African startups witnessed a huge funding slump in August 2024 as startups on the continent were only able to raise $56 million in the month. This was according to the report by African startup funding analytics company, Africa the Big Deal. August’s funding represents the second-slowest month since startup funding recording began in 2020, after June 2024 when they raised $42 million.
The $56 million raised in August is a big decline from July 2024 when African startups raised $443 million, representing a humongous 87 per cent decline. Compared to the same period last year (August 2023) when startups on the continent raised $234 million, this month’s funding represents a 76 per cent decline.
“When we covered the really good performance of the ecosystem in July last month, we knew there was a risk that it might not keep up in August. And in fact, things have been much slower last month: start-ups in Africa announced only $56m in funding, down from $443m in July (~8x less) and $234m in August 2023 (~4x less), making August 2024 the second-slowest month in four years in terms of funding raised, after June 2024 ($42m),” the report noted.
The report also noted that the majority of funding in August 2024 was raised as equity with 87 per cent of the total funding coming in the form of equity. Of the rest, 9 per cent was raised as debt while 4 per cent was raised in the form of grants.
A total of 27 start-ups announced that they had raised funding in August 2024. This is well below the monthly average of 40 that has been recorded over the past twelve months. The three largest deals recorded include Ghanaian fintech, Fido, which raised $10 million backed by Dutch DFI FMO as part of its Series B round.
South African green energy startup, Solarise Africa announced a $9 million raise while YC-backed Nigerian fintech Waza, which was just coming out of stealth mode announced $8 million in funding comprising $3 million in seed funding and $5 million in debt financing. No exits were recorded in the month.
African startups recorded funding improvement in 2024
The story has not been totally gloomy in 2024 because looking on the bright side, despite the slowdown of funding last month, the report noted that the ecosystem’s performance was so good in July that the funding raised in the third quarter is already higher than in the first and second quarters with one month still to go.
Indeed, venture capital funding into African startups in 2024 crossed the $1 billion mark in early July, way earlier than expected.
“While the pace of investments has not yet fully picked up compared to the past three years (the $1 billion mark was reached in May in 2021, in April in 2023 and as early as February in 2022), this news is encouraging as it shows that 2024 might in the end deliver stronger results than 2019 and 2020 it is often benchmarked against (and when the $1 billion mark was only reached in November). In fact, start-ups in Africa have already raised more funding (in 2024) than they had in 2020,” the Africa the Big Deal July report stated.
This development is coming amid a funding winter that has seen a great reduction in venture capital investments in the continent since the end of 2022. The crunching winter continued to bite harder, progressively getting worse all through 2023 and into 2024. African tech startups were able to raise only $780 million in the first half of 2024.
The total H1 2024 funding represents a 31 per cent decline from the total funding attracted in the second half of 2023. But it looks even worse if compared with the total funding numbers from the first half of 2023, representing an even steeper 57 per cent decline.
See also: African startup funding finally crosses $1 billion in 2024, 2 months later than 2023
The post African startups raised $56 million in August 2024, the second-slowest month in 4 years first appeared on Technext.
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