The surge of Chinese venture capital into Africa’s growing tech scene, which peaked around 2021, now appears to be receding, raising questions about the sustainability of that initial boom and the future direction of global investment into the continent.
Between 2019 and 2021, Africa’s startup ecosystem buzzed with energy, significantly fueled by capital injections from Chinese venture capitalists. Firms such as MSA Capital, Tencent, Sequoia China, IDG Capital, and Transsion Holdings placed substantial bets — particularly in fintech — backing headline names like OPay, PalmPay, and Paystack. Mega-deals exceeding $100 million, including OPay’s $400 million round in 2021 led by SoftBank Vision Fund 2 and supported by existing Chinese investors, signaled robust confidence. Nigeria, Egypt, and South Africa became the primary magnets for this wave of funding.
Yet the landscape has shifted. Although 2022 saw continued interest, the frequency and scale of major deals declined notably compared to the boom years. Data shows a trend toward smaller ticket sizes and earlier-stage rounds post-2021, suggesting a more cautious investment approach or a funding winter that mirrors global patterns.
Investment Stumbles and Strategic Preferences
The retreat in Chinese capital has not occurred in a vacuum. A string of high-profile failures appears to have dampened investor enthusiasm. MSA Capital, one of the most active Chinese VCs in Africa, reportedly encountered challenges with several portfolio companies, including Egypt’s B2B marketplace Capiter and the fintech firm Cassbana, both of which faced severe operational setbacks.
There is also a discernible pattern in investment preferences: several Chinese investors have shown a tendency to back startups founded by Chinese entrepreneurs operating in Africa. Fintech leaders OPay and PalmPay, both with strong ties to Chinese parent companies or co-founders, are prime examples. Some investors also preferred ventures headquartered in China or adjacent financial centers like Singapore or Hong Kong, indicating a reliance on familiar networks and oversight frameworks.
The Crypto Contagion and Regulatory Hurdles
One of the most dramatic blowbacks came from the collapse of crypto ventures. Initially viewed as a promising frontier, African crypto startups — often backed by top-tier global and Chinese VCs — suffered a series of swift and painful implosions that eroded confidence.
- VIBRA, a Pan-African P2P crypto platform launched in 2021 with $6 million in funding from Dragonfly Capital and CRE Venture Capital, shut down within two years. Its incentive-based model, paying users to learn about crypto, failed to create lasting financial viability.
- Pillow, a Singaporean crypto savings app targeting Nigeria and Ghana, raised $21 million from investors including Accel India and Quona Capital. It abruptly closed in mid-2023, blaming the “existing regulatory environment,” which forced a rushed user exit.
- Bundle Africa, a social payments app incorporating crypto, also shuttered in 2023 despite strong user engagement. While the company cited a shareholder decision to restructure, Nigeria’s regulatory hostility toward crypto and the global “crypto winter” were likely decisive.
- Mara, the most spectacular flameout, raised $23 million in 2022 from Coinbase Ventures and Alameda Research, among others. The firm burned through nearly $16 million within a year — $9.1 million of which went to salaries and bonuses — while generating no revenue. The startup collapsed amid vendor debts and accusations of inflated user metrics and mismanagement.
These failures highlight the difficulties in accessing Africa’s fragmented and evolving regulatory regimes, particularly around digital assets. Nigeria offers a stark example: while authorities occasionally signal openness to tokenized traditional assets, the Central Bank’s 2021 directive banning banks from facilitating crypto transactions continues to inject significant uncertainty.
Market Maturation and Evolving Strategies
Despite setbacks, fintech remains a favored category for Chinese VCs. However, data indicates a broader shift. While earlier years featured large rounds in logistics (SWVL, Lori Systems), e-commerce (TradeDepot, MaxAB), and mobility (AutoChek), more recent investment activity skews towards smaller, earlier-stage deals in startups like DXwand.
This suggests a maturing market in which investors are increasingly selective, targeting ventures with demonstrable paths to profitability. Some Chinese VCs have doubled down on perceived winners, such as OPay and Wapi Pay, through repeat funding rounds. Corporate VCs like DragonBall Capital (Meituan) and Transsion have remained active, particularly in fintech, often aligning their African investments with broader strategic or operational interests on the continent.
Other Reasons
Home Market Prioritization
China’s domestic slowdown has compelled VCs to reorient toward local markets. State pressure to channel capital into domestic tech champions over foreign ventures has also intensified.
Structural Challenges in Africa
Currency volatility — Nigeria’s naira lost 70% of its value in 2023 — along with poor infrastructure (only 38% of Africans have reliable internet) and rising talent costs (median tech salaries are up 42% since 2021) have added friction.
Better Alternatives Elsewhere
Southeast Asia now attracts many times more Chinese VC money than Africa, while Latin America offers comparable growth with more predictable regulation and fewer structural risks. According to data from Tech in Asia, Chinese tech companies invested approximately US$2.4 billion across 34 deals involving Southeast Asian firms in 2023.
The New Reality for African Startups
Chinese capital hasn’t disappeared — but the thesis has evolved. Fintech remains an outlier: OPay and PalmPay continue to attract capital, albeit only after demonstrating viable unit economics. Meanwhile, the average Chinese-led funding round has shrunk — from over $10 million in 2021 to less than $1 million in 2023.
Another shift is that many of the deals that continue to be inked are with startups that have Chinese co-founders or strong operational ties to China. This reflects a growing insistence on local presence, tighter oversight, and deeper alignment with Chinese strategic interests.
In 2021, investors bet on Africa’s promise with abundant capital and optimism. Today, they demand traction, revenue clarity, and regulatory resilience. For African founders, the message is clear: the era of easy Chinese money is over. Securing capital now requires bulletproof business models — and ideally, a bit of Chinese DNA in the cap table.
| Investor | Address | Peak Year | Startups Invested In |
| Huashan Capital | Shanghai, China | 2022 | DXwand |
| Bixin Ventures | Beijing, China | 2022 | Canza Finance |
| Fenbushi Capital | Shanghai, China | 2022 | Canza Finance |
| SNZ Capital | Beijing, China | 2021 | VIBRA |
| Chain Capital | Shanghai, China | 2021 | Wicrypt Network |
| DragonBall Capital | Ningbo, Zhejiang, China | 2021 | OPay |
| Gobi Ventures | Shanghai, China | 2021 | Wapi Pay |
| Future Hub | Shanghai, China | 2021 | Wapi Pay |
| Crystal Stream Capital | Beijing, China | 2021 | MaxAB |
| Tenhong Holdings | Beijing, China | 2021 | LifeQ South Africa |
| Integral Capital | China | 2021 | Weelo |
| Huobi Ventures | Beijing, China | 2022 | MARA |
| MSA Capital | Beijing, China | 2021 | AutoChek, TradeDepot, Homzmart, SWVL, Rabbit, pawaPay, Wapi Pay, Jetstream, Flextock |
| JUN Capital | Shanghai, China | 2020 | Xend Finance |
| Tencent | Shenzhen, China | 2021 | Helium Health, Paystack, TymeBank |
| GaoRong Capital | Beijing, China | 2019 | OPay |
| Source Code Capital | Liaoning, China | 2019 | OPay |
| Redpoint Ventures China | Beijing, China | 2019 | OPay |
| IDG Capital | Beijing, China | 2019 | OPay |
| Sequoia Capital China | China | 2019 | OPay, Wave |
| Transsion Holdings | Shenzhen, China | 2021 | PalmPay, Wapi Pay |
| Crystal Stream Capital | Beijing, China | 2019 | Lori Systems, GONA |
| UnityVC (Shaw Wang) | China | 2019 | GONA |