Global Trends in 2024
Global venture capital activity maintained a downward trajectory in Q3 2024 and Q4 is likely going to sustain the trend, with total funding declining to $67 billion across 5,300 deals—representing a 15% drop in value and a significant 30% reduction in deal volume compared to the same quarter in 2023. Despite these headwinds, certain trends signal shifts in investor behaviour. Deal sizes grew as investors concentrated capital on startups with strong fundamentals and profitability paths, reflecting caution amidst persistent macroeconomic uncertainties.
AI startups led global funding activity, accounting for 31% of VC dollars in Q3—the second-highest share on record. The sector also demonstrated a faster median time to exit (7 years) compared to non-AI startups (13 years), driven by strategic acquisitions and IPOs. Notably, over half of Q3’s 24 unicorns emerged from AI, underscoring sustained investor confidence. In the U.S., Silicon Valley retained its dominance, securing 41% of venture funding ($10.5 billion), while strategic ecosystems like Israel, Singapore, and the UAE outpaced larger economies in activity relative to GDP.
Africa’s Venture Landscape
Africa faced steeper challenges, with funding dropping 50% year-over-year to $507 million across 108 deals. Despite this contraction, the continent demonstrated pockets of resilience. FinTech remained the dominant sector, accounting for 32% of funded startups and raising $564 million year-to-date. CleanTech and AI gained traction, reflecting a shift toward scalable and sustainable solutions.
Regionally, North Africa emerged as a standout performer, fueled by significant rounds in Egypt’s financial services sector, overtaking West Africa, which saw a 32% decline in deal volume. Investors displayed a preference for established founders and follow-on rounds, creating barriers for new entrants. Venture debt also gained prominence, with $317 million deployed in Q3 2024. The median deal size increased to $9.5 million, signalling maturing startup ecosystems and stronger demand for growth capital in the tech ecosystem. In light of the headwinds, VC
Key Sector Insights and Emerging Opportunities
AI remains at the forefront of VC attention, with projections estimating it could attract 35% of global investments by 2025. Its rapid evolution, from generative capabilities to complex problem-solving applications, is expected to unlock transformative opportunities across law, medicine, and software development. This trend is echoed in the accelerated rise of AI-driven unicorns and mega-deals shaping the market.
In Africa, early-stage funding saw a decline in volume, but the rise in average deal sizes highlights sustained confidence in promising startups. Venture debt's growing role suggests a shift toward alternative financing solutions, particularly for startups requiring growth capital without diluting equity.
Looking Ahead to 2025
As global interest rates potentially decline, the accessibility of capital could reignite investment in high-growth sectors like AI, green technologies, and quantum computing. Conversely, a global recession could see a pivot toward resilient industries such as healthcare and cybersecurity, with personalized medicine and telemedicine emerging as key beneficiaries.
The venture capital ecosystem will also grapple with consolidation, giving rise to "zombie firms" unable to deploy new capital, and an increase in equity crowdfunding as a democratizing force. The evolving dynamics underscore the importance of strategic agility for both investors and entrepreneurs in navigating this rapidly changing landscape.
MT in Numbers — 2024
- We made a follow-on investment in one of our portfolio companies.
- We invested in 5 companies. Microtraction’s portfolio has grown to over 70+ companies.
- We hosted 2 in-person community events in Nigeria (Lagos and Abuja).
- 37% of the companies we have invested in are either led by female founders or co-founded by female entrepreneurs.
In 2024, we made a total of 5 investments across the continent.
- PBR Life Sciences: Founded by Ayodeji Alaran. PBR Life Sciences leverages its strong local insight, and expert capability to equip Big Pharma with actionable insights that inform business decisions in the pharmaceutical market.
- BLNK: Founded by Jerry Enebeli and Praise Philemon. BLNK is a reliable developer tool for building and managing financial products to standard and at scale.
- Paycrest: Founded by Chibuotu Amadi and Francis Ocholi. Paycrest is a decentralised payment infrastructure for people and businesses
- Afriskaut: Founded by Nnamdi Emefo and Ussa. Afriskaut is powering the world's discovery of Africa's top sports talent using proprietary data and AI.
- HustleSasa: Founded by Peng Chen and Michael Denuh. Hustlesasa is a platform that enables creators to sell directly to their fans; making it easy to create storefronts, manage orders, accept payments, and handle delivery.
MT Overall Stats
Portfolio Company in the News
- Aya Data raised a Seed Round.
- FoodCourt launched a QSR brand.
- AXIAN Group acquires stake in Wiassur.
- Gamr partnered with Spotify to host a gaming event.
- ORDA partnered with EAT ‘N GO master franchisee of Coldstone.
- Tix Africa wins the Top Prize at NBA Africa Startup Accelerator Demo Day.
- Termii launches Global eSims API, partnered with Siu Telcoms for data roaming across 180 countries.
Community Events
Microtraction Founders Retreat
From October 23rd to 26th, we hosted our annual Microtraction Founders’ Retreat at ALMAT Farms, Abuja. This transformative event brought together over 20 portfolio founders, industry leaders, and our team for a strategic and collaborative experience. The retreat featured curated panel sessions and workshops led by esteemed industry leaders, including Babajide Duroshola, Razaq Ahmed, Ciku Mugabe, Olaide Olusoji-Oke and Emmanuel Gbolade. These sessions provided actionable insights on governance structures, operational efficiency, and achieving ambitious KPIs. Through thoughtfully designed discussions, we tackled key areas such as capital efficiency, scaling businesses, and balancing growth with profitability, ensuring our founders gained practical strategies to propel their ventures forward.
Beyond the sessions, we fostered an environment where founders could deeply connect, share experiences, and build meaningful relationships that strengthened our community. The retreat reaffirmed our commitment to supporting our founders’ journeys and set the tone for continued success across our portfolio.
Microtraction LP Trip
Immediately after the Founders Retreat, we held a week-long Microtraction LP Community Africa Trip which was designed to strengthen relationships between Microtraction, its existing Limited Partners (LPs), and prospective LPs. The trip particularly aimed to provide a comprehensive showcase of Microtraction's portfolio while highlighting select standout companies integral to our journey. Participants engaged in a curated program that included meaningful interactions with entrepreneurs, ecosystem leaders, and key stakeholders across sectors such as technology, sports, and entertainment.
The LP Trip particularly consisted of a tour of portfolio companies of Microtraction. During these visits, the LPs participated in interactive sessions with the founders, gaining valuable firsthand insights into their entrepreneurial journeys, including the challenges they face and the successes they have achieved.
The LP Trip ended with a celebration of the trip’s successes and connections - with everyone leaving with a deeper appreciation of the opportunities and dynamics within Africa’s and particularly Microtraction’s startup ecosystem.
From all of us at Microtraction, we wish you a Healthy, Prosperous, and Happy 2025! Sign up for Opentraction, our newsletter where we share actionable insights and real-world advice from founders & operators who are building venture-backed startups in Africa
🚀 Have or know a tech product we should be aware of? Let’s talk
💰 Are you a founder of a startup? Apply for funding
💭 Just want to give us feedback? Please reach out
🐦 Don’t want to miss Microtraction news, updates? Sign up for Opentraction
