Startup funding in Africa fell by 25% in 2024 to $2.2 billion. This marks the second year in a row of reduced investment in technology companies on the continent. Kenyan startups attracted the most funding for the second year in a row with $638 million.

Nigeria, Egypt, and South Africa together raised $1.2 billion. Two-thirds of the total funding was raised in the second half of the year. The $2.2 billion figure reflects expectations that African startups would raise less money than in previous years.

Fundraising has been falling since the peak of 2022 when startups raised $4.6 billion. One reason for the dip last year was a 40% reduction in funding in the form of debt, while equity-type deals fell by 11%.

Most startup funding is in the form of equity, but debt deals have been an increasing source in recent years. Debt funding rose between 2018 and 2022 to $1.5 billion. The main reason for the lowered receipts for African startups remains the pullback from the continent by venture capitalists from developed markets.

Initially spooked by increased interest rates, many have focused their cash on markets closer to home. Moniepoint, Nigeria’s payment processing firm, and Tyme Group, a digital banking platform from South Africa, were among a few African startups to raise nine-figure sums last year. Each deal featured a US-based ‘Big Tech’ company — Google and Uber, respectively.

However, institutional VCs like Tiger Global, which invested in five African startups in 2022, have largely been absent from the scene since. African investors say they aim to fill the region’s startup funding gap created by the reluctance of foreign venture capital firms to return to the market over the last two years.