Kenya leads Africa as 2024 start-up funding dips

Kenya took a third of the investment poured into African start-ups in the first half of 2024, new data shows, even though overall venture funding towards the continent has dipped.

Records from the funding database Africa: The Big Deal show that African start-ups have raised $780 million (Ksh.100 billion), excluding exits.

Seventy-nine per cent of this funding went to ventures based in Africa’s ‘Big Four’, where Kenya’s start-up ecosystem is classified alongside Nigeria, Egypt and South Africa.

Kenyan ventures have so far received $244 million (Ksh.31 billion), which is 32 per cent of the continent’s total, followed by Nigeria ($172 million), Egypt ($101 million) and South Africa ($85 million).

Among the top-funded start-ups in the first half of 2024 were Nigerian logistics start-up Moove and Kenya’s M-Kopa, which provides affordable financing for smartphones, electric motorbikes and digital financial services.

The data indicates that between January and June 2024, M-Kopa got a $51 million loan from the United States International Development Finance Corporation (DFC).

Others are the Benin headquartered e-mobility start-up Spiro, which has operations in Kenya and got a $50 million loan from the African Export-Import Bank (Afreximbank).

But the numbers also show a slow year for African start-ups. The $780 million investment is a 31 per cent drop compared to the second semester of 2023.

It also represents a 57 per cent decline compared to the funding African start-ups secured in the first half of 2023.

“H1 has been the quietest semester in terms of start-up funding in Africa since late 2020,” the report says.

Sixty-six per cent of this funding ($513 million) was in the form of equity while 33 per cent ($254 million) was debt.

Sector-wise, transport and logistics attracted the most funding followed by fintech then start-ups in energy and water.

“Only a fraction of the funding continued to go to female-founded and female-led start-ups with 85 per cent of the funding going to ventures without a single female founder and 92 per cent to companies with a male CEO,” says the report.

At the close of 2023, Kenyan start-ups accounted for the majority of investment poured into African ventures that year with just under $800 million, which was 28 per cent of the continent’s total.

African start-ups had until late 2022 enjoyed a boom in funding from venture capital firms, with financial technology (fintech) firms accounting for most of the investment secured.

But from 2023, there was a decreased activity called ‘funding winter’ attributed to rising inflation, weakening currency, and unfavourable interest rates which led foreign investors to shift capital from emerging and frontier economies.

The $800 million funding Kenyan ventures got last year, for instance, was a 25 per cent year-on-year decline.