The African start-up ecosystem is reported to have witnessed a noticeable decline in investor activity in 2024, compared to the year 2023, according to a report by Africa: The Big Deal.
The report revealed that fewer investors had some engagements on the continent, and those who participated were generally less active than in previous years. Among the 430+ African start-ups that secured at least $100k in funding this year, most relied on multiple investors, providing the much-needed capital to fuel their growth.
In 2023, over 520 investors were involved in at least one $100k+ deal on the continent, a notable drop from the 610+ investors in 2022 and the staggering 1,000+ investors in 2021. The decline in participation reflects a shrinking pool of investors actively supporting African start-ups.
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A striking 69% of investors in 2024 participated in just one $100k+ deal, the highest share recorded since at least 2021. This marks a 4-percentage-point increase from 2023 and a 12-percentage-point rise from 2022. The trend is also evident among the most active investors; while 28 investors participated in more than 10 $100k+ deals in 2022, that number dropped to just 8 in 2024, consistent with 2023 levels.
The Top Players: Who Are Africa’s Serial Investors?
According to the report, despite the slowdown in activity, some investors remained committed to funding start-up growth on the continent. The most active investor in 2024 was 54 Collective (formerly Founders Factory Africa), which participated in 26 deals, averaging more than two deals per month. Notably, it was the only investor to exceed 20 $100k+ deals in 2024.
Also, Techstars, a leading pre-seed venture capital firm, and Launch Africa, a leading pan-African VC firm, have been consistent in their involvement, appearing on the top investor list since 2021. Catalyst Fund, an early-stage VC fund and accelerator investing for a climate-resilient future in Africa, which was among the top investors in 2023, also made the list again. However, all these investors completed fewer deals in 2024 compared to the previous year.
Meanwhile, four other investors increased their activity: Digital Africa, Baobab Network, Renew Capital, and EdVentures. Some of these investors also extended their support to deals below the $100k threshold, demonstrating a broader commitment to African start-ups.
Other notable investors, which include Y Combinator, 500 Global, and Axian Group, narrowly missed the top spots in 2024. For instance, Y Combinator completed just nine deals this year, a sharp decline from its peak of 37 and 43 deals in 2021 and 2023, respectively.
While the number of active investors has declined and top investors are less active, the report noted that it would be premature to conclude that investors are abandoning Africa. On the contrary, there remains a strong community of backers, and significant capital (“dry powder”) to be deployed with quite a few new Africa-focused funds announced in the past couple of years.
Many investors have reportedly scaled back their activity temporarily while raising their next funds. Additionally, past investors who are less active today still have vested interests in the continent, particularly as they await exits from their previous investments. Moreover, several new Africa-focused funds have been announced in recent years, signaling sustained interest and confidence in the region’s long-term potential.
Conclusion
While 2024 reflects a challenging year for investors’ activity in African start-ups, the underlying commitment to the continent remains robust. With the continent reaching a significant milestone of producing two unicorns last year, alongside promising startups, investors continue to see Africa as a promising market, with a strong foundation for future growth.