By Racheal Nagawa | Senior Reporter, Business Express
Kenya reinforced its position as the leading African startup hub in 2025, with ventures raising nearly US$1 billion—the highest annual total for any African market since 2022. The surge was largely fueled by debt financing into energy and asset-intensive companies, according to data from Africa: The Big Deal.
Funding in Kenya grew 52% year-on-year, accounting for almost one-third of all startup capital deployed across Africa. Approximately 60% of the total came in the form of debt, directed primarily to solar and energy-access firms such as d.light, Sun King, M-Kopa, Burn, and PowerGen.
Despite the overall funding growth, the number of Kenyan startups raising at least US$100,000 declined by 23%, marking the steepest drop among Africa’s four largest startup ecosystems. This trend suggests that investors increasingly favor larger, asset-backed deals with predictable revenue streams over smaller, early-stage ventures.
Sector Trends: Energy and Fintech Dominate
Energy and fintech led the largest transactions in 2025, with rounds above US$100 million concentrated in companies offering infrastructure-based or cash-flow-stable business models. Analysts note that this reflects a blurring of lines between venture capital, development finance, and infrastructure investment, as institutional investors seek predictable returns alongside impact.
Across the continent, African startups raised a total of US$3.2 billion in 2025—a 40% increase from 2024, marking the first annual rebound following two consecutive years of contraction. While the recovery brought funding above 2023 and 2024 levels, it remained below the record highs of 2022.
Concentration in the Four Largest Markets
Investment remains heavily concentrated in Africa’s top startup markets. Kenya, Egypt, Nigeria, and South Africa collectively captured 82% of total funding—a proportion largely unchanged since 2019. More than 80% of deals exceeding US$10 million were headquartered in these four countries, whereas smaller rounds were spread more broadly across the continent.
Egypt followed Kenya with US$614 million raised, up 51% from 2024, split roughly evenly between debt and equity. South Africa ranked third, with US$600 million in funding, largely equity-driven, while deal activity grew by 63% year-on-year to 83 ventures raising at least US$100,000.
Nigeria raised US$343 million, down 17% from 2024, representing just 11% of Africa’s total startup funding—the lowest share since 2019. While equity accounted for over 80% of Nigerian capital, deal count remained high at 86 startups, signaling a shift toward smaller rounds and more cautious investor sentiment.
Outside the continent’s four largest markets, only Senegal and Benin recorded more than US$100 million in funding. Senegal’s total of US$157 million was propelled by a single major debt round by fintech company Wave, while Benin saw Spiro raise US$100 million. Other countries, including Ghana, Morocco, Tunisia, Rwanda, and Uganda, attracted between US$10 million and US$100 million, but 26 African nations recorded no identifiable deals above US$100,000.
Regional Snapshot
Regionally, Eastern Africa led in total capital raised, securing 34% of the continent’s startup funding, followed by Western Africa at 24%, Northern Africa at 23%, and Southern Africa at 19%. Western Africa’s decline reflected Nigeria’s reduced fundraising performance, offsetting gains in other countries.
Since 2019, African startups have raised nearly US$20 billion, with just 33 companies surpassing US$100 million in cumulative funding. The 2025 rebound illustrates that capital continues to concentrate in a small cohort of mature companies and markets, highlighting both opportunities and challenges for early-stage African ventures.
Kenya’s continued dominance underscores its reputation as the continent’s leading innovation hub, particularly in energy and fintech, and positions it to attract further institutional and international investment in the coming years.
About the Author
Racheal Nagawa is the Senior Reporter at Business Express Magazine, covering African startups, venture capital, fintech, and innovation ecosystems. She provides analysis on funding trends, market dynamics, and the evolving investment landscape across the continent. This news originally appeared on SA Varsity News.
