Investors Favor Kenya Over Nigeria as African Startup Funding Drops to $2.2bn
By Okafor Joseph Afam, January 9, 2025
In 2024, startup investors allocated more funds to Kenyan entrepreneurs than to their Nigerian counterparts, continuing a trend seen in the previous year. East Africa attracted the largest share of funding on the continent, with Kenya securing 88% of the region’s $725 million total, amounting to $638 million, according to ‘Africa: The Big Deal,’ a data insight firm that tracks startup funding.
The report revealed that African startups raised a total of $2.2 billion in equity, grants, and exits in 2024, marking a 25% decline from the $2.9 billion raised in 2023 and a 53% drop from the $4.6 billion raised in 2022.
Nigeria, which had been a dominant player in the previous years, saw a significant decrease in funding, attracting only $410 million of the $587 million raised in West Africa. The data also highlighted a 10% decrease in the number of African ventures raising $1 million or more, with 188 startups reaching this milestone in 2024, down from the previous year.
A sharp decline in funding was noted in the first half of the year, with a noticeable rebound in the latter half. “Startups in Africa raised $780 million (excluding exits) in the first half of 2024, representing a 31% drop compared to H2 2023, and an even steeper 57% fall compared to H1 2023,” said Africa: The Big Deal in June. However, the second half of the year witnessed a recovery, with startups securing $1.4 billion, the second-best semester since the onset of the “funding winter” in mid-2022. This growth was partly fueled by the mega deals involving Moniepoint and Tyme Group, both of which achieved unicorn status.
Additional analysis of the funding distribution showed Egypt raising $400 million, although Northern Africa’s total funding decreased by 22% to $478 million. South Africa raised $394 million, with a similar 18% decline in its regional funding, totaling $397 million.
As usual, the four largest economies—Kenya, Nigeria, Egypt, and South Africa—accounted for 84% of all startup funding in Africa, excluding exits.
Francis Vesta, investment associate at Madica, explained that the overall decline in startup funding in Africa reflected global economic trends such as rising interest rates and a tightening of venture capital markets. He added that industries appealing to investors may have shifted due to factors like inflation and changing consumer behavior.
