African startups attracted $3.9 billion in funding across 506 transactions in 2025, signalling renewed stability in the continent’s venture capital landscape after two years of global market correction, according to the 2025 Venture Capital Activity in Africa report released by the African Private Capital Association.
While total capital deployed remained below the record highs of earlier investment cycles, deal activity showed resilience.
The report highlighted a four percent year-on-year increase in deal volume, making Africa the only global region where venture activity did not decline during the period.
Early-stage funding emerged as a strong driver of growth.
Seed and early-stage transactions expanded, with median deal sizes at both levels reaching multi-year highs, reflecting stronger investor confidence despite a more selective funding climate.
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The report also noted faster transitions from Seed to Series A rounds, indicating improved efficiency in early-stage growth.
At the top end of the market, eight megadeals were completed in 2025, raising a combined $1.3 billion.
These large transactions helped cushion the slowdown in late-stage equity funding, which dropped to its lowest level since 2020.
Domestic participation reached record levels, with African investors accounting for 45 percent of total venture fund commitments, compared to an average of 23 percent between 2022 and 2024.
This shift was largely driven by corporate investors and African development finance institutions.
Although overall DFI participation declined by 27 percent, African DFIs contributed 63 percent of deployed DFI capital, reversing the previous dominance of international DFIs. The trend suggests a growing reliance on local capital as a more sustainable foundation for innovation.
Another major development was the rapid growth of venture debt. Funding through venture debt climbed to $1.8 billion in 2025, nearly doubling year-on-year and extending a three-year upward trend.
Debt financing is increasingly being used as a core funding strategy, especially by growth-stage startups seeking to extend operational runway while limiting equity dilution.
East Africa accounted for more than two-thirds of total regional deal value in this segment.
Exit activity also strengthened. Venture-backed exits rose 31 percent year-on-year to a record 34 deals, outperforming the marginal one percent global growth.
North Africa led in exit volume, while Southern Africa recorded the highest exit value at $288 million. Trade sales remained the dominant exit route, accounting for more than 70 percent of both volume and value.
Financial sponsors increased their involvement, particularly in sectors such as fintech, and Africa-based buyers represented 54 percent of all exits, signalling a growing base of local and regional acquirers.
Commenting on the findings, AVCA Chief Executive Officer Abi Mustapha-Maduakor said the ecosystem is shifting toward more patient, structured, and locally anchored capital.
She noted that rising domestic participation and exit activity demonstrate growing confidence among African investors in supporting and exiting homegrown businesses.
Overall, the 2025 data points to a venture capital ecosystem that is recalibrating rather than retreating, with stronger local participation, expanding debt financing, and resilient early-stage activity shaping Africa’s evolving startup landscape.
