Africa’s contribution to global VC funding in 2024 remained modest, and while there were some positive signs, the overall picture was one of underperformance rather than significant growth.
According to a report by Africa: The Big Deal, last year, African startups raised $1.5 billion in equity funding, representing just 0.6% of the global total of $275 billion. While this highlights the growing presence of African innovation on the global stage, it also underscores a glaring funding gap when compared to the continent’s significant contributions to global GDP and population.
Africa accounts for approximately 5% of global GDP (PPP) and 18% of the world’s population, yet its share of global start-up funding remains disproportionately low. This disparity highlights a persistent issue, which shows that talent is equally distributed on the continent, while opportunity is not.
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This implies that many investors continue to fail to realize the potential of Africa’s entrepreneurs and markets, missing great deals in the process. This is not impressing, that a continent of 1.4 billion people, attracts about the same amount of start-up funding as Miami ($1.8 billion), the 12th city in the United States, in terms of equity fundraising last year.
When viewed alongside other regions, Africa’s performance presented a mixed picture. The continent experienced an 11% year-over-year (YoY) decline in equity funding in 2024. By contrast, global equity funding grew by +4% YoY, highlighting Africa’s underperformance relative to broader trends.
However, some regions also faced challenges. In Asia, equity funding declined by 27% YoY, driven by a sharp -m56% drop in China’s start-up ecosystem, as regulatory changes and economic slowdown stifled investment. Yet, India, a nation with a comparable population and GDP to Africa achieved an impressive +40% YoY growth in equity funding, showcasing the opportunities possible with sustained investor confidence.
North America and Latin America, saw growth in their start-up ecosystems. Equity funding in North America increased by +21% YoY, while Latin America posted a +9% YoY growth. These figures highlight the importance of stable economic environments, supportive policies, and investor trust in driving start-up success.
Africa’s decline in equity funding underscores the need for global investors to recognize the continent’s potential. The narrative that “talent is evenly distributed, but opportunity is not” remains a critical point of reflection. Africa boasts a wealth of entrepreneurial talent, innovative ideas, and a rapidly growing market, yet many investors continue to overlook these opportunities. The funding disparity is not just a missed opportunity for Africa but also investors seeking high-growth markets.
According to TechCrunch, VC funding in Africa was between $2.9 billion and $4.1 billion in 2023 an impressive amount, even if it was way lower than the $4.6 billion to $6.5 billion startups raised the previous year.
This show proof that VCs are still wholly interested in practical African ideas and are willing to help fund them into profitable businesses. With strategic investments and increased attention to Africa’s unique challenges and opportunities, the continent could emerge as a powerhouse of innovation and economic growth.
Notably, Africa’s entrepreneurial ecosystem has immense potential, but unlocking it will require a shift in mindset. Global investors must look beyond short-term challenges and focus on the long-term opportunities Africa offers. By addressing the funding gap, fostering innovation, and supporting entrepreneurs, Africa can play a more significant role in the global start-up landscape.