After two years of decline, African tech funding bounced back in 2025, reaching $4.1 billion—a 25% increase from $3.25 billion in 2024, according to Partech Africa’s annual VC report. However, the growth is driven primarily by debt financing rather than a broad surge in equity. Debt financing reached a record $1.64 billion, accounting for 41% of total capital, reflecting its evolution as a structural component of Africa’s startup ecosystem rather than a marginal complement to equity investment.
Equity funding grew modestly, rising 8% to $2.4 billion across 462 deals, while overall deal count remained nearly flat. The headline growth in total funding is largely a reflection of African startups maturing and accessing diverse financing tools, rather than a dramatic return of investor exuberance.
Funding remained highly concentrated in four markets: Kenya, South Africa, Egypt, and Nigeria, which together captured 72% of total investment. Kenya led with $1.04 billion, driven by debt and four megadeals accounting for 60% of the country’s total. South Africa reclaimed the lead in equity funding and deal count, reflecting broad-based recovery. Egypt maintained a strong deal pipeline, while Nigeria saw a decline following its peak in 2021.
Sector dynamics are shifting as well. Fintech remained the largest sector by funding, but its share of equity dropped from 60% to 32%, signaling a normalization of capital flows. Cleantech nearly doubled in funding to $1.18 billion, while Enterprise software, E-commerce, and Healthtech each exceeded $200 million for the first time since the 2021–2022 boom. These trends suggest investors are diversifying into sectors with maturing business models.
Despite the recovery, the seed-stage pipeline continues to contract, with a slight decline in both deal count and capital deployed. Low conversion rates from Seed to Series A indicate potential constraints on future deal flow for later-stage funding rounds.
Artificial intelligence is increasingly embedded in African startups, particularly in Fintech, Healthtech, and Enterprise solutions. While not explicitly labeled as AI in funding reports, startups are deploying AI in areas like credit scoring, fraud detection, diagnostics, and SME productivity, reflecting a growing role for the technology in the ecosystem.
Overall, African tech funding in 2025 reflects a measured recovery, with debt becoming a key structural layer, sector diversification beyond Fintech, and top markets maintaining dominance. The long-term growth trajectory will depend heavily on revitalizing the Seed-stage pipeline to ensure sustainable investment in the next generation of startups.
