The African start-up ecosystem has shown growth and resilience in the month of May, recording a significant increase in funding as compared to April, a report by Africa: The Big Deal, a tech research firm, reveals.
Since the start of 2024, the report says, African start-ups have managed to raise Sh94.04 billion ($729 million) in total, which is a sharp drop compared to previous periods such as Sh219.30 billion ($1.7 billion) in the first five months of 2023, Sh348.30 billion ($2.7 billion) in 2022 and Sh141.90 billion ($1.1 billion).
African start-ups also recorded an increase in total funding from Sh9.68 billion ($75 million) in April to Sh24.12 billion ($187 million) in May at the back of a slow start in terms of funding raised in the first five months of the year since 2020.
The total number of start-ups that raised at least Sh12.9 million ($100,000) in funding increased from 38 in April to 64 in May, with 17 out of the 64 being able to raise at least Sh129 million ($1 million).
Total funding was split between 4% in grants, 31% in equity, and 65% in debt as notable deals going to various players such as M-KOPA which raised Sh6.58 billion ($51 million) and electric vehicle manufacturer Spiro, Sh6.45 billion ($50 million).
The report adds that the share of funding going to climate-related ventures also recorded an increased from 19% in the first five months of 2021, to 23% in 2022, 32% in 2023, and so far in 2024, it has risen to 44%.
Despite the low record in total funding, the number of African start-ups that were able to raise at least $1 million in the first five months of 2024 (90) were able to keep up with previous years, 91 in 2021 and 95 in 2023.
Overall, the increase in funding seen in May signals a positive trajectory for African start-ups, with investors showing a renewed interest in supporting innovative ventures on the continent. As the ecosystem continues to evolve and grow, it is evident that African start-ups are poised for further success and impact in the global market.
