The Shift in African Investment Landscape
Since 2023, African investors have dramatically reshaped the capital landscape for local startups. As global investors recede, local funding has surged, now accounting for nearly 40% of total investments, a marked increase from 25%. This trend underscores a crucial shift highlighted in a January 2026 report by Briter, a prominent technology research firm.
In 2022, African investors contributed $1.6 billion alongside nearly $5 billion from global players. However, by 2025, global funding plummeted to approximately $2.3 billion. While such a decline could have led to instability in the startup ecosystem, African investors have managed to fill a portion of this gap. This shift towards a resilient local investment base indicates maturing market dynamics.
Briter delineates local investors as entities headquartered within Africa. These local fund managers are pivotal in channeling capital to commercially viable products tailored for African markets. With their on-the-ground presence, they effectively identify, back, and scale technology solutions rooted in local contexts. For instance, Moniepoint, a budding unicorn, thrived with crucial backing from Nigerian venture capital firms that helped propel it into the consumer market.
The Role of Local Fund Managers
Local fund managers have a nuanced understanding of their markets, which allows them to offer invaluable insights and advice. Kola Aina, founder of Lagos-based Ventures Platform, emphasizes the importance of a robust mix of local fund managers who can provide advice that is geographically relevant—something not easily achieved from overseas.
The rise of these managers can be attributed to backing from development finance institutions, such as the International Finance Corporation (IFC), which has initiative programs supporting local VCs. British International Investment, Proparco, and AfricaGrow have also stepped up to bolster African ventures in light of global investors withdrawing.
In addition to fund managers, local angel investors and high-net-worth individuals are increasingly channeling investments into startups. As noted by Marge Ntambi, a venture partner at Benue Capital, these local investors not only contribute capital but also bring extensive networks and business experience, thereby enriching the ecosystem. Their investments signal a commitment to improving local economies and building a legacy.
Funding Trends in Africa
Despite the progress, the funding landscape remains uneven, with deep regional concentrations and a dearth of exits creating challenges for local startups. In 2025, African startups collectively raised $3.6 billion—a 25% growth from the previous year—through 635 disclosed deals, as reported by Briter. The increase in deal activity, with a 43% rise in transactions, indicates a renewed interest in African technology, albeit with smaller average check sizes.
However, the majority of funding is still concentrated in the “Big Four” countries: Nigeria, Kenya, Egypt, and South Africa. These nations commanded 80% to 85% of total funding, a trend that has persisted for a decade. Their dominance stems not only from higher startup densities but also from the presence of later-stage companies capable of absorbing larger investments.
Conversely, regions in Francophone Africa and smaller Anglophone countries are witnessing an uptick in deal counts, yet these markets are grappling with smaller funding rounds, often below $5 million. Countries like Senegal, Côte d’Ivoire, and Rwanda are fostering early-stage activity, but without sufficient capital to catapult them to regional scales.
Challenges in Growth-Stage Investments
While early-stage deals are far more numerous, growth-stage capital remains stagnant compared to pre-2022 levels. Though overall funding has increased, late-stage rounds are still scarce. Essentially, mega-deals constitute only 1% of transactions, capturing around 25% of total value, which signals a market skewed toward a few favored companies.
Consequently, many startups find it easier to secure initial funding but struggle with follow-on capital. To bridge this gap, founders often resort to debt financing and hybrid instruments to extend their operational runway.
Exits are showing signs of improvement, with Briter tracking over 60 acquisitions in 2025 across various sectors, including fintech, software, logistics, and renewable energy. Still, these acquisitions tend to be smaller corporate mergers rather than large-scale exits driven by venture capital, which hampers the recycling of capital within the ecosystem.
The fintech sector particularly stands out, accounting for 27 of these transactions. The increasing presence of climate, energy, and infrastructure-focused startups on acquisition lists reflects a growing interest in models with asset-backed or recurring cash flows—factors that strategic buyers find appealing amidst economic volatility.
Notably, large IPOs or cross-border exits remain elusive, creating a reliance on secondary sales and mergers for liquidity events. This restriction ultimately limits the speed at which capital can be reinvested into emerging companies and stymies the overall growth potential for Africa’s tech landscape.