African startups raise $56 million in August 2024, the second weakest month in 4 years

African startups experienced a massive funding drop in August 2024, as startups on the continent were only able to raise $56 million that month, according to a report by African startup funding analytics firm Africa the Big Deal. August funding represents the second-slowest month since startup funding records began in 2020, after June 2024, when $42 million was raised.

The $56 million raised in August is a big drop compared to July 2024, when African startups raised $443 million, a whopping 87 percent drop. Compared to the same time last year (August 2023), when startups on the continent raised $234 million, funding this month represents a 76 percent drop.

“When we discussed the really strong performance of the ecosystem last July, we knew there was a risk that it would not continue in August. In fact, last month was much slower: startups in Africa announced only $56 million in financingcompared to USD 443 million in July (~8 times less) and USD 234 million in August 2023 (~4 times less), making August 2024 the second weakest month in four years in terms of financing raised, after June 2024 (USD 42 million)“, the report noted.

The report also noted that the majority of financing in August 2024 was raised in the form of equity, with 87% of total financing coming in the form of equity. Of the remaining 9%, it was raised in the form of debt and 4% in the form of grants.

Together 27 start-ups announced that it had raised funding in August 2024. This is well below the monthly average of 40 that was recorded over the past twelve months. The three largest deals on record include Ghanaian fintech, Fido, which raised $10 million with the support of Dutch DFI FMO in a Series B round.

South African green energy startup Solarise Africa announced a $9 million round, while YC-backed Nigerian fintech Waza, which was just coming out of stealth mode, announced an $8 million round, including $3 million in seed funding and $5 million in debt funding. There were no exits this month.

African startups see funding improve in 2024

2024 isn’t all bleak though, as on the bright side, despite last month’s slowdown in funding, the report notes that ecosystem performance was so good in July that Q3 funding raised is already higher than Q1 and Q2, with a month still left in the year.

Indeed, venture capital funding for African startups in 2024 already surpassed $1 billion in early July, much earlier than expected.

“While the pace of investment has not yet fully accelerated compared to the last three years (the $1 billion milestone was reached in May 2021, in April 2023 and already in February 2022), this news is encouraging because it shows that 2024 could ultimately outperform the years it is often compared to (and where the $1 billion milestone was only reached in November). In fact, startups in Africa have already raised more funding (in 2024) than in 2020.“, we read in the July report Africa the Big Deal.

The development comes amid a funding winter that has seen a significant reduction in venture capital investment on the continent since late 2022. The bitter winter continued to bite, worsening steadily throughout 2023 and 2024. African tech startups were only able to raise $780 million in the first half of 2024.

Total funding in H1 2024 represents a 31% drop compared to total funding raised in H2 2023. However, this looks even worse when compared to total funding in H1 2023, which saw an even greater drop of 57%.

See also: African startup funding will finally surpass $1 billion in 2024, 2 months later than 2023.