Startup Funding in Africa Surpasses $1 Bn in the First Half of 2025
Amidst fears of global uncertainty and degrowth, the African continent has emerged as a beacon of hope in the startup ecosystem. Led by a group of tech companies in the finance, health, and agriculture sectors, Africa has experienced significant growth in startup funding.
The rise that began in 2019 has now resulted in an important milestone. According to Techpoint Africa, startups have raised over $1 billion between January and May 2025, representing a 40% increase compared to the same period in 2024. Having once been viewed as a risky investment destination, Africa’s fledgling startup scene has repositioned itself as a lucrative option for global investors.
This blog offers a comprehensive overview of the startup landscape in Africa, encompassing the funding boom, the 2022 funding freeze, factors driving the rebound, country-specific trends and growth, potential risk factors, and the global impact of a robust African startup ecosystem.
The Evolution of Startup Funding in Africa
2019: The African entrepreneurial ecosystem greatly benefited from a combination of factors, including improved political and regional stability, increased literacy levels, and laws and regulations conducive to business growth. According to consultancy firm Infomineo, 2019 was a remarkable year for startup funding. $1.4 billion was raised (Africa: The Big Deal), marking the first time African-focused startup funding crossed the $1 billion milestone. This represented a significant increase from the $200 million invested in 2015 (Quartz).
2020: Despite the COVID-19 pandemic slowing growth worldwide, startups in Africa displayed remarkable resilience by adapting quickly, cutting costs, and securing bridge funding. This year saw startups amass $1.1 billion in funding. While this amount was a slight decrease from the previous year, it helped startups in the region maintain momentum.
2021-22: While regions like Europe and North America experienced a decline in funding, African startups continued to perform strongly. According to Infomineo, in 2021, startups raised an impressive $4.3 billion across 818 deals. Moreover, five companies achieved unicorn status, with 12 deals exceeding $100 million in value, which included TymeBank and Flutterwave. A notable deal was OPay, which became the first African startup to raise $400 million in a single funding round and the fastest African startup to reach a valuation of $1 billion. The trend continued in 2022 with over a thousand deals and $4.6 billion raised based on data from Africa: The Big Deal. A report by AVCA Africa stated that 2022 was a significant year, marking strong investor interest, with over 1,100 unique investors participating in deals.
2023-24: The strong momentum in startup funding from past years came to a standstill in 2023, with startups raising $2.9 billion, a 39% drop year-over-year, as per data from Africa: The Big Deal. A “funding winter” due to factors such as geopolitical tensions, recession fears, and interest rate hikes had affected the global startup landscape and negatively impacted African startups. The pullback of North American investors on the continent accounted for 50% of the decline in investor numbers in 2023, according to AVCA Africa. However, in 2023, financing for climate-related ventures increased, with a cumulative total of approximately $790 million (AVCA Africa). Moreover, funding shortages caused many startups such as Dash, Sendy, and WhereIsMyTransport to cease operations. The situation worsened in 2024, with only $2.2 billion raised through equity, debt, and grants, a 25% drop compared to 2023 (Africa: The Big Deal).
Source: Africa: The Big Deal
What Drove the Rebound in African Startup Funding in 2025?
2025 brought much-needed relief to the African startup ecosystem. Firstly, government and institutional support, as well as macroeconomic stability, played a crucial role in helping startups overcome challenges and become investment-ready. Startups that attracted significant funding were from industries such as fintech, logistics, healthcare, agriculture, and transportation. As a result, African startups have not only rebounded but also achieved a 40% year-on-year increase in 2025.
To ensure momentum in startup funding, governments across Africa are creating startup bills or establishing Special Economic Zones (SEZs) to provide an environment conducive to startup success. In Nigeria, the Nigerian Startup Act helps founders by creating a supportive framework with easy access to capital, talent, and technology. In Rwanda, SEZs have been established where startups can conduct operations with special benefits like tax breaks. At the institutional level, organizations such as FMO and AfricaGrow have partnered to help African agri-tech entrepreneurs become investment-ready.
Startups that withstood the “funding winter” also made changes to their business model to be less dependent on external investment. With an emphasis on generating income and profitability rather than just growth, debt financing emerged as a viable solution. According to the news outlet Africa Briefing, debt funding for startups accounted for 11%, a figure double that of 2022. A News report by AInvest stated that of the $1.4 billion raised, equity investments accounted for 68% of the total, debt funding for startups was 28.5%, and grants made up 3.5%. This breakup reflects a diverse funding strategy suitable for both growth and reducing reliance on external investors.
Thirdly, encouraging entrepreneurship at the university level has provided support to the startup ecosystem. University incubation centers and entrepreneurship academies, such as Futurize’s Fuel Africa, can help students identify locally relevant needs and develop and implement solutions that address some of the pressing crises the region is facing.
Country-wise Fundraising Trends in 2025: The Big Four Markets
Egyptian startup funding
2025 has seen Egypt emerge as a major player in the African startup funding landscape. Techpoint Africa reported a 130% increase in funding compared to 2024, with over 16 deals and $330 million raised. Six out of the seven startups that raised more than $10 million in May 2025 came from Egypt. A major winner was Nawy, a proptech startup that raised $75 million. Other deals included funding for fintech startups Valu, Thndr, and Money Fellows.
South African startup funding
Funding for startup businesses in South Africa has also seen steady growth, accounting for 26% of the total funding Africa received, as per an article published by the Making Finance Work for Africa Partnership (MFW4A). According to Tracxn, a technology company, $191 million has been raised through over 20 equity investments as of July 2025. Investment activity was observed across diverse sectors, including insurtech and medtech, reflecting a varied ecosystem. Noteworthy investments included Aura’s $15 million Series B investment in the healthtech industry.
Nigerian startup funding
Although a drop has been observed compared to 2024, Nigeria still accounts for 15% of the total funding in Africa. Tracxn reported that $134 million has been raised across 15 equity investments, with remittance platform LemFi securing the largest round. Investments were spread across diverse industries, including fintech, cleantech, and construction technology. Companies such as Carrot Credit and Cutstruct were other notable investments, raising $4.2 million and $1.5 million, respectively.
Kenyan startup funding
While a drop in major deals was observed in Kenya, it attracted investment in areas such as cleantech and healthtech. Startups BURN manufacturing and ARC ride raised $5 million, while the E-health startup MyDawa secured $9.6 million in funding. Currently, it accounts for a 12% share in total funding.
Risk Factors for Investments in Africa
While a renewed investor interest in the region has been observed, several risk factors remain as hurdles to funding startups:
1) Steep investment curve: Investment in the continent requires a patient approach due to its opaque markets and underdeveloped infrastructure. Moreover, many argue that the permission-based nature of the market, rather than a rule-based one, necessitates a deeper understanding and a stronger relationship with stakeholders.
2) Fluctuating funding trends: Secondly, although a positive trend in funding for small business startups has been observed, month-to-month fluctuations are high, and the number of deals has decreased. Africa Signal noted that while $289 million was raised in January 2025, a 20% increase from January 2024, only $50 million was raised in March. Similarly, the values highly fluctuated in April and May. Moreover, a decline in the deal count was observed, with only 39 deals in May, although average ticket sizes had increased.
Source: Techpoint Africa and Africa Signal
3) Decline in key ecosystems: Lastly, significant startup ecosystems in Africa have slowly been losing momentum. Kenya, which had established itself as a stronghold, faced a substantial decline in funding due to regulatory hurdles, operational challenges such as poor access to risk capital, and a lack of trust between investors and founders. Similarly, inflationary pressures and policy challenges in Nigeria have reduced growth, discouraging domestic and international investment. However, investor interest remains, and experts are optimistic that the startup ecosystem will recover through policy reforms and greater startup discipline.
What’s Next for Startup Fundraising in Africa?
Despite significant risks being observed, Africa Signal noted that if current trends continue, funding for startups is expected to exceed $2.5 billion to $3 billion by year-end, driven by large funding rounds for agritech, digital infrastructure, and fintech.
Landry Signe, a senior fellow at the Brookings Institution and professor and executive director at the Thunderbird School of Management, stated that Africa would account for 25% of the world’s population by 2050, with potential for $16 trillion in combined business and consumer spending, creating massive opportunities for startups and investors.
Furthermore, despite the African Continental Free Trade Area framework being in its early stages, it is expected to help startup markets expand across Africa and ease cross-border investment and trade.
The first half of 2025 has been a period of substantial investment and growth for the continent. Funding for small business startups has not only contributed to solving pressing challenges in healthcare and climate change in the region but has also attracted attention from across the globe. While European and American investors dominated the field, the reemergence of Japanese investors in the healthcare sector, along with increased participation from Middle East investors in early and growth-stage rounds, presented promising signs. Moreover, the expansion of startups such as LemFi into Asia and Europe represents the immense potential of African companies, positioning the continent as a significant player in the global market.
Conclusion
In conclusion, Africa’s startup funding landscape has grown significantly since 2019, despite challenges like limited infrastructure and policy hurdles. Startups have shown resilience through innovation and support from institutions and governments. Funding in early 2025 has been substantial, but risks remain. Most investment still goes to the “Big Four” — Nigeria, Kenya, South Africa, and Egypt — yet emerging markets like Ghana, Tanzania, Senegal, Ivory Coast, and Tunisia are gaining traction. With a young, connected population driving demand for tech solutions, African startups are well-positioned for global impact.
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