The “funding winter” that chilled the African continent for two years has finally thawed, but the sun isn’t shining equally on everyone. While African startups successfully raised approximately $3.1 billion in 2025 — a significant rebound from the $2.2 billion recorded in 2024 — the narrative has shifted from continental growth to a tale of two halves.

For the first time in nearly a decade, Nigeria is no longer the undisputed engine of African venture capital. Despite the overall market growing by approximately 41% year-on-year, Nigeria’s share of the pie has dwindled, leaving the West African giant struggling to keep pace with a surging Kenya and a consolidating Egyptian market.

The New Leaderboard: Kenya Takes the Crown

The most striking shift in the 2025 data is the definitive crowning of Kenya as the continent’s primary investment destination. Driven by massive deals in the energy and e-mobility sectors, Kenya nearly reached the $1 billion mark, overshadowing its peers.

While the “Big Four” still dominate, their internal hierarchy has been upended. Nigeria, which historically battled for the top spot, has slid to fourth place, barely outperforming a surging Senegal in terms of growth velocity.

Nigeria: The Giant Losing its Grip

Nigeria’s decline to the bottom of the “Big Four” is the headline of the year. The reasons are largely macroeconomic rather than a lack of entrepreneurial talent:

• Currency Volatility: With the Naira facing persistent devaluation, startups earning in local currency find it increasingly difficult to deliver the dollar-denominated returns that international VCs demand.
• Inflationary Pressure: High inflation has squeezed consumer disposable income, hitting B2C startups in the fintech and e-commerce sectors particularly hard.
• The Exit Problem: While South Africa saw healthy M&A activity, Nigerian exits remained sparse in 2025, making investors hesitant to lock capital into the market without a clear path to liquidity.

“2025 was a remarkable year for the African startup ecosystem. For the first time, the continent recorded major breakthroughs: the first VC-backed funding rounds in Angola and Gabon, a wave of startup-led acquisitions, and landmark IPOs.

Investors returned in droves, with a renewed focus on fundamentals. As we tracked funding activity across Africa month by month last year, however, a noticeable gap emerged in Nigeria. Investors backing Nigerian startups increasingly favoured companies with global operations.

Nigeria’s macroeconomic challenges were largely to blame, and even local VC firms were not spared the impact. Whether conditions improve in 2026 will depend largely on investor confidence in the country’s macroeconomic outlook. But the slowdown marked one of Nigeria’s most significant setbacks in recent years.”
 — Launch Base Africa

The Unicorn Drought 

Despite the $3.1 billion total, the “Unicorn” era has hit a standstill. No new billion-dollar valuations were officially minted this year — a stark contrast to 2024, which saw Moniepoint and Tyme Group reach the milestone.

However, the industry is closely following developments in North Africa. Algerian startup Yassir is rumored to have unofficially reached unicorn status following an undisclosed internal round, though the company has not publicly confirmed the valuation.

Consolidation Over Creation

The 2025 rebound was also defined by “The Great Consolidation.” Rather than new startups entering the fray, the year was characterized by mergers and acquisitions.

The successful integration of the MaxAB-Wasoko merger in Egypt set the tone for the year: investors are now rewarding startups that “buy” market share and efficiency rather than those burning cash for organic growth.

Summary of Key Trends

• Debt is King: Asset-backed debt financing now accounts for nearly 45% of total funding, particularly in the energy and logistics sectors.
• Local Capital: African-led funds and local institutional investors provided a vital cushion, accounting for nearly one-third of all deal participation in 2025.
• The Unicorn Drought: The focus has shifted from valuation to “path to profitability,” leading to a year with zero new official unicorns.

The message for 2026 is clear: the capital is back, but it is more discerning, more focused on green infrastructure, and increasingly wary of the macroeconomic instability currently plaguing the Nigerian market.

Further Reading: 

• Every African Tech Investment Tracked in 2025 — All in One Place. Download Now.
• The Most Up-to-Date List of Funds, Angel Investors and Active VCs African Startups Can Pitch to in 2026 (1000+)— Before Everyone Else. Download Now.
• New VC Firms and Funds Backing African Startups in 2026 . Download Now.