African startups raised about US$3.1 billion in venture capital funding in 2025, a sharp rebound from the US$2.2 billion recorded the previous year, according to data compiled by research firm Launch Base Africa.
The increase signalled renewed investor interest in the continent’s technology sector after a slowdown triggered by rising global interest rates and heightened risk aversion among international funds in 2023 and 2024. However, funding remained heavily concentrated in a handful of countries, even as the rankings shifted.
Kenya emerged as Africa’s leading venture capital destination in 2025, overtaking Nigeria for the first time in years. Kenyan startups raised US$933.6 million during the year, accounting for nearly one-third of all venture capital invested across the continent, the report showed.
Much of Kenya’s performance was driven by large deals in the energy, electric mobility and climate-linked sectors, reflecting growing investor interest in infrastructure-related technology and sustainability projects.
South Africa ranked second, with startups raising US$625.7 million. The country continued to benefit from a relatively mature financial ecosystem, a strong base of local investors and easier access to international capital markets.
Egypt placed third, attracting about US$430 million in venture capital funding. The North African country maintained strong momentum in fintech, logistics and digital services, supported by a large domestic market and ongoing reforms aimed at improving the business environment.
Nigeria, long regarded as Africa’s largest startup hub, fell to fourth place. Startups in Africa’s most populous nation raised US$410.1 million in 2025, a steep decline compared with previous years when Nigeria consistently led the rankings.
Analysts attributed Nigeria’s weaker performance largely to macroeconomic pressures. A prolonged devaluation of the naira reduced the ability of startups to generate dollar-denominated revenues, which many international investors prefer. Persistently high inflation also eroded consumer purchasing power, weighing on transaction volumes in sectors such as fintech and e-commerce.
Senegal ranked fifth, with startups raising US$154.2 million, highlighting a gradual diversification of venture capital flows beyond the continent’s traditional innovation hubs.
The report also pointed to notable structural changes in Africa’s startup ecosystem during the year. For the first time, startups in Angola and Gabon raised venture capital funding, marking a tentative expansion of investment into new markets, even though deal volumes remained modest.
Despite the overall recovery in funding, no African startup officially reached a $1 billion valuation in 2025, in contrast to 2024 when Moniepoint and Tyme Group joined the continent’s small group of unicorns.
Investors increasingly prioritised profitability, cash-flow generation and sustainable business models over rapid growth, Launch Base Africa said. This shift reflected a broader global reassessment of risk as higher borrowing costs persisted.
Debt financing also gained prominence. Nearly 45 percent of the total funds raised in 2025 came in the form of debt, particularly in capital-intensive sectors such as energy, logistics and mobility, where revenues tend to be more predictable and assets can be used as collateral.
African venture funds and local institutional investors played a growing role, accounting for nearly one-third of recorded transactions during the year. Their increased participation helped cushion the impact of continued caution among some international investors.
Looking ahead to 2026, the report said capital flows into Africa’s startup ecosystem were expected to continue recovering, though investors were likely to remain selective.
Funding is expected to focus on projects linked to energy infrastructure, climate transition and essential services, while macroeconomic risks particularly in Nigeria are set to remain a key factor shaping investment decisions.
