As the global venture capital market cools down, African startups are increasingly turning to non-dilutive funding to meet their capital needs.

According to data released on December 5 by the platform Africa: The Big Deal, startups operating on the continent raised $1.1 billion in debt during the first eleven months of 2023, constituting 42.3% of the total funds raised during the same period. Debt financings (venture debt) mobilized between January 1 and November 30, 2023, have significantly increased compared to the amounts raised during the same period in 2022 ($676 million) and in 2021 ($257 million).

With around $700 million in debt, Sun King (financing for the acquisition of off-grid solar kits), M-Kopa (financing for the purchase of products such as smartphones, off-grid solar energy systems, and health insurance contracts), and MNT-Halan (fintech) accounted for about two-thirds of the total debt financing raised by all African startups since the beginning of 2023.

The primary advantage of loans for startups lies in it being non-dilutive financing, allowing founders to maintain ownership without selling shares or compensating investors in the long term.

Africa: The Big Deal also revealed that the overall amount raised by startups active on the continent (equity + debt + grants exceeding $100,000) reached $2.6 billion in the first eleven months of 2023. However, this amount represents only 60% of the funds raised during the same period in 2022.

In November 2023 alone, African tech gems secured $270 million, including $154 million in the form of debt financing.