The show must go on 🌍

Start-up funding in Africa continues to represent a negligible proportion of global flows, and suffered relatively more than most other regions in Q1.

This week, we’re putting Q1 2024 numbers into perspective, by comparing the performance of the African ecosystem to other regions around the world:

• In absolute terms, Africa represented less than 1% (~ 0.5%) of all the funding raised globally in Q1 2024, in line with previous quarters. Start-ups in Africa attracted 100x times less funding than in the US. While it surely feels unfair to compare Africa to the US, it is worth reminding ourselves that this imbalance is much more acute for start-up funding than, say, nominal GDP for instance (8x times less); and than Africa is home to around 4x times more inhabitants than the US. Missed opportunity, you said?

• In terms of QoQ evolution, start-up funding in Africa contracted slightly (-9%) while it grew in the two top regions (+33% in the US and +8% in Europe) and therefore globally (+11%). Africa still did better than Asia (-20%) and LatAm in particular (-38%).

• When it comes to YoY evolution though, Africa is by far the continent than performed most poorly, with Q1 2024 funding representing just over half of Q1 2023 funding (-47%). However, globally and across all regions except Europe (+3%), double-digit decrease was also the norm.

• If we compare Q1 2024 funding to the funding heatwave peak (in late 2021/early 2022), start-ups are currently raising 5x times less quarterly than they were when fundraising peaked in Q3 2021. This is a more serious contraction than the global average (3.1x), which is very much influenced by Europe and US numbers (2.7x). It is in line with the Asian trend though, and much less dramatic than the gap registered in LatAm (14x).

If we were to compare Africa to India like we did in the past - a flawed comparison, I know -, we’d see that: Indian start-ups raised significantly more than their African counterparts in Q1 ($1.7b vs. $0.3b), that funding reduced a bit more QoQ in India (-15% vs. -9%) but held up much better YoY (-15% vs. -47%). Funding levels are also slightly lower compared to peak than they are in Africa (6x times less, vs. 5x).

Finally, if we step back a little, we have seen in the past that the trends observed in the US and Europe usually take a couple of quarters before they impact Africa. For instance, the funding winter started in early 2022 there, while it only struck the continent in mid-2022. As such, the positive QoQ growth - and even the positive YoY growth in Europe - along with the growth in number of deals on the continent we’ve covered a couple of weeks ago - might be the first signs of a future rebound in Africa? At least that’s what we hope…

While this might not be the most encouraging read, remember there is also anecdotal evidence that Africa continues to be on the radar of many investors, and global players, with Uber investing in moove’s $100m Series B in March for instance. So we remain hopeful that the numbers will soon start to reflect this. Want to make your own analysis, or identify your next investment/investor? Check out our deals database, and use this link for a discount.