African Startups Raise $460m in Q1 2025, Despite A Promising Start

African startups have collectively raised a total of $460 million in the first quarter of 2025, through deals exceeding $100,000, excluding exits, marked by a promising start in January.

According to a report by Africa: The Big Deal, despite a burst of promise from the beginning of the year, the funding could not maintain the momentum, after a significant slowdown in March.

January’s Strong Start

The year began on a high note, with startups securing approximately $289 million in January alone. This figure represents a 240% increase compared to the $85 million raised in January 2024, making it the second-best January for startup funding since 2018.

Notable deals during this period included LemFi’s $53 million Series B round to support its expansion into Asia and Europe through the acquisition of a European firm, PowerGen’s over $50 million to develop scalable renewable energy solutions across Africa, South African Insurtech firm Naked $38 million Series B round to enhance its offerings, investing further in AI and automation, expanding its product offerings and market reach, and bolstering advertising efforts to grow its customer base, and Enko Education’s $24 million funding led by Africa Capitalworks (ACW), with continued support from returning investor Adiwale Fund I, to expand its network of schools across the continent.

February and March Records Decline in Funding

February saw a decline in funding, with startups raising $119 million. The downturn continued into March, with only $50 million in announced funding, a figure among the lowest monthly tallies since late 2020. This decline was not due to a decrease in the Q1 2025.

Despite the sluggish performance in February and March, the total funding for Q1 2025 amounted to $460 million, a slight 5% decrease from the $486 million raised in Q1 2024. While the number of startups announcing at least $1 million in funding during Q1 2025 was 52, aligning with the 2023-2024 average, the overall funding amount positions this quarter as the second lowest since late 2020.

Geographical and Sectoral Distribution

The “Big Four” countries Kenya, Nigeria, South Africa, and Egypt continued to dominate the funding landscape, collectively attracting 83% of the total investments. Kenya, Nigeria, and South Africa each secured approximately $100 million (24%, 24%, and 22% of the total, respectively), while Egypt garnered $61 million (14%). Togo also made a notable appearance in the top five, primarily due to Gozem’s $30 million Series B funding round.?

Sector-wise, fintech startups led the way, accounting for 46% of the total funding, with significant deals such as LemFi’s $53 million and Naked’s $38 million. The energy sector followed, attracting 18% of the investments, while logistics and transportation secured 10%.?

Gender Disparity in Funding Persists

A concerning trend observed during Q1 2025 was the minimal funding allocated to female-led startups. Only about 2% of the total funding, approximately $10 million, was raised by companies with female CEOs. The largest such round was a $6.2 million grant to South African biotech firm African Biologics.

Excluding grants, the share of funding raised by female CEOs would fall to 0.7%. In contrast, startups led by solo male founders or male-only founding teams received 79% of the total funding, while diverse founding teams attracted 20%. Solo female founders or female-only founding teams received a mere 1% of the investments.?

Looking Ahead

While Q1 2025 presented a mixed bag of outcomes for African startups, the strong start in January indicates underlying resilience and potential within the ecosystem. Addressing the observed funding disparities and building on the momentum from early in the year could pave the way for more robust performance in subsequent quarters.