African startups raised $3.9bn in 2025 – Report

African startups raised $3.9 billion across 506 deals in 2025, signalling a steadying pulse for the continent’s venture ecosystem after two years of global market adjustment, according to AVCA’s newly released 2025 Venture Capital Activity in Africa report.

While overall capital deployment remains below the highs of previous cycles, deal activities stabilised in 2025.

Early-stage resilience, rising domestic investor participation, and the expansion of venture debt shaped the year, according to the report.

Africa’s venture market entered 2025 in a phase of disciplined stabilisation. Deal volume rose 4% YoY, making Africa the only global region where venture activity did not decline.

The report said one of the most consequential shifts in 2025 was the continued rise of venture debt as a financing tool. Venture debt reached $1.8 billion, nearly doubling YoY and extending a three-year growth trend.

“Debt has increasingly moved from a complementary instrument to a core component of startup financing, particularly for growth-stage companies seeking to extend runway, manage dilution, and optimise capital efficiency. This shift brings Africa more closely in line with financing dynamics observed in more mature emerging venture markets, with East Africa accounting for more than two-thirds of regional deal value”, according to the report.

But venture-backed exits reached a new high of 34, rising 31% YoY to outpace the more marginal 1% growth recorded globally.

North Africa led by exit volume, while Southern Africa accounted for the largest share of exit value, at $288 million.

Trade sales continued to anchor exit activity, accounting for over 70% of both exit volume and value, however exit routes have broadened modestly.

Financial sponsors increased their participation and reached a new high in 2025, with growing presence in more mature sectors such as FinTech, and Africa-based buyers accounted for 54% of exits, signalling a growing base of local and regional acquirers alongside continued international participation.

Domestic investor participation reached a new high in 2025. African investors accounted for 45% of total venture fund commitments, up from an average of 23% between 2022 and 2024. This shift was led by corporates and African development finance institutions (DFIs).

While overall DFI participation declined to 27%, composition localised: African DFIs contributed 63% of DFI capital deployed, reversing earlier years when international DFIs dominated commitments. Domestic capital is positioning itself as a more durable anchor for innovation, reducing the ecosystem’s historical reliance on external capital sources and sentiments.

Commenting on the findings, Abi Mustapha-Maduakor, Chief Executive Officer of AVCA, said: “The African venture capital ecosystem is recalibrating towards patient, structured and locally anchored capital. The record-breaking domestic participation and exit activity we see shows that African investors are increasingly confident in backing homegrown businesses and achieving exits, providing strong validation of the ecosystem’s long-term investability.

The priority now is to continue supporting the industry in diversifying its allocation pool to ensure adequate funding reaches the investors backing high-growth startups across the continent.