African startups stage funding comeback

Amidst a tumultuous funding landscape, African startups made a resounding comeback in May, setting a $645 million record and signaling a potential rebound for the ecosystem, African Business said in a report.

In May, African startups emerged from a two-month funding hiatus. March and April were exceptionally quiet, with the former being the worst month in two and a half years.

However, startups in Africa raised a total of $645 million in May 2023, putting them back on track to surpass the $5 billion 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 $700 million – 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 $70 million raised.

This remarkable month was mainly due to significant amounts raised by two Kenyan startups. Asset financing platform M-Kopa secured over $250 million 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.

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