Kenya emerged as the undisputed champion in the first half of 2024 among African startups, attracting the most funding of a remarkable $244 million, while overall investment dipped significantly compared to the previous year.

Kenya Takes the Crown

Dominating the scene is Kenya, attracting a substantial 32% of the total $780 million raised across Africa. This remarkable achievement can partly be attributed to the impressive $51 million secured by M-KOPA, a clean energy company.

Nigeria followed closely behind with $172 million, while Egypt and South Africa secured the third and fourth spots, respectively. Interestingly, despite their dominance collectively attracting 79% of the funding, the “Big Four’s” grip has loosened slightly compared to H1 2023, when they held a staggering 92%.

A Funding Downturn

Despite Kenya’s success story, the overall funding landscape paints a different picture. There’s a significant 57% decline in total funding compared to the first half of 2023. This highlights the ongoing challenges within the venture capital environment, prompting questions about the future of startup investment in Africa.

Kenyan Entrepreneur’s Guide to Funding and Support Programmes

Equity vs. Debt: A Shifting Landscape

Interestingly, the funding composition has shifted. Equity investments made up two-thirds of the total funding, with debt financing accounting for the remaining third.

This marks a significant increase in debt financing compared to the historical average of 17% since 2019. Why this shift occurred remains to be seen, but it’s a noteworthy trend.

Sector Spotlight: Transport and Logistics Takes the Lead

When it comes to sectors attracting the most funding, Transport & Logistics emerged victorious, capturing a significant 28% of the total invested capital.

Major deals involving companies like Moove and Spiro fueled this surge. Fintech, although second in terms of total funding raised, maintained its leadership role in the number of startups securing significant investments (over $1 million).

Beyond the Numbers: A Look at Trends

Female-Founded Startups: Still Struggling for Equality

Despite the growing emphasis on diversity and inclusion, only 15% of the funding reached ventures with female leadership. This highlights the need for initiatives and support structures to empower female entrepreneurs in Africa.

Consolidation Within the Ecosystem

Signs of consolidation are emerging within the startup ecosystem. Acquisitions like Rivia (a Ghanaian health tech company) acquiring Waffle (a SaaS provider) and BuuPass (a Kenyan transport tech company) acquiring QuickBus to expand regionally suggest a growing focus on market dominance and regional expansion.

Series B Funding Rounds: Gaining Traction

Series B funding rounds, which provide capital for growth-stage startups, seem to be picking up momentum. Two noteworthy deals occurred in April 2024 alone: SunCulture (a Kenyan company providing solar irrigation systems) and Pula (a Kenyan insurtech company). This trend indicates growing investor confidence in the scalability of African startups.

Exploring the Diverse Fintech Ecosystems of Kenya and South Africa

While Kenya’s success and sectoral growth in Transport & Logistics offer promising signs, the overall funding decline paints a cautious picture.

The increased use of debt financing is another factor to consider. Moving forward, it will be crucial to monitor these trends and see how they impact the African startup landscape in the coming months and years.