Startups in Africa feel the pinch in August as funding dips

• Startups in Africa report just over $100M in funding even as the number of deals signed dipped compared to a month earlier.
• Venture financing hit $109M, a sharp drop from $550M worth of venture deals sealed in July.
• However, August saw a milestone with South Africa’s lender Nedbank acquiring payments fintech iKhokha for over $93M.

Startups in Africa experienced a sharp drop in new funding across August, reporting just over $100 million even as the number of deals signed dipped compared to a month earlier, the latest update from business intelligence platform Briter Bridges shows.

According to BriterEYE August review notes, the month under focus saw a milestone in the segment with South Africa’s lender Nedbank acquiring payments fintech iKhokha for an estimated $93 million.

Funding tracker Briter Bridges report says during the month the total value of venture financing hit $109 million, reflecting a 33 per cent decrease compared to a similar month in 2024 and a sharp drom from the $550 million worth of venture deals closed in July.

“The largest raise was a $40 million equity round by CrossBoundary Energy, reflecting Cleantech’s strongest year-on-year growth,” BriterEYE brief states in part.

Startups in Africa part of $1Bn Visa Accelerator program

According to Briter Bridges, players in over 50 per cent of the funding agreements did not disclose their fine print, including the 22 startups that were selected to benefit from Visa’s Fintech Accelerator program. Visa Accelerator program is part of the payment giant’s $1 billion investment in Africa that aims at accelerating the pace of financial inclusion across economies.

“Among disclosed deals, 30 per cent raised under $5 million, while another 30 per cent secured less than $10,000 through Egypt’s longest-running incubator programme,” Briter Bridges stated.

“Fintech accounted for 38 per cent of August deals, unsurprisingly driven by the Visa Fintech Accelerator programme. Cleantech, however, captured the largest share of funding by volume, with just two deals.”

According to statistics on startup financing in Africa, players in cleantech have continued to experience increased interest from funders since 2020 an aspect which experts attribute to growing preference for debt financing.

Read also: Startups in Africa struggle as venture capital, debt investment drop to $4.5Bn

Funding by region

Africa’s increasingly tech-driven economies of South Africa, Nigeria, Egypt, Ghana and Kenya, which have come to referred as the “Big Four” in startup financing continued to attract the lion’s share of fresh capital during August.

“Some of the key investors behind these major deals include Impact Fund Denmark, KawiSafi Ventures, AfricInvest, Novastar Ventures, and the European Bank for Reconstruction and Development (EBRD),” explained Briter Bridges report.

In August, Impact Fund Denmark, in collaboration with the Danish Ministry of Foreign Affairs, unveiled a fresh DKK 350 million line of financing targeting Danish firms with presence in Africa, a push that is aligned with Danish government’s 2024 Africa Strategy.

At the same time, renewable energy platform CrossBoundary Energy (CBE), announced that it has entered into a $40 million equity-like capital investment arrangement with Impact Fund Denmark (IFDK) as a partner to help CBE build its growing portfolio of clean energy investments across the continent.

“CBE is a developer, owner, and operator of renewable energy systems for private commercial and industrial customers in Africa. It operates as a distributed Independent Power Producer, providing financed, integrated energy solutions that provide cleaner power under an energy-as-a-service business model,” a disclosure note from FMO, Entrepreneurial Development Bank states in part.

Mergers and acquisitions in August

Last month, a total of six acquisitions were recorded across economies, which was the same as what the segment experienced in July. According to Briter Bridges, the most notable transaction was Johannesburg Stock Exchange-listed Nedbank’s $93 million purchase of iKhokha, a deal which is tailored at expanding the lender’s suite of digital offerings in South Africa, especially across the micro, small, medium enterprises in the country.

“We believe that empowering entrepreneurs is essential to building a thriving and inclusive economy. iKhokha’s mission and technology align perfectly with our vision for digital transformation in the SME sector,” explained Nedbank chief executive officer Jason Quinn, adding: “Together, we will unlock new opportunities for growth and financial inclusion in South Africa and potentially abroad.”

In terms of mergers and acquisitions sector performance across August, Briter Bridges report notes that there were two acquisitions deals sealed in fintech and digital financial services, while the others were spread across other industries.

Read also: Cleantech deals top as startups in Africa secure $2Bn in seven months