In the first quarter of 2025, venture capital funding into African startups dropped by 5%, reaching $460 million. This marks a continued decline in investment, with figures falling from $486 million in Q1 2024. According to data from Africa: The Big Deal, the decline was primarily due to a significant drop in large deals, with February and March seeing particularly low funding levels. The drop in mega deals, specifically those exceeding $10 million, contributed to the overall reduction in funding.
While the total funding for Q1 2025 was lower, the number of startups securing at least $1 million remained stable. In fact, 52 startups reached this milestone, aligning with the previous year’s performance. The lion’s share of funding was concentrated in the continent’s major economies, with Kenya, Nigeria, South Africa, and Egypt receiving the bulk of investments. Kenya and Nigeria each secured approximately $100 million, while South Africa received $100 million, and Egypt brought in $61 million.
Fintech continued to dominate the investment landscape, capturing 46% of total funding, followed by the energy sector, which secured 18% of the capital. Notable fintech deals included LemFi’s $53 million and Naked’s $38 million raises. In addition, logistics and transportation startups saw a share of 10% of the funding. However, despite fintech’s strong showing, the absence of larger deals in the energy and transportation sectors contributed to the overall decline in capital raised.
A concerning trend highlighted in the report was the ongoing underfunding of female-led startups. Only 2% of Q1 funding went to female CEOs, with the largest deal being a $6.2 million grant for African Biologics. Excluding grants, the share dropped to a mere 0.7%. In comparison, solo male founders and all-male teams received 79% of the total funding, signaling that more work is needed to improve gender inclusivity in African venture capital.
Source: business day