Despite a decade of innovation and growth, 2024 has emerged as a turning point for Africa’s startup ecosystem, one marked by significant funding declines, high-profile shutdowns, and structural challenges that have tested the resilience of founders and investors alike.
A recent industry report highlights the closure of 11 startups across the continent in 2024, alongside a staggering 25% drop in funding. Nigeria, once hailed as Africa’s venture capital darling, recorded the highest number of shutdowns, followed closely by Kenya.
Among the shuttered companies are Nigeria-based ThePeer, HerRyde, Chopnownow, Cova, BuyCoinsPro, and Quizac, as well as Kenya’s Gro Intelligence. This follows a similar trend from 2023, when Nigeria led the continent in startup closures and saw the sharpest funding contraction—from $976 million in 2022 to just $399 million in 2023.
While Nigeria’s decline is notable, the challenges extend beyond its borders. South Africa continues to grapple with monopolistic markets, entrenched gender disparities, and recurring power shortages—all of which increase operating costs and stall innovation. In Kenya, despite Nairobi’s tech hub status, startup activity remains too centralized, with rural areas missing out on funding opportunities. Furthermore, male-led ventures continue to dominate equity funding, while female-led startups largely depend on grants and soft loans.
With only nine of the world’s 1,200 unicorns in 2024 originating from Africa, the continent’s struggle to secure venture capital remains a pressing issue. Many startups, including Lazerpay, have shut down after failing to secure additional funding. “We fought hard to keep the lights on, but it’s time to shut down,” said Emmanuel Njoku, CEO of Lazerpay, in April 2023.
A fragmented funding ecosystem and a lack of contextualized VC models have also played a role. Critics argue that applying Silicon Valley frameworks to African markets has contributed to investor hesitancy, especially as more startups fail to generate returns despite sizable early-stage funding.
Another compounding factor is the region’s growing talent exodus. Skilled professionals—developers, designers, and engineers continue to migrate to more stable economies, leaving behind a workforce that is either underqualified or increasingly expensive to retain. According to Ope George, Lagos State’s Commissioner for Economic Planning and Budget, this has created a mismatch between what universities teach and the actual skills industries need, stifling innovation and scaling potential.
While some startups attempt to fill the talent gap by hiring from overseas markets like India and China, this approach creates dependency on external expertise and undermines the growth of local talent pools.
Many startups are also struggling to navigate a volatile regulatory landscape. Nigerian API startup ThePeer, which once raised $2.1 million, was forced to close due to compliance challenges and limited market traction. Despite the introduction of startup acts across several African countries, their impact remains largely cosmetic.
In Nigeria, fintechs have borne the brunt of aggressive policy shifts, including the CBN’s recent imposition of ₦1 billion fines on OPay and Moniepoint. From license costs to cryptocurrency bans, these policy shifts have created an unpredictable environment for entrepreneurs and investors alike.
Rising operational risks, market volatility, and underwhelming returns have made investors more cautious. Many now demand faster paths to profitability, more transparency, and deeper due diligence. However, as Davidson Oturu, a venture capitalist, noted, some past investments lacked rigorous oversight. “Due diligence is key. Too often, investors assume that if a big-name VC is in, everything must be fine,” he said.
The fallout is not just financial. As Charles Rapulu-Udoh, a startup lawyer, explained, the wave of failures could dampen investor morale at a time when confidence in the fundraising market is already fragile.
While the setbacks are significant, they may also signal the beginning of a more mature startup era—one driven by sustainable models, refined talent pipelines, and more thoughtful investment strategies. The road ahead will require structural reform, targeted support, and a long-term view to rebuild trust and unlock Africa’s full innovation potential.
