African startups face funding chill in 2024 despite underlying growth, Egypt shows signs of promise
African startups raised a significantly lower amount of funding in January 2024 compared to the same period last year, according to data from Africa: The Big Deal. While the headline figures show an 84.8% year-on-year drop from $545.1m to $83m, excluding a single large acquisition in 2023 paints a less dramatic picture with a 16.2% decrease. This suggests that the underlying growth of the African tech ecosystem remains stable despite the global funding slowdown.
The sectors attracting the most investment in January 2024 were agritech ($26.3m), cleantech ($18.1m), and health tech ($13.5m). However, fintech and other sectors saw a decline in funding compared to previous years. This reflects a global trend of investors focusing on established startups with proven track records during uncertain economic times.
Interestingly, three of the four logistics startups that raised funds in January — Bosta, FriendlyM and Roboost — came from North Africa, particularly Egypt. This aligns with the growing success of Egyptian mobility startup Swvl, which achieved profitability in 2023 after years of losses. This suggests that Egypt’s logistics sector could see increased investor interest in the coming year.
Despite the funding slowdown, January 2024 saw new and established investors reaffirm their commitment to the African tech ecosystem. The European Investment Bank (EIB) invested $30 million in Seedstars, focusing on francophone Africa, while the African Development Bank (AfDB) provided an additional $10.5 million. Additionally, prominent figures like Iyin Aboyeji and Mia von Koschitzky-Kimani launched Accelerate Africa, a Nigerian accelerator supporting early-stage startups.
Egypt also saw the launch of T-vencubator, a hybrid VC firm and incubator aiming to invest in promising Egyptian talent. This unique model could provide valuable support for early-stage startups in the country.
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African startups face a funding challenge in 2024 as funding levels dropped significantly compared to the previous year, although underlying growth in the continent’s tech ecosystem remains stable. Data from Africa: The Big Deal reveals that startup funding in January 2024 decreased by 84.8% year-on-year, from $545.1 million to $83 million. However, excluding a single large acquisition in 2023, the decrease amounted to 16.2%, indicating a more moderate decline. Despite the global funding slowdown, Africa’s tech industry continues to show resilience.
The funding landscape in January 2024 witnessed a shift in investment focus, with agritech, cleantech, and health tech emerging as the sectors attracting the most funding. Agritech secured $26.3 million, cleantech received $18.1 million, and health tech obtained $13.5 million. Conversely, fintech and other sectors experienced a decline in funding compared to previous years. This trend mirrors a global pattern where investors seek to support established startups with proven track records during uncertain economic times.
Egypt showcased promising signs as the home of three out of four logistics startups that successfully raised funds in January 2024. Startups such as Bosta, FriendlyM, and Roboost demonstrated North Africa’s growing prominence. This aligns with the success of Egyptian mobility startup Swvl, which achieved profitability in 2023 after enduring years of losses. The strong performance of these logistics startups suggests that Egypt’s logistics sector may attract increased investor interest in the coming year.
Despite the funding challenges, both new and established investors demonstrated their commitment to African startups in January 2024. The European Investment Bank (EIB) invested $30 million in Seedstars, with a particular focus on supporting francophone Africa. Additionally, the African Development Bank (AfDB) provided an additional $10.5 million. This infusion of capital highlights the faith that investors continue to place in African tech ventures, despite the funding slowdown.
In a show of support for early-stage startups, prominent figures Iyin Aboyeji and Mia von Koschitzky-Kimani launched Accelerate Africa, a Nigerian accelerator program. This initiative aims to nurture and promote the growth of promising startups. Furthermore, Egypt witnessed the launch of T-vencubator, a hybrid VC firm and incubator. This unique model seeks to invest in Egyptian talent, offering valuable support to early-stage startups in the country.
While funding levels for African startups experienced a decline in January 2024, the underlying growth of the continent’s tech ecosystem remains steadfast. With sectors such as agritech, cleantech, and health tech attracting substantial investments, African startups continue to demonstrate their potential. The commitment from both new and established investors, alongside the rise of promising startups in Egypt, indicate a positive outlook for the future of African entrepreneurship.
