By Seth Onyango
African startups hauled in an impressive US$187 million in a May surprise funding surge, marking a significant rebound from previous lacklustre months.
It represents a remarkable 149% jump compared to the $75 million raised in April, according to new figures from data insight firm, Africa: The Big Deal.
May’s funding boost saw 64 ventures receiving at least $100k, a substantial increase compared to the monthly average of 38 ventures between January and April.
Tellingly, 17 of these ventures raised at least US$1 million. However, the overall figure was somewhat inflated by the announcement of 40 grants of around US$100k, including 12 from CcHUB and 12 from iHub as part of the Mastercard Foundation EdTech Fellowship.
The total funding announced in May was divided into 4% in grants, 31% in equity, and a significant 65% in debt, amounting to US$122 million.
Significant debt financing included US$51 million for M-KOPA and $50 million for Spiro.
Additionally, May saw three major exits: Lesaka’s acquisition of Adumo for US$85 million, Busbud’s acquisition of Ratality in South Africa, and the much-discussed takeover of Brass by Paystack & friends.
According to Africa: The Big Deal, “With $187m of fresh funding announced by start-ups in Africa, May 2024 marked a serious rebound compared to what was – let’s say it – a pretty bad month of April ($75m), making it the second-highest month in terms of fundraising in the past 6-month period.”
Comparing longer-term trends, the total announced funding for 2024, excluding exits, stands at US$729 million.
This figure, although impressive, lags previous years: US$1.7 billion in January-May 2023, US$2.7 billion in the same period in 2022, and US$1.1 billion in 2021.
Despite this, the number of ventures raising at least US$1 million in 2024 remains robust, with 90 such ventures so far, closely matching 95 in January-May 2023 and 91 in the same period in 2021.
The analysis also highlights a significant shift towards climate-related ventures, which received an increasing share of funding.
From 19% in January to May 2021, this share has grown to 44% in 2024, reflecting a rising investor interest in sustainable and environmentally focused projects across the continent.
This trend could further position Africa as a key player in the global green economy, with startups at the forefront of addressing pressing environmental challenges.
The weight of debt financing is also notable, representing 35% of all funding announced in January-May 2024.
This is consistent with the 38% in the same period in 2023 and is a significant increase compared to the 4%-8% range seen from 2019 to 2022.
Africa’s startup and venture capital scene continues to demonstrate its resilience and ability to absorb geopolitical punches while bucking global trends.
Despite global economic uncertainties and regional challenges, African startups have shown a remarkable capacity to attract significant investment.
This trend is particularly evident in the success stories of M-KOPA and Spiro, which secured substantial debt financing to propel their operations.
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African startups achieved a notable milestone in May, raising a total of US$187 million, representing a 149% increase from April's US$75 million, as reported by Africa: The Big Deal. The funding surge saw 64 ventures securing at least $100k, with 17 of these attracting over US$1 million each. Notably, 40 of the $100k grants, including from CcHUB and iHub, were supported by the Mastercard Foundation EdTech Fellowship. The funding distribution in May was 4% in grants, 31% in equity, and 65% in debt, amounting to US$122 million, led by significant debt financings for M-KOPA and Spiro at US$51 million and US$50 million, respectively.
Furthermore, May witnessed three major exits: Lesaka acquiring Adumo for US$85 million, Busbud purchasing Ratality in South Africa, and Paystack & friends taking over Brass. Despite May's strong performance, the total announced funding for 2024 stands at US$729 million, lagging behind the previous years' figures. The number of ventures raising at least US$1 million remains steady with 90 ventures, nearly matching the previous years' numbers.
There has been a significant increase in climate-related ventures, with their funding share growing from 19% in early 2021 to 44% in 2024, indicating a rising investor interest in sustainable and environmentally focused projects in Africa. Debt financing has also become more prominent, making up 35% of all funding in the first five months of 2024, aligning with the 38% in the same period in 2023, and significantly higher than the 4%-8% range from 2019 to 2022.
This data highlights the resilience and adaptability of African startups in attracting substantial investments despite global economic uncertainties and regional challenges, showcased by the success stories of companies like M-KOPA and Spiro.
