African Startups Off to a Strong Start in 2025
The beginning of 2025 is looking promising for African startups. Figures published by Africa: The Big Deal show that January was the second-best month since 2019. In total, 40 startups raised $289 million last month, a 275% increase compared to the $77 million raised during the same period last year.
At first glance, these figures suggest a strong rebound of the African startup ecosystem, which has faced a significant decline in venture capital investments over the past two years. However, a closer examination reveals a more complex reality. While the total amount of funding has increased, the number of deals has not followed the same pace, with fewer deals exceeding $100,000 compared to the last three years. Meanwhile, the number of deals exceeding $1 million has risen from 21 in January 2024 to 26 this year, indicating that while the volume of deals has slowed down, investors are still betting big on certain startups. Equity financing accounted for over 90% of total funding, reaching $262 million, a 4.4x increase compared to January 2024.
As usual, the four major markets of Nigeria, Kenya, Egypt, and South Africa dominated, absorbing nearly 60% of the total funds raised. Among the largest transactions of the month, we note the Nigerian fintech LemFi ($53 million), PowerGen (over $50 million), South African insurtech Naked ($38 million), and South African edtech Enko Education ($24 million). Three of these four startups will use their funding to expand beyond their country of origin, reflecting a growing trend of African startups looking to Asia, Europe, and other African markets for growth and expansion.
Is this rebound the start of sustained growth or just a temporary peak? It's too early to tell, but while investor confidence seems to be returning, macroeconomic uncertainties and the global slowdown in funding still cast a shadow over the long-term dynamics.
