Venture capital funding for African startups has surpassed the $1 billion mark in 2024, as reported by Africa the Big Deal, a leading startup funding analytics company. This milestone was reached sooner than anticipated, although it still lags behind the pace of previous years, when the same benchmark was achieved in May 2023 and as early as February in 2022.
The achievement was driven by two significant investments in July. Kenyan clean energy company, d.light, secured a substantial $176 million securitisation facility. This facility, supported by social impact-focused asset management firm African Frontier Capital, is multi-currency and aims to provide reliable, renewable energy to an estimated six million people across Kenya, Uganda, and Tanzania over the next three years.
The second major investment was MNT-Halan’s $157.5 million funding round. This round included $40 million from the International Finance Corporation (IFC), with additional contributions from Development Partners International (DPI), Lorax Capital Partners, funds managed by Apis Partners LLP, Lunate, and GB Corp. The new capital is expected to support the Egyptian unicorn’s upcoming geographical expansion.
“We can now confidently say that the $1 billion in start-up investments for 2024 has been reached! The ecosystem closed H1 2024 with just under $800 million raised (excluding exits), and it was only a matter of time until it crossed the $1 billion mark. Things happened a little faster than expected though thanks to two mega deals announced since the middle of the month,” the Africa the Big Deal report stated.
July 2024 is poised to be the highest funding month of the year, thanks to the significant investments in d.light and MNT-Halan. Combined with the $40 million Series A from international money transfer app Nala earlier in the month, and several smaller deals, the month is expected to close near the $400 million mark. This figure surpasses the total raised in the entire second quarter of 2024, making July 2024 the most successful month for fundraising in Africa in over a year.
This milestone comes amid a challenging funding environment, with venture capital investments in Africa significantly reduced since the end of 2022. The funding downturn worsened throughout 2023 and into 2024, with African tech startups raising only $780 million in the first half of 2024.
The total funding for H1 2024 represents a 31% decline from the second half of 2023, and an even steeper 57% drop compared to the first half of 2023. Indeed, the funding for African tech startups between January and June 2024 is the lowest since the second half of 2020, highlighting the ongoing decline in investment into the continent. Despite this context, the recent numbers suggest that better days may lie ahead.
“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 report concluded.
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