CHART: Funding in African startups showed that January can't always be a 'slow' month

The year is off to a great start for African startups, with 40 startups raising $289 million in January 2025—a staggering 275% increase from the $77 million raised in the same period last year. Per data from Africa: The Big Deal, this makes it the second-best January for startup funding since 2019, only trailing the peak of the funding boom in 2022.

At first glance, these numbers suggest a strong recovery for Africa’s startup ecosystem, which has faced a steep decline in venture capital investment over the past two years.

But a closer look reveals a more complex reality. While the total funding amount has surged, the number of deals has not kept pace—with fewer $100k+ deals recorded compared to the last three years. However, the number of $1 million+ deals increased from 21 in January 2024 to 26 this year, showing that while deal volume may have slowed, investors are still betting big on certain startups.

Meanwhile, equity financing accounted for over 90% of the total funding, reaching $262 million—4.4 times more than in January 2024. This also makes it the second-best January for equity fundraising since at least 2019.

As expected, the ‘Big Four’ markets—Nigeria, Kenya, Egypt, and South Africa—dominated, accounting for nearly 60% of all funding raised. The biggest deals of the month included Nigeria's fintech, LemFi ($53M), PowerGen ($50M+), South Africa's insurtech, Naked ($38M), and South Africa's edtech, Enko Education ($24M). However, what’s striking is that three out of these four startups are using their funding to expand beyond their home countries, reflecting a growing trend of African startups looking to Asia, Europe, and other African markets for scale and growth.

The question now, though, is whether this rebound marks the beginning of sustained growth or just a temporary spike. While investor confidence appears to be returning, macroeconomic uncertainties and the global funding slowdown still cast a shadow over long-term momentum. For African startups, the challenge will not just be raising capital but proving they can scale and sustain growth in a more cautious investment climate.