When Alan, the French health insurer valued at €5.5bn, acquired Tanel in June, it looked like a rare piece of good news for African healthtech. The Dakar-based digital insurer had raised just $2.45m across two rounds before the deal. It covered about 70,000 lives across more than 400 companies in Senegal and Côte d’Ivoire. Ventures Platform, AAIC Investment, Jaza Rift, First Impact Ventures and a group of angel investors received a full exit.
The acquisition was notable precisely because it was unusual. The big four African markets — Nigeria, South Africa, Egypt and Kenya — accounted for 81% of disclosed exits between 2011 and 2026, according to research from Ventures Platform and Stears that tracked 181 verified venture-backed exits. A third of those came from financial services. Healthtech barely registers. Tanel, a Francophone West African startup sold to a European acquirer at a time when foreign buyers are retreating from the continent, broke almost every pattern the African exit market has recently shown.
It is a good outcome for a small company. It is not a template for scaling a sector. And it raises a question that is becoming harder to avoid: is African healthtech facing a terminal diagnosis?
The funding collapse
The headline numbers are stark. Total African startup funding fell 17% year-on-year in the first half of 2026 to $1.21 billion, down from $1.45 billion in H1 2025, according to Launch Base Africa. Yet beneath the macro slowdown lies a glaring omission: healthtech was almost entirely absent from the half-year’s biggest deals. The sector captured a mere 1.3% — or $18 million — of all disclosed funding across 31 rounds. Just four startups raised over $1 million, led by AI Diagnostics’ $5.2 million pre-Series A. By August, total announced deals had crept up to just 36. At this pace, 2026 is on track to be healthtech’s worst funding year since at least 2019.
The decline is not a sudden reversal. Healthtech funding dropped sharply in 2024 to just $65m, down 70% from 2023’s $212m. It recovered to $215m in 2025 — a 232% increase — but that recovery has not held. Healthtech startups now account for about 5% of African venture funding, down from an 8% average between 2020 and 2023, and aid funding, which has historically offered a lifeline, is expected to drop by up to 17% by the end of the year, according to the OECD.
The sector’s leadership layer is also thinning. Adegoke Olubusi’s exit as Helium Health CEO in October follows founder departures at Lifestores and mPharma over the past 18 months. This wave signals a structural crisis rather than routine maturation. African healthtech faces high capital burn, long sales cycles, fragmented regulation, and sluggish public procurement. A decade after early funding rounds, founders are hitting a wall just as early investors demand de-risked returns. Institutional backing for mPharma post-transition shows investors rewarding a pivot toward operational discipline. As post-pandemic exuberance fades into a grind, founders are stepping back right as scaling becomes hardest.
The consequences are now more visible in Kenya, once the sector’s most vibrant market. Antara Health, which had built a telemedicine and virtual primary care business, laid off all staff and closed its Kenya operations. The company had raised $2m in 2021 led by MaC Venture Capital, and its model — managing policyholders’ health at Ksh500 ($3.87) per client per month — was generating revenue. But growth was slow and investors declined to provide more capital.
Ilara Health, which digitises primary health facilities, announced significant headcount reductions, citing “current market conditions and financing dynamics, including a reversal of funding commitments and delays in disbursements.” It had raised $10.8m from investors including the Gates Foundation, DOB Equity, TLcom Capital and the US Development Finance Corporation.
M-TIBA shut down its health savings wallet. The High Court suspended Rology Kenya’s operations over regulatory compliance failures. These are not product failures. They are funding failures, regulatory failures and structural failures — and they are compounding.
The funder/manager model
The deeper problem is not a shortage of capital. It is the structure of the capital itself.
Unlike fintech, where commercial VCs such as Partech, TLcom and Norrsken22 build portfolios and co-invest across multiple rounds, data by Launch Base Africa shows that African healthtech has been dominated by development finance institutions, philanthropic foundations and impact funds this year. These investors operate under different mandates, time horizons and return expectations. They do not form syndicates. They fund programmes.
The model recurs across the sector. The Bill & Melinda Gates Foundation-backed i3 programme has invested $1.6m in 15 African healthtech startups and supported more than 67 early- and growth-stage innovators through a combination of grants and commercialisation support. The Health Finance Coalition, Villgro Africa and the William Davidson Institute launched the Multiply Health Fund, a blended finance vehicle designed to unlock catalytic and commercial capital. UNICEF and the Government of Sweden backed femtech ventures with equity-free capital. Proparco, the French development finance institution, backed EdenCare in Rwanda with €250,000 through its Bridge Fund by Digital Africa, and Tibu Health in Kenya through the same facility.
The most ambitious of these is the Transform Health Fund, managed by AfricInvest and the Health Finance Coalition. It closed at $111m in 2024, backed by Royal Philips, the International Finance Corporation, Swedfund, the US Development Finance Corporation, Proparco, Merck and others. It provides debt and mezzanine financing to scale health supply chains, care delivery and digital solutions. The fund is structured with a concessional first-loss tranche that absorbs disproportionate risk in exchange for lower returns, and a commercial tranche — a two-tier capital stack designed to bring commercial investors into a sector they would otherwise avoid.
The structure is designed around a simple logic: philanthropic capital de-risks early-stage ventures; concessional finance bridges the gap to commercial viability; commercial capital follows. But in African healthtech, the commercial capital rarely arrives.
This is why the sector has so few repeat VCs. The investors who do back healthtech — the Global Innovation Fund, Africa Health Ventures, Anara Impact Capital, Proparco, the Steele Foundation, Savant, iFSP, DEG — are mostly impact-first, concessional or DFI-backed. They are mostly not building portfolios for financial return at scale. They are funding programmes, catalysing markets and de-risking early-stage ventures for later commercial capital that does not materialise.
The exit problem
Healthtech also has the thinnest exit record of any major African tech sector. Only about 1.6% of annual impact investments target healthcare in Africa, despite Sub-Saharan Africa being home to 14% of the global population and 20% of the global disease burden. African healthtech companies have not matured to the point of public listing, limiting exits to strategic and financial buyers. International acquirers made up 56% of disclosed exits in 2020. By 2025, that share had fallen to 33%.
The Tanel acquisition is the exception. It worked because the company was profitable in 2025, carried its own insurance risk, built its own network of 1,200 pharmacies and providers, and sold to an acquirer that had been an investor for two years. Most African healthtech companies do not have those attributes. They have pilots, partnerships and grant funding. That is not a foundation for acquisition.
The structural barriers
The reasons for healthtech’s thin VC base are structural, not cyclical.
Health systems in most African countries are underfunded and state-dependent. Reimbursement frameworks for digital health are either absent or inadequate. Research on mHealth interventions in sub-Saharan Africa notes that “reimbursement and liability continue to be significant barriers,” and that “failure to integrate telehealth services into formal reimbursement frameworks makes any policy ‘superficial’ since it does not take care of the economic feasibility for service providers”. A qualitative study of telemedicine implementers in Ghana found that reimbursement lacked structure and offered only modest non-monetary incentives, while sustainability was limited by a lack of pricing frameworks and dependence on external funding.
Regulatory frameworks are fragmented. A study of licensing processes across African countries found that current procedures are “complex, unclear, lengthy” and create barriers to scale, with a policy recommendation to advance regional licensing harmonisation through bodies including the African Union and Africa CDC. Fragmented regulation, difficult procurement and contracting processes, and financing gaps continue to prevent promising models from reaching their full potential.
Sales cycles are long. Government procurement is slow. Private insurance penetration is low. The result is that healthtech companies often succeed at the pilot stage and stall at procurement, having scaled beyond what philanthropic capital can sustain but not enough to attract commercial VC.
The paradox
The paradox is not that healthtech is underfunded relative to its potential. It is that it is crowded with startups and dependent on concessional capital without building the investor network that sustains it. A sector can attract capital without creating repeat syndicates. That is what has happened here.
The investors who do back healthtech are mostly impact-first. They are not building portfolios for financial return at scale. They are funding programmes, catalysing markets and de-risking early-stage ventures for later commercial capital that rarely materialises.
That model has produced real companies. AI Diagnostics has screened more than 1,000 patients in South Africa and is conducting clinical research across more than 10 countries. Reme-D has developed and commercialised 30 diagnostic products and supplied over 550,000 tests across Egypt, Kenya and Sudan. EdenCare is Rwanda’s first licensed digital health insurer and is connected to over 70% of Rwanda’s healthcare facilities and more than 600 in Kenya.
But it has not produced a venture ecosystem. The closest thing to a repeat healthtech syndicate this year is a pair of impact investors — the Global Innovation Fund and Africa Health Ventures — who have co-invested twice this year. That is not a base on which to build a sector.
The diagnosis is not terminal. The sector has real companies, real revenue and real impact. But the treatment it has received — concessional capital, programme funding, catalytic grants — has not produced the commercial investor base that would sustain it. The funding is moving. The question is whether the investor network moves with it — or whether healthtech remains what it has always been: a sector funded by programmes, not portfolios.