As per Africa: The Big Deal, African startups raised $621.8 million from just 34 deals which makes it an average of $18.3 million per deal in May 2023. This is a 42% increase year-over-year from May 2022. On a month-over-month basis, funding grew by 379% from the 129.8 million that was raised in April.
Startups raise funding for several reasons. Firstly, funding allows startups to fuel their growth and scale their operations. It provides the necessary financial resources to hire talented employees, develop and improve products or services, and expand into new markets. Additionally, startups often require capital to invest in research and development, acquire essential equipment or technology, and build a solid infrastructure.
Funding also plays a crucial role in mitigating risks and supporting a startup’s survival during the early stages when revenue generation may be limited. Furthermore, securing funding from investors or venture capitalists brings strategic value in the form of mentorship, industry connections, and expertise. Overall, raising funding enables startups to pursue their vision, drive innovation, and increase their chances of long-term success in a competitive business landscape.
East African startups led the way in May, accounting for almost 70% of all funding ($401.7 million) powered by the M-Kopa $255 million debt and equity deal and SunKing’s $130 million. Southern Africa beat out West Africa for the second spot while North Africa raised just 0.4% of all funding.
On a sectoral basis, fintechs took the lion’s share of the funding followed by Cleantech in a distant second and Mobility/Logistics.
There were no Ugandan startups in the top five biggest rounds of funding in May. However, M-Kopa, which is headquartered in Nairobi, Kenya raised the biggest funding round. M-Kopa has a very active presence in Uganda. The biggest funding round raised by a Ugandan startup in May was Zofi Cash’s $1M Pre-seed round from Advancly.