Tech Outlook and funding opportunities for African Start-ups in 2024

Market Trends:

2023, saw a dramatic 46% Year-on year decline in overall venture capital (VC) funding, reaching only $3.5 billion. The Fintech sector retaining its top demand for investors.

It is also expected that more African start-ups such as Tymebank, will be looking to acquire companies outside the continent or expand their services globally in 2024.

While Venture Capital funding continues, this has been subject to less appetite for new investment, perhaps caused by several high-profile tech failures in 2023. South African transit data provider – Where Is My Transport and Kenyan Tech start-up Sendy, were among those that shut down last year alongside the Nigerian genomics company 54gene.

New African Tech start-ups will need to explore more diverse funding sources while other Initiatives like the $1 billion Timbuktoo Initiative by UNDP and African governments will be a source of funding for some but lacks the scale that would be a game changer for African Tech start-ups.

Tech Start-ups in Africa, and particularly in the Fintech industry has been gaining momentum but there are many new Tech groups in other areas such as the Biotech industry that have also recently won large scale funding and Entrepreneurs need to be able to adapt to changing environments, particularly with regards funding where they will have to explore various options in order to get funds to scale their business.

Here are several potential funding sources that African tech start-ups should consider looking into:

1. Venture Capital Firms:
   • Partech Africa: Focuses on early-stage tech start-ups across various sectors in Africa.
   • TLcom Capital: Invests in tech-enabled companies in Sub-Saharan Africa.
   • Knife Capital: Invests in high-growth technology-enabled businesses in South Africa and Sub-Saharan Africa.
2. Development Finance Institutions:
   • International Finance Corporation (IFC): Provides equity and loan financing to private companies in Africa, including tech start-ups.
   • African Development Bank (AfDB): Offers financing solutions and support for start-ups across different sectors in Africa.
3. Impact Investors:
   • Investisseurs & Partenaires (I&P): Focuses on supporting small and medium-sized enterprises (SMEs) in Africa, including tech start-ups.
   • Omidyar Network: Invests in initiatives that promote social impact and support innovative start-ups in Africa.
4. Corporate Venture Capital (CVC):
   • Safaricom Spark Fund: Focuses on investing in early-stage start-ups in Kenya with innovative solutions.
5. Angel Investors:
   • African Business Angel Network (ABAN): Supports the development of early-stage investor networks across Africa.
   • EchoVC Partners: Invests in early-stage technology-enabled start-ups across Sub-Saharan Africa.
   • MEST Africa: Provides training, investment, and support for aspiring African entrepreneurs and tech start-ups.
6. Crowdfunding Platforms:
   • Thundafund: A South African crowdfunding platform supporting innovative projects and start-ups.
   • Seedrs: While based in the UK, Seedrs has facilitated fundraising for African start-ups with global appeal.