African startups raised US$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 previous the highs of previous cycles, deal activity stabilised in 2025. Early-stage resilience, rising domestic investor participation, and the expansion of venture debt shaped the year.
A RECALIBRATED VENTURE MARKET
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.
Seed and Early Stage deal activity expanded, with median deal sizes at both stages reaching multi-year highs, demonstrating stronger conviction at entry despite a more selective funding environment. The report also notes shorter fundraising timelines from Seed to Series A, pointing to more efficient early-stage progression. At the upper end of the market, 8 megadeals closed in 2025 raising a combined US$1.3 billion. These outsized funding rounds partially offset the contraction of Late Stage equity activity, which fell to its lowest level since 2020.
VENTURE DEBT RESHAPES CAPITAL EFFICIENCY
One of the most consequential shifts in 2025 was the continued rise of venture debt as a financing tool. Venture debt reached US$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.
EXIT CHANNELS QUIETLY IMPROVE
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 US$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 CAPITAL INCREASINGLY ANCHORS THE ECOSYSTEM
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.”
AVCA – the African Private Capital Association is the nexus of private capital in Africa, championing and enabling private capital investment in Africa. As the pan-African industry body, AVCA plays a significant role as an effective change agent for the industry and acts as the trusted independent source of information, insight, and intelligence, inspiring investor confidence and making the case for both commercial returns and the impact of private capital in Africa.
AVCA represents a community of capital allocators, investors, fund managers, advisors, entrepreneurs, and professional services committed to our shared vision of a prosperous Africa that is sustainable, inclusive, and innovative.
