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TechCabal, a leading African tech publication, has released its latest ‘State of Tech in Africa Report.’
One of the main findings of the report is that in Q1 2024 African startups prioritized profitability as they raised $466 million in 2024 Q1; a 45.62% reduction compared to Q1 2023.
Published by TC Insights, TechCabal’s data, research, and intelligence unit, the ”State of Tech in Africa” report is a quarterly publication that gives a bird’s-eye view of technology trends in Africa. The Q1 Report, themed “Charting a path to profitability,” provided a comprehensive round-up on the funding winter, regulation and policy, and the future outlook.
Regarding why they publish these reports, Head TechCabal Insights, Olanrewaju Odunowo, said our quarterly reports uncover the major events and trends around Africa’s growing digital economy. It also analyzes the impact of regulations with comments from industry experts. Altogether, you get a sense of Africa’s digital economy within the review period.”
A significant insight from the report was the strategic moves of several African startups towards profitability. TymeBank and Swvl, for instance, achieved profitability for the first time in Q4 of last year. Meanwhile, Jumia, Africa’s e-commerce giant, implemented a series of measures, including reducing operational losses, laying off workers, and shutting down its food business, all part of its strategic plan to become profitable.
Some startups also pivoted their business models to remain in business and attain profitability. These startups include Gebeya, Kippa, Gokada, and Zilla.
Speaking on how startups can find profitability, Justin Norman, Founder of The Flip, said, “Every company should prioritize revenue and push hard to get sales over the line with as a lean team and low burn as possible.”
Looking ahead, at the report launch event, Uwem Uwemakpan, Head of Investment at Launch Africa Ventures, anticipates a trend of more pivots. He foresees, “There will be more pivots this year as both founders and investors navigate the paths to profitability.”
In Q1 2024, African startups raised a total of US$466.2 million from 127 deals in VC funding. Deal count remained stable across the three months, with the average deal size closing out at $3.67 million for the quarter ending.
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Logistics startups raised the highest amount in funding, $151 million, compared to other sectors. The position came from 16 deals and was primarily driven by Moove’s $100 million Series B funding round in March. Fintech startups received less funding ($105.52 million) from more deals(33) than other sectors.
The Big Four (Nigeria, Kenya, South Africa, and Egypt) received $393.64 million in VC funding across 86 deals.
There were also some highlights regarding regulations for startups and tech-enabled businesses. South Africa granted licenses to 59 crypto companies. Starlink faced mixed regulations across Africa, while Egypt approved its first 5G license.
Learn more about the state of African tech in this report: State of Tech in Africa Report
