African startups stage funding comeback

Amidst a tumultuous funding landscape, African startups make a resounding comeback in May, setting a $645m record and signalling a potential rebound for the ecosystem.


Image : Gabriel Trujillo / Adobe Stock

In May, African startups emerged from a two-month funding hiatus. After an exceptionally quiet March and April, with the former being the worst month in two and a half years, startups in Africa raised a total of $645m in May 2023, putting them back on track to surpass the $5bn they raised last year.

“May 2023 was actually the best May the ecosystem has ever had in terms of funding raised,” says Max Cuvellier, the founder of the startup deal database Africa The Big Deal.

“Now, is it the light at the end of the tunnel? As always, it’s hard to say. While the numbers are certainly encouraging, they could also give false hope, as we experienced in February,” he adds.

In February, African startups raised $700m – the highest ever recorded for that month. However, hopes for another exceptional year sharply declined after a 10-fold month-on-month drop in March, with only $70m raised.

Large deals influence trends

This remarkable month was mainly due to significant amounts raised by two Kenyan startups. Asset financing platform M-Kopa secured over $250m in equity and debt, and Sun King, an off-grid solar energy company and the most funded non-fintech startup in Africa, announced a $130m securitisation led by Citibank.

These substantial Kenyan deals accounted for 62% of all funding in May, while deals exceeding $10m represented 96% of the total raised.

Except for Namibia, where software development startup Adaire raised $1.1m, all deals above $1m were raised by three countries: Kenya, Nigeria, and South Africa. This does not come as a surprise as these countries, together with Egypt, constitute the Big Four, referring to the four African countries that have consistently raised the most funding every year since 2019.

Major deals made by prominent countries make it challenging to predict trends for the rest of the quarter.

“We know, though, that monthly trends can be quite volatile, especially as significant deals heavily influence these trends,” says Cuvellier.

“Three companies, namely MNT-Halan, M-Kopa, and Sun King, represent nearly half of all the funding raised on the continent in 2023 so far. And this percentage rises to 58% if we add Planet42 and TymeBank to the list,” he says.

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Leo Komminoth

Leo is tech reporter for African Business, based in Dakar, and also works on data visualisations.