Africa Tech VC Funding Plummets by 51% YoY in Q1 2024
Venture Capital funding in the African tech start-up ecosystem has continued to experience a significant decline, after a recent report by BD funding tracker, disclosed that VC funding in Africa faced a significant setback in the first quarter (Q1) of 2024, with a staggering 51% year-over-year decline.
The steady decline has been driven partly by rising interest rates and global geopolitical tensions which have impacted investor confidence and has further slowed down startup funding.
In the first quarter (Q1) of 2024, startups on the continent raised a total of $369 million across 64 publicly announced deals. Equity funding, traditionally dominant, accounted for 67% of deals, with debt funding closing up 14.90% and undisclosed mixed deals.
The mobility sector led Q1 2024 funding, with only six deals but a dominant 31.17% share. Nigerian startup Moove was instrumental, in securing $110 million, making up 30% of total Q1 funding for African startups through both equity and debt deals.
Other sectors secured modest shares in Q1 2024 funding. Cleantech accounted for 13% with eight deals, health tech followed with 10.89% across seven deals, and fintech clinched 7.78% through 11 deals.
Nigeria, South Africa, Egypt, and Kenya, known as Africa’s “big four” markets, maintained their funding dominance, securing 91.22% of total regional funding in Q1 2024.
According to the report, based on the number of deals, early-stage funding dominated Q1 2024, with accelerators, pre-seed, and seed rounds accounting for 27 deals worth a combined $38.5 million.
This focus on early-stage ventures contrasts sharply with the later stages -pre-Series A, Series A, and Series B, where just sight rounds secured $144.2 million.
It is worth noting that the decline in funding in the African tech and startup ecosystem, has negatively impacted the valuations of several companies, prompting some of them to pursue consolidation and downsize their workforce.
Recall that in 2023 about 15 African startups closed shop with a significant number of them shutting down due to inability to secure a growth funding round.
With the first quarter of 2024 already ended, several startups in Nigeria have recruited their capital and have shut down. Earlier this year, Cova, a Nigerian health tech startup founded with the vision of providing a single source of truth for asset management, shutdown operations having faced hurdles in scaling its operations.
Also, Thepeer, a Nigeria-based API startup that embarked on a mission to revolutionize digital payments for businesses shut down and returned capital to investors.
