As global investors continue to exit African technology, African investors will become an increasingly important source of funding for local startups from 2023 onwards, accounting for between 25% and nearly 40% of total funding, according to a January 2026 report from technology research firm Brighter.
According to the report, African investors wrote checks worth $1.6 billion in 2022, while global investors paid out nearly $5 billion.
Since then, global funding has plummeted to about $2.3 billion. The decline may have been destabilizing, but local investors stepped in to fill some of the gap. The increase in the proportion of domestic capital indicates that the local investment base is more resilient and mature, maintaining a relatively constant investment level.
Breiter’s report defines local investors as companies headquartered in Africa.
Local fund managers deploying funds to the African continent will help direct funds to commercially viable products within African markets. This on-the-ground presence creates a cycle in which local conditions help identify, substantiate, and extend African technology products. The latest African unicorn, Moniepoint, relied on funding and strategic support from a Nigerian venture capital firm to enter the consumer market and take the startup to national scale.
“The key is a healthy mix of local fund managers who understand the market and can provide geographically relevant advice, which is difficult to do from abroad,” Kola Aina, founder of Lagos-based venture capital firm Ventures Platform, told TechCabal in 2025.
The rise of local fund managers can be traced to support from the International Finance Corporation (IFC) through its Catalyst program and development finance institutions such as British International Investment, Proparco and AfricaGrow, which backed African VCs as global investors retreated from the continent.
Alongside these efforts, local angel investors and high-net-worth individuals are also increasing their direct investments in local funds and startups.
“Local high net worth individuals bring not only capital, but also strong local networks, business experience, and a substantial stake in the success of the ecosystem,” Venue Capital venture partner Marge Ntambi told TechCabal in 2025.
Total funds raised
African venture capital is stabilizing after two years of volatility, but the recovery remains uneven, shaped by deep regional concentration, thin exit pipelines, and a widening gap between early-stage capital and scalable growth.
Startups across the continent raised $3.6 billion in 2025 through 635 deals that went public, up 25% from the previous year, Breiter said. Trading activity recovered faster than funding volumes, with deal values up 43%, demonstrating renewed investor appetite for African technology despite smaller check sizes.
However, that capital remains highly concentrated. The “Big Four” of Nigeria, Kenya, Egypt and South Africa received 80% to 85% of the total funding, continuing a decade-long pattern of geographic concentration. These markets dominate not only because of the density of startups, but also because of the presence of later-stage companies that can absorb larger tickets.
In contrast, in Africa’s French-speaking and smaller English-speaking markets, the number of deals has increased steadily, but the amounts raised remain relatively small. Countries such as Senegal, Côte d’Ivoire, Rwanda and Benin are seeing the emergence of early-stage activities and sector-specific start-ups, but funding remains below $5 million, insufficient to sustainably bridge companies to a regional or pan-African scale.
Growth capital reduction
Brighter data shows that while early-stage deals continue to dominate on a volume basis, growth-stage capital has yet to recover to pre-2022 levels. Despite the rebound in total funding, late-stage rounds remained scarce, with mega deals accounting for just 1% of deal value and around 25% of total value, highlighting the skewedness of headline numbers for some companies.
As a result, a growing number of startups are able to raise seed or Series A rounds but struggle to secure subsequent funding. In response, founders are turning to debt and hybrid products to extend the trajectory of their businesses.
Although withdrawals are improving, they remain small. Brighter tracked more than 60 known acquisitions in 2025, spanning fintech, software, logistics, mobility, and renewable energy. Most of these were corporate-led acquisitions or intra-African consolidations rather than large-scale venture-scale exits.
Fintech continued to dominate merger activity with 27 deals, reflecting both the maturity of the sector and the pressure to consolidate amid tightening funding conditions. However, climate, energy and infrastructure-adjacent startups, especially those with asset-backed or recurring cash flow models, are increasingly appearing on acquisition lists, making them more attractive to strategic buyers in volatile markets.
There is a particular lack of large-scale initial public offerings (IPOs) or cross-border exits that could recycle capital on a large scale. Without these, African capital remains reliant on secondary sales, partial exits and M&A as liquidity events, limiting the speed at which capital can be reallocated to the next generation of companies.
