After a prolonged slump, funding activity in Africa’s tech ecosystem gained momentum late in 2024 with the minting of two new “unicorns.” The upturn offers hope for 2025’s full-year startup scene.
By Conrad Onyango
Africa’s startup ecosystem is set for a comeback in 2025, driven by positive funding prospects in the last half of 2024, headlined by stabilising equity levels, the emergence of new unicorns and an expanding digital economy.
According to the latest update by Africa: The Big Deal, capital flows into Africa’s startups have experienced something of a rebound, with most of that recorded in the second half of 2024 after a slow start of the year.
Although there was a 25% decrease in overall startup funding for 2024 (US$2.2 billion compared to 2023’s US$2.9 billion), there is optimism as founders begin to shift away from a heavy reliance on the debt funding seen in 2023.
“A reason to remain positive is that the YoY decline in funding is mostly attributable to a decline in debt funding. You may remember we’d dubbed 2023 ‘The Year of the Debt’, and while the share of debt in the overall funding announced remained high in 2024 (30%), it was not as high as it was in 2023 (38%),” the Big Deal update explained.
Africa: The Big Deal data shows that while debt contracted by 40% year-over-year, the total equity raised in 2024 (US$1.5 billion) was only 11% below the US$1.7 billion recorded in 2023.
“It is quite encouraging to see equity levels stabilising after taking the hardest hit in 2023 (-57% YoY),” said Africa: The Big Deal analysis.
In the second half of 2024, African startups began to secure significant funding, raising a total of US$ 1.4 billion. This represents 25% year-on-year growth and marks the second-best semester since the onset of the “funding winter” in mid-2022. This amount is almost double the US$ 800 million raised in the first half of 2024.
“The numbers were driven in part—but absolutely not in full—by the two mega deals of Moniepoint and Tyme Group in Q4, minting two new unicorns back-to-back, the first such events since early 2023,” according to the update.
In late October 2024, fintech company Moniepoint successfully closed a Series C funding round, raising US$110 million that catapulted it to unicorn status—a private company with a valuation of US$1 billion or more. Two years prior, the company was valued at just over US $800 million.
In mid-December 2024, Tyme Group, a South African fintech, secured US$250 million in a Series D funding round, increasing its valuation to US$1.5 billion.
Only MNT-Halan had achieved unicorn status earlier in 2023—three years after five start-ups reached this milestone at the end of 2021.
Analysts from Africa: The Big Deal noted that the stories of Moniepoint and Tyme highlight the significant impact that large funding rounds can have on startup funding dynamics.
“These two back-to-back announcements somehow cocked a snoot at those arguing the start-up ecosystem on the continent was moribund,” said the analysts.
Africa’s nine unicorns have raised US$3.9b in funding since 2019, almost a quarter (23%) of all the funding raised on the continent in the past six years.
Out of over 2,000 startups, The Big Deal data shows a total of 28 startups, including all the unicorns—that have raised at least US$100m since 2019—have collectively raised US$7.8billion—almost half (47%) of the total invested.
African Federation of Business Angels Networks (AFBAN), Secretary General Fady Ismaeel also shares similar sentiment on positive prospects for ecosystems, affirming it’s time for angel investors to capitalise on opportunities by tapping into key sectors that will drive growth of the ecosystem.
“Africa’s startup ecosystem is expected to flourish, driven by innovation, demographic trends, and the continent’s growing digital economy,” said Ismaeel on a LinkedIn post.
In his projections, he cites innovation across fintech, health tech, agritech, renewable energy, and e-commerce as key growth drivers.
“Angel investors seeking opportunities in this vibrant market should consider key sectors poised for substantial growth while navigating the unique challenges of the African business environment,” he said.
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African tech startups are poised for a resurgence in 2025, bolstered by improved funding activity in late 2024. The continent experienced a comeback in startup funding, particularly in the second half of 2024, with US$1.4 billion raised during this period, marking a significant increase from the first half's US$800 million and a 25% year-over-year growth. Despite a 25% overall decrease in 2024 funding compared to 2023, optimism arises from the stabilization of equity levels and a reduction in dependency on debt funding.
Two notable funding events in Q4 2024 contributed to this optimism: Nigeria-based fintech Moniepoint's US$110 million Series C round and Tyme Group's US$250 million Series D round, both achieving unicorn status. These large funding rounds have highlighted a positive shift in the funding dynamics within the African startup ecosystem.
Since 2019, Africa's nine unicorns have collectively raised US$3.9 billion, representing nearly a quarter of the continent's total funding in the last six years. The African Federation of Business Angels Networks (AFBAN) foresees further growth, driven by innovation in sectors such as fintech, health tech, agritech, renewable energy, and e-commerce. Angel investors are encouraged to explore these sectors while considering the unique challenges within the African business environment.
