A recent analysis by Africa: The Big Deal, a leading insights organization concentrating on African tech startups, shows tremendous growth in the continent’s entrepreneurial environment.
According to the research, African IT entrepreneurs raised an impressive $466 million in the first quarter of 2024.
While this figure demonstrates significant financial activity, it represents a 47% decline from the almost $900 million raised during the same period in 2023.
Despite a decrease in total funding, African IT firms received more than $1 million in Q1 2024 compared to the same period the previous year.
The analysis delves deeper into the financial scene, indicating that 121 African digital startups collectively received the aforementioned funding.
These firms received financing ranging from $100,000 to more.
Equity capital dominated the financing scene, accounting for the vast majority of $332 million, or 71% of total funding.
However, this marks a 9% quarter-on-quarter reduction and a huge 47% decline from the prior year.Debt finance accounted for $132 million, or 28% of total capital. This represents a 44% quarterly fall and a 46% year-on-year decrease.
Moove, a Nigerian mobility firm, emerged as the fundraising leader, securing 24% of total capital for African tech startups in Q1 2024.
Uber led the $100 million equity funding round, while Stride Ventures led the $10 million loan financing.
This funding round, which brings Moove closer to unicorn status with a $750 million value, was supported by renowned investors such as the sovereign wealth fund Mubadala, The Latest Ventures, AfricInvest, Palm Drive Capital, Triatlum Advisors, and Future Africa.
Following Moove’s lead, Kenyan transport and logistics firm Roam raised $24 million in fundraising, including $14 million in equity and $10 million in loan financing.
Furthermore, Kenyan health technology business HewaTele received $20 million in investment, split equally between equity and debt.
Geographically, Nigerian companies dominated the funding landscape, raising $160 million, accounting for an amazing 35% of overall funding.
Kenya followed suit with $108 million, or 24% of the total, while South Africa and Egypt received $72 million (16%) and $53 million (12%), respectively.
The “Big Four” African digital startup ecosystems accounted for 87% of total funding.
Other African countries also made significant contributions, with Uganda receiving $16 million, Ghana $10 million, Tanzania $9 million, and Morocco $7 million in assistance.
The transportation and logistics sector emerged as the most profitable, attracting 32% of total capital, closely followed by fintech at 23%.
Meanwhile, the agritech, food, and energy sectors each received 11% of overall financing.
Surprisingly, health tech received the least, accounting for only 10% of the total.
Despite attempts to encourage gender diversity, male-led software startups remained to dominate the funding scene, with 99% of investments going to startups with at least one male founder.
Startups with at least one female founder received only 15% of total funding, underlining the continued hurdles to attaining gender equality in the tech startup sector.
