African investors are playing a bigger role than ever in financing the continent’s startup ecosystem, helping to cushion the impact of a sharp pullback by global venture capital.
According to a January 2026 report by Briter, African-based investors now account for nearly 40% of total startup funding, up from 25% in 2023, marking a significant shift in the balance of capital supporting African technology companies.
Local investors step in as global capital retreats
In 2022, African investors deployed approximately $1.6 billion into startups, alongside nearly $5 billion from international investors. Since then, global funding has declined steeply, falling to around $2.3 billion as rising interest rates, risk aversion, and tighter capital markets reduced foreign exposure to African tech.
Rather than triggering a collapse, the funding slowdown has highlighted the growing importance of domestic capital. Local investors have maintained relatively stable investment levels, increasing their share of total funding and signalling a more resilient and maturing investment base.
Briter defines a local investor as an entity headquartered in Africa, regardless of where its capital originates.
Why local capital matters
African fund managers bring more than money. Their proximity to markets allows them to better assess risk, identify commercially viable products, and support founders through regulatory, cultural, and operational complexity.
This local knowledge often translates into stronger execution. Moniepoint, Africa’s most recent unicorn, is a clear example: the Nigerian fintech relied heavily on domestic venture capital firms for funding and strategic guidance as it expanded from enterprise services into consumer financial products, enabling nationwide scale.
“The key is having a healthy mix of local fund managers who understand the markets and can provide geographically relevant advice, which is hard to do from abroad,” said Kola Aina, founder of Lagos-based venture capital firm Ventures Platform, speaking to TechCabal in 2025.
The role of DFIs and local wealth
The rise of African fund managers has been supported in part by development finance institutions (DFIs). Organisations such as the International Finance Corporation (IFC), through its Catalyst programme, along with British International Investment, Proparco, and AfricaGrow, have backed African venture firms at a time when many global investors were scaling back.
At the same time, local angel investors and high-net-worth individuals have increased their direct participation in funds and startups.
“Local high-net-worth individuals bring not only capital but also strong networks, business experience, and a real stake in the success of the ecosystem,” said Marge Ntambi, venture partner at Benue Capital, in 2025. “When they invest, they’re investing in their communities, their economy, and their legacy.”
Funding rebounds, but unevenly
African venture funding is showing signs of stabilisation after two volatile years, though the recovery remains uneven.
Startups across the continent raised $3.6 billion in 2025, a 25% increase year-on-year, across 635 disclosed deals, according to Briter. While total capital grew modestly, deal volume surged 43%, indicating renewed investor activity but with smaller cheque sizes.
Funding remains heavily concentrated in Africa’s four dominant markets — Nigeria, Kenya, Egypt, and South Africa — which together captured 80% to 85% of total funding. These countries continue to dominate not only due to startup density but because they host the continent’s limited pool of late-stage companies capable of absorbing large investments.
Elsewhere, Francophone Africa and smaller Anglophone markets are seeing steady growth in deal count but at much lower ticket sizes. Countries such as Senegal, Côte d’Ivoire, Rwanda, and Benin are producing promising early-stage startups, but most funding rounds remain below $5 million, making it difficult for companies to scale regionally or pan-African.
Growth-stage funding remains the bottleneck
Briter’s data shows that while early-stage deals dominate by volume, growth-stage capital has yet to recover to pre-2022 levels.
Late-stage rounds remain rare, with mega-deals accounting for just 1% of transactions, yet capturing roughly 25% of total funding value. This concentration skews headline figures and leaves many startups stuck between Series A and sustainable scale.
As a result, founders are increasingly turning to debt, revenue-based financing, and hybrid instruments to extend runway and bridge funding gaps.
Exits improve, but liquidity remains limited
Exit activity improved modestly in 2025, with over 60 recorded acquisitions across fintech, software, logistics, mobility, and renewable energy. Most exits were corporate-led or intra-African consolidations, rather than large, venture-scale outcomes.
Fintech led merger and acquisition activity by volume, accounting for 27 transactions, reflecting both sector maturity and consolidation pressures. Meanwhile, climate, energy, and infrastructure-adjacent startups are becoming increasingly attractive to acquirers, particularly those with asset-backed models or predictable cash flows.
Still, large IPOs and cross-border exits remain notably absent. Without these liquidity events, capital recycling remains slow, leaving African venture capital dependent on M&A, secondary sales, and partial exits to fund the next generation of startups.
