According to a recent report by research firm Africa: The Big Deal, Africa accounted for less than 1% (-0.5%) of global startup funding in the first quarter (Q1) of 2024.
The continent’s startup funding remains a marginal fraction of global investment flows and experienced a more pronounced decline compared to most other regions in the first quarter (Q1) of 2024.
In terms of Quarter-on-Quarter (QoQ) evolution, start-up funding in Africa contracted slightly, recording-9%) while it grew in the two top regions (+33% in the US and +8% inEurope) and therefore globally (+11%). Meanwhile, Africa still performed better than Asia (-20%) and LatAm in particular (-38%).
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
On the Year-on-Year report, Africa performed poorly than other continents, with Q1 2024 funding representing just over half of Q1 2023 funding (-47%). However, globally and across all regions except Europe (+3%), double-digit decrease was also the norm.
Check Out The Total Amount of funding startups raised in Each Region of Q1 2024
The total funding raised by startups globally in Q1 of 2024 reached $58.4%, representing a +11% Quarter-on-Quarter (QoQ) growth.
US:
Startups in this region raised a total sum of $34.2 billion, with a +33% Quarter-on-Quarter growth. Meanwhile it experienced a -21% decline in Year-on-Year (YoY) evolution.
Europe:
Startups in this region raised a total sum of $12.2 billion, with +8% Quarter-on-Quarter (QoQ) growth. It recorded a positive +3% year-on-year (YoY) growth.
Asia:
Startups in this region raised a total sum of $10.2 billion. However it recorded declines in QoQ and YoY, with -20% and -17% respectively.
LatAm:
Startups in this region raised a total sum of $0.5 billion, with -38% recorded on Quarter-on-Quarter growth, with -29% recorded on Year on Year.
Africa:
Startups in the African region performed poorly, raising $0.3 billion in funding and -9% in Quarter-on-Quarter (QoQ) and -47% Year-on-Year.
The report stated that if Q1 2024 funding were compared to the funding heatwave peak (in late 2021/early 2022), start-ups are currently raising 5x times less quarterly than they were when fundraising peaked in Q3 2021.
This highlights a more serious contraction than the global average (3.1x), which is very much influenced by Europe and US numbers (2.7x). It is in line with the Asian trend though, and much less dramatic than the gap registered in LatAm (14x).
Notably, the trajectory of venture funding to African startups is beginning to look like a bell curve from barely anything 10 years ago to a rapid acceleration in 2021, peak funding in 2022, and a deceleration starting from 2023.
For the coming quarters, with global inflation and interest rates still at record highs, there are expectations of similar declines in African startup funding versus the previous year’s equivalent quarter.
African startups have been urged to focus on generating revenue and strengthening financial management amidst the decline in VC funding. Meanwhile, in response to the funding crunch, several startups have implemented several strategic measures to keep their business afloat.
Apart from the downsizing of the workforce, reports reveal that some of these measures implemented varied from business model shifts to exploring asset-light approaches.