August marks lowest funding month of 2024, African startups report
In contrast to July's unsurpassed funding reports, August showed disappointment, as startup funding in the African sector hit an all-time low.
After a record-breaking July, August took a ground-breaking downturn as startup funding plummeted by 87%. "Despite a record-breaking $443 million raised in July, African VC funding dropped to a mere $56 million in August, according to the latest report from Africa: The Big Deal. This marked the second-lowest monthly total for 2024, only surpassed by June, which was the slowest month for African VC investment in four years.
Most of August’s funding was secured through equity (87%) while the rest came as debt (9%) and grants (4%). Records show that only 27 startups announced funding in August, contrasting the monthly average of more than 40 in the last year. The largest deals recorded last month were relatively modest compared to other high-profile investments seen earlier in the year, with Dutch DFI FMO’s $10m investment in Ghanaian Fintech Fido as part of its Series B round; South Africas Solarise Africa’s $9m announcement; and Nigerian fintech Waza (YC W23) coming out of stealth mode and announcing $8m in funding ($3m seed, $5m debt).
The data shows that there are significant challenges to sustaining momentum in a region where economic, political, and social factors can disproportionately affect investor confidence. The sharp contrast in both months was not unexpected due to the unstable nature and complexities of the global economic landscape, however, the magnitude of the decline raised concerns about how sustainable the growth seen in the African startup sector is.
Reports also point to the fact that while the ecosystem is prone to fluctuations, it’s not entirely a losing field in the long run. Despite the bad state of funding in August, the Q3 funding report showed that it had surpassed the totals for both Q1 and Q2, which was largely owed to the funding received by startups in July.
"Although August 2024 saw a sharp decline in VC funding, Africa's startup landscape remains ripe for growth, as evidenced by the record-breaking July. However, to capitalize on this potential, African startups must navigate evolving market dynamics and acknowledge the inherent risks of operating in the region."
The ability to weather these fluctuations and build long-term resilience will be vital to sustaining the success of Africa’s startup ecosystem.
