management capabilities into its services.
3. Paystack-led Consortium Acquisition of Brass: A much-discussed acquisition that highlights the strategic movements within the fintech sector.

Year-to-Date Funding

Since the beginning of the year, African startups have announced $729 million in funding (excluding exits). While this figure demonstrates robust activity, it still lags behind previous periods.

The significant increase in funding in May reflects growing investor confidence in African startups and underscores the dynamic nature of the continent’s tech ecosystem. This capital influx is expected to fuel further innovation, support business expansion, and contribute to economic growth across Africa.

Part of the report reads,

“As numbers can fluctuate quite heavily on a monthly basis, it is more significant to compare numbers over longer periods, for instance 2024 ‘year to date’ to previous comparable periods (Jan-May, ‘J-M’), to account for seasonality.

“Since the beginning of the year, $729m have been announced in funding (excluding exits), a total still lagging behind previous periods: $1.7b in J-M 2023, $2.7b in I-M 2022 and $1.1b in J-M 2021. However, in terms of number of ventures raising at least $1m, 2024 so far compares rather well to some previous years: 90 vs. 95 in J-M 2023 and 91 in J-M 2021 (2022 was exceptional though with 200 ventures involved in $1m+ deals in Jan-May)”.

While the recent uptick in funding is a positive sign, the African tech startup ecosystem still faces challenges in attracting the levels of investment seen in prior years. Continuous efforts to innovate, attract diverse investment sources, and foster a supportive entrepreneurial environment will be crucial for sustaining growth and closing the investment gap.