Africa’s Startup Funding Landscape: The Rise of East Africa

In Africa’s startup funding landscape, East Africa and Kenya have solidified their dominance in start-up funding across the African continent, maintaining top positions in 2024.

As highlighted in Africa: The Big Deal report, both the region and the country have consistently attracted the most Venture Capital investment, excluding exits, for two consecutive years.

East Africa’s Rise to The Top

While East Africa briefly led in 2020 with 31% of total funding edging out West Africa by a mere $6 million from a $1.1 billion pool, the region’s dominance has been firmly established since the end of the funding boom in mid-2022. Over the past two years, East Africa has captured 30% of all venture funding, surpassing all other regions.

This marks a significant shift from the previous 2.5-year period (2020 to mid-2022), where East Africa held a distant second place with 22% of funding compared to West Africa’s commanding 41%.

Since 2019, start-ups in East Africa have raised a total of $4 billion, representing 25% of the continent’s total funding. Kenya has been the driving force behind this growth, securing $3.3 billion, which accounts for a staggering 84% of the region’s total investment. Kenya’s dominance has only increased in recent years. Since mid-2022, it has consistently been the top-funded country in Africa, a position that previously belonged to Nigeria.

Notably, Kenya significantly outperforms its economic weight despite accounting for just 4% of Africa’s nominal GDP and population in 2024, the country attracted 29% of total start-up funding on the continent.

Startups With The Most Funding in Kenya

The bulk of Kenya’s funding has gone to well-established players in the pay-as-you-go off-grid energy sector. Three companies which include Sun King, M-Kopa, and dlight have collectively raised nearly $1.5 billion, representing 44% of all funding secured in Kenya since 2019.

Following closely are companies revolutionizing retail and supply chains, including Twiga Foods, Wasoko, and Copia Global, which together secured $400 million during the same period. However, this sector has faced significant challenges recently, with Copia liquidating and both Twiga and Wasoko undergoing restructuring. Beyond these heavyweights, over 150 start-ups in Kenya have raised at least $1 million since 2019, underscoring the country’s dynamic entrepreneurial ecosystem.

Funding Across the Rest of East Africa

While Kenya dominates, other East African nations have also seen significant funding activity. Tanzania ranks as the second-largest funding recipient in the region, attracting nearly $300 million since 2019, with half of that funding going to Zola Electric and Nala.

Uganda follows as the third-largest market in the region, securing funding primarily through Tugende and Asaak, which together account for half of the country’s total investment. Rwanda is also emerging as a notable player, nearing the $100 million milestone, while Ethiopia and Sudan follow closely behind. Sudan, in particular, has gained attention through YC-backed fintech Elevate.

In contrast, Mauritius and Madagascar have seen minimal start-up investment over the period, and no recorded deals above $100,000 were identified in the remaining six East African markets, aside from offshore crypto exchanges registered in Seychelles for tax purposes.

Looking Ahead

With Kenya leading the charge and East Africa asserting itself as a venture capital hub, the region’s start-up ecosystem is poised for continued growth. However, challenges remain, particularly in ensuring sustainable business models and navigating economic fluctuations.

The coming years will reveal whether Kenya can maintain its dominant lead in startup funding, and whether the East African region will continue to attract significant funding ahead of other promising region like West Africa.