Africa’s startup ecosystem is staging a comeback after two difficult years, with venture funding rebounding to an estimated US$3 billion in 2025, up from US$2.2 billion in 2024, driven increasingly by local and Africa-focused investors, according to data presented at the AfricArena Grand Summit in Cape Town.
The recovery marks a turning point after the sharp global venture capital slowdown of 2023, which hit emerging markets particularly hard. While international investors remain active, ecosystem leaders say the centre of gravity is shifting, with African general partners, local institutional investors, corporate venture arms and diaspora-backed funds now playing a bigger role in deploying capital across the continent.
Speaking during a State of Tech in Africa 2025 presentation, Maxime Bayen, operating partner at Catalyst Fund, said Africa-focused venture funds have significantly deepened over the past two years. He noted that 27 Africa-focused VC funds raised a combined US$1.8 billion between 2024 and 2025, largely targeting the seed to Series A stage, long considered the continent’s “missing middle”.
That financing gap, where startups outgrow microfinance but remain too risky for banks, has historically constrained African scale-ups. Bayen said this is beginning to change as local capital fills the space. “A couple of years ago, this was the missing middle. It increasingly looks like the middle is not missing anymore,” he said.
Despite the rebound, funding remains heavily concentrated in Africa’s four largest startup hubs, Nigeria, Kenya, Egypt and South Africa, which together have consistently captured 80–85% of total venture funding over the past five years. Analysts say this stability reflects deeper ecosystems, larger markets and stronger exit prospects, though it also highlights the need to unlock capital for smaller and frontier markets.
Sectorally, clean energy, climate tech and fintech have emerged as leading beneficiaries of the recovery, supported by rising demand for decentralised power, financial inclusion tools and climate adaptation solutions. Data from Partech Africa and the African Private Equity and Venture Capital Association (AVCA) show climate-related startups accounted for a growing share of deal value in 2025, reflecting both global climate finance trends and Africa’s acute infrastructure needs.
Africa’s resilience stands out in a global comparison. Bayen noted that when venture funding is indexed to a 2020 baseline, Africa’s ecosystem has grown to 209, meaning total startup funding in 2025 is more than double 2020 levels. By contrast, several developed markets remain below their pandemic-era peaks, according to Crunchbase and PitchBook data.
A major confidence boost came from two landmark tech IPOs in November 2025, reopening Africa’s long-dormant public market exit route. In South Africa, fintech firm Optasia listed on the Johannesburg Stock Exchange, raising $345 million at a valuation of $1.4 billion. Weeks later, Moroccan payments company Cash Plus raised $82.5 million on the Casablanca Stock Exchange at a $550 million valuation. The last comparable African tech IPOs—Jumia and Fawry—dated back to 2019.
At the summit, Kola Aina, founding partner of Ventures Platform, cautioned against unsustainable growth and overcapitalisation, urging founders and investors to prioritise efficiency. “Our ecosystem is still early. You don’t go to the gym after years away and try to bench press the heaviest weights on day one,” he said.
Aina argued that governments must also play a more active role by recognising startups as a strategic development asset class, improving regulatory clarity and supporting local capital markets to unlock domestic liquidity. “Africa’s venture future is collaborative, not speculative. It’s a multiplayer sport involving governments, regulators, investors and founders,” he said.
With local capital increasingly setting the agenda, analysts say Africa’s startup recovery is becoming structurally stronger, less dependent on volatile global flows and more aligned with the continent’s long-term economic priorities.
African startups raised US$3.1bn in 2025 as Kenya overtakes Nigeria
