Africa’s start-up funding is losing momentum, with investors increasingly concentrating capital at the seed and early stages, amid rising uncertainty reflected in a growing share of undisclosed deals.

 

A quarterly report by the African Private Capital Association (AVCA) shows that in the nine months to September 30, 2025, venture capital activity was concentrated in early growth phases, with late-stage activity limited to just two recorded deals—the weakest level since 2020.“The first three quarters of 2025 portray a market gaining depth at the base but thinning toward the top. Africa’s revitalisation remains bottom-heavy, anchored in the Seed and Early stages while awaiting the capital needed to propel its next generation of exits,” the report says.“Even so, the renewed depth at this entry point signals that investors are re-engaging at the base of the venture pyramid, favouring early bets on emerging founders and ideas with potential to drive the next growth cycle. Momentum carries through to the Early stage, where both volume and value trends reflect strengthening investor conviction.”The report says the absence of high-value rounds has constrained overall dollar growth, leaving many scale-ups short of expansion capital.

Only 13 large deals valued at $20 million or more were recorded in 2025, with a combined value of just over $500 million—the weakest aggregate in five years.

Venture capital deal countAccording to the report, Africa’s bottom-up recovery in venture capital funding is being driven by a revived seed segment, which grew by 14 percent to 107 deals during the period—already 85 percent of the total recorded in all of 2024.

Although disclosed value fell to $218 million from $558 million, 15 percent of these deals were undisclosed, obscuring the true scale of capital deployed.“The quarter saw an unusually high share of deals with undisclosed values: 17pp (percentage points) higher than Q3 2024 and 26pp above the average for 2022–2024. This suggests that capital deployment did not collapse outright, but rather became less transparent, reflecting investors’ heightened discretion and a market still navigating relative uncertainty,” the report says.

During the period, venture capital deal count was broadly flat at 43, compared with 42 a year earlier, while total capital deployed tripled to $600 million.

The region hosted more than a third of deals valued above $20 million in 2025, benefiting from a relatively stable investment environment, particularly in South Africa.

West Africa remained the most active corridor by deal volume but lagged in value, with Nigeria driving activity on the back of a wave of Series A funding.

North Africa accounted for 23 percent of both deal volume and value, with Egypt and Morocco contributing nearly three-quarters of the region’s funding.

The report says East Africa’s steady deal flow masked a sharp contraction in equity inflows, as investors shifted toward debt instruments in financial services, transport and clean energy.

In the nine months to September 30, 2025, venture debt deals rose by 31 percent to 55, while total value more than doubled to $1.6 billion—exceeding the full-year total of $1 billion in 2024.

The surge was driven by six megadeals, which together contributed $1.1 billion.

Notable transactions included Sun King’s $156 million local-currency securitisation in Kenya and Wave’s $137 million debt raise in Senegal.

The report says venture debt has become a critical buffer, cushioning the slowdown in equity capital and sustaining liquidity across growth stages.

East Africa led in venture debt activity, with Kenya accounting for 22 percent of all deals in 2025—double the share of Egypt, Ghana and Nigeria, each at about 11 percent.“Collectively, these developments point to a decisive shift in the funding landscape: Debt is no longer a niche, supplementary tool but the primary driver of growth and liquidity across the continent,” the report says.

Including venture debt, a combined $3 billion was deployed across 417 deals during the period, compared with $2.2 billion across 361 deals in 2024.

The financial sector’s share of total venture capital deal value fell to 31 percent in the nine months to September 30, 2025, from 59 percent in 2024.

Within financial services, investor focus has shifted from the digital banking boom of 2024 to core fintech infrastructure, including payments rails, buy-now-pay-later platforms such as Sevi in Kenya, Leya in Côte d’Ivoire and ValU in Egypt, as well as personal credit services.

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