African startups might have ended quarter one with an abysmal performance, having witnessed a sharp decline in fundraising in March.

According to a report by Africa: The Big Deal, African startups could only raise $50 million last month, the lowest monthly inflow since late 2020.

In January, the startups raised almost $300 million in funding, and in February, they secured $119 million. The poor March performance dragged the first−quarter total to $460 million, a five per cent drop from the $486 million raised in Q1 2024.

Kenya, Nigeria and South Africa remained the top investment destinations, each attracting roughly $100 million, representing 24 per cent, 24 per cent and 22 per cent of the total, respectively, followed by Egypt ($61 million, 14 per cent).

Togo completed the top five list with Gozem’s $30 million Series B funding round.
According to the report, almost half of the funding (46 per cent) was raised by fintech startups ($53 million for LemFi, $38 million for Naked, etc), followed as usual by energy (18 per cent) and logistics and transportation (10 per cent).

The report showed that female-led startups received just two per cent, that is, $10 million of the total Q1 funding, heavily influenced by a $6.2 million grant to South African biotech firm biologics.

Excluding grants, the share of funding going to female CEOs fell to a mere 0.7 per cent. Male-only founding teams dominated, securing 79 per cent of investments, while female-only teams received just one per cent.

Mixed-gender founding teams accounted for 20 per cent, showing slight improvement compared to previous quarters.

While overall funding declined, the number of startups that raised at least $1 million in Q1 remained stable at 52, in line with the 2023−2024 average.

“Q1 wasn’t the best quarter overall, but it’s not all doom and gloom if we zoom back and look at longer-term trends”, the report noted.

The sluggish Q1 raises concerns about whether African startups can regain momentum after a tough 2024.

African startups cumulatively raised a total of $2.2 billion in 2024, driven by two mega deals by Nigeria’s Moniepoint and South Africa’s Tyme Group.

The amount secured in 2024 represented a 25 per cent drop in funding compared to the $2.9 billion raised on the continent in 2023.

Already, the Nigerian government said it is committed to startup developments in the country and tasked them with N10b funding it provided.

Speaking recently, the National Coordinator, Office for Nigerian Digital Innovation (ONDI), a Special Purpose Vehicle of the National Information Technology Development Agency (NITDA) Mrs. Victoria Fabunmi, who rallied private sector stakeholders in the digital innovation ecosystem on the challenges, opportunities, and government-backed incentives available under the Nigeria Startup Act, which was passed into law in 2022, emphasised the government’s commitment to ensuring a thriving startup ecosystem by providing financial support, regulatory clarity, and strategic partnerships that empower businesses to scale as fast as possible.

She emphasised the synergy between the private sector and the government in ensuring that the provisions of the NSA positively impact the innovation ecosystem.

According to her, there are lots of interventions to encourage more participation in the NSA, saying there is also the Startup Portal that will serve as a one-stop shop for all ecosystem players and activities. She said plans are also on the ground to bring together the private sector, the public sector, academia, which includes universities and research outfits to develop the ecosystem.

While calling on startups to access the N10 billion funding, she noted that apart from the funds, which are currently domiciled with the Nigerian Sovereign Investment Authority, adding: “Of course, realistically speaking, N10 billion is not enough to go around the country, not even in a state like Lagos State, right? But, of course, it’s to encourage more funding activities, some from venture capitalists, some from angel investors. Secondly, there are tax incentives, as it is right now, and that’s to encourage the growth of startups because tax sometimes burdens their funding capacity and for their activities.