BD Insider: Mobility dethrones Fintech

Jesutofunmi Adedoyin -

Mobility Dethrones Fintech in H1 2024 Funding Report

🍔 Quick Bite: There was a shift in African startup funding in H1 2024; Mobility zoomed past Fintech to become the hottest sector, attracting $254.5 million, 39% of all funding in the first half of 2024. Fintech and Cleantech followed closely with $109.1 million and $77.7 million respectively.

The Breakdown

Fintech has long been the golden child of African startups, attracting the lion's share of investor funding. But the tide might be turning. According to our H1 2024 Funding Report, mobility startups have zoomed past their fintech counterparts, raking in a whopping $254.5 million, which accounts for 39% of all the funding in the first half of 2024. To put that number into context, in H1 2023, mobility startups raised $105,300,000 while fintech startups raised $790,692,193.

Why? Investors are shifting gears, pouring money (albeit more of debt) into African mobility startups (ride-hailing, EVs, logistics) as they see a growing need for innovative transportation solutions across the continent. Two of the three largest funding deals in this half (Moove with $100 million and Spiro with $50 million) went to startups in the mobility sector. 

But the mobility sector didn't completely dominate in H1. Fintech still led the way in terms of the number of startups that received funding with 20 fintech startups receiving investments compared to 8 in the mobility sector. The 8 startups in the mobility sector that received funding are Moove, Spiro, Ampersand, FriendyM, Roam, Planet42, Mogo and BasicGo.

Why the surge?

This surge in funding can be attributed to several factors. Some of these include:

Growing urbanisation in Africa  

Africa is experiencing a rapid urbanisation boom, with statista predicting that by 2026, the continent’s urban population will reach 722 million.  This growth creates a critical need for efficient and affordable transportation systems to handle the increasing strain on existing infrastructure. Mobility startups are seen as key players in addressing this gap, offering innovative solutions like ride-sharing services and on-demand logistics that can meet the demands of urban populations. 

Focus on sustainability and environmental concerns

The rise of electric vehicles (EVs) within the mobility sector reflects a growing focus on sustainability and environmental concerns. Investors are betting on African startups to bypass old gasoline cars and implement greener options from scratch. Part of Spiro's $50 million funding in May will go towards new electric bike models. Moove is also partnering with Uber to bring over 20,000 electric vehicles to Uber's platform in India. This trend aligns with global efforts towards sustainability.

Debt fueling the mobility engine

The stories of existing mobility companies in Africa, like Bolt and Uber, are paving the way for new ventures. These established companies have proven the viability of innovative solutions in the mobility sector. 

One interesting aspect of the funding surge in the mobility sector is the prevalence of debt financing. While fintech startups primarily relied on equity investments (Only 2 of the 20 fintech funding rounding rounds recorded were debt), a significant portion of mobility funding involved debt. 8 of the 11 funding rounding rounds recorded by mobility startups had an element of debt, with 5 being purely debt funding.

This debt-driven approach to funding highlights investors' confidence in the long-term viability of the African mobility sector. It suggests these companies can generate sufficient revenue to service their debt and deliver strong returns.

Speed bombs on the road

The recent influx of funding for African mobility startups is exciting, but a smooth ride isn't guaranteed. Crumbling infrastructure across many African cities remains a major hurdle. Upgrading these roads will require not just investor capital but also sustained government commitment.

Regulation also presents a challenge. Startups will need to navigate complex and sometimes conflicting government policies across different African countries. For instance, South Africa only recently signed a bill into law that provided operating licences for ride-hailing companies like Bolt and Uber.

The continent's economic climate adds another layer of complexity. In May, Bolt Nigeria reportedly laid off 22 out of its 45 employees. The mobility company later denied such reports and termed it a “discontinuance of collaboration” with some of its employees. 

Also, in July 2023, ride-hailing drivers in South Africa threatened to shut down operations due to low pay. They claimed these ride-hailing services were exploiting them with high commissions—a repeat of what happened in 2020. 

Even with the production of electric vehicles, poor road conditions and a lack of charging stations throughout the continent could limit their effectiveness.

Despite these hurdles, the increased investment is a positive sign. With innovative solutions, strategic planning to address these challenges, and continued support, African startups have the potential to revolutionise transportation on the continent. 

Here are other important stories in the media:

  • 2024 Informal Economy Report: A report by Moniepoint on the informal economy in Nigeria.
  • Computer village became Africa’s largest gadget hub in two decades. Now it’s future is uncertain: A look into the future of computer village. 
  • South Africa missing as Starlink launches in Madagascar, five other countries: South Africa is the only country in the southern region yet to receive official confirmation for Starlink access.
  • Africa’s smartphone market sees 17.9% growth in Q1 2024: Smartphone shipments in Africa surges by 17.9% despite economic challenges.
  • Zoho announces price increase for Nigerian users: Zoho has announced a price adjustment to align with market conditions in Nigeria. 

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