Africa’s private capital ecosystem is undergoing a structural shift. After two years of volatility, the market is stabilising, but with a new financing hierarchy.
According to the African Private Equity and Venture Capital Association (AVCA), venture debt has overtaken equity investment for the first time, becoming the continent’s dominant source of startup capital in the first nine months of 2025.
“Africa’s venture ecosystem is operating in its ‘new normal,’ having absorbed its correction and adapted to a more sustainable baseline,” AVCA noted.
Equity vs Debt Financing
| Metric | Q1–Q3 2025 | YoY Change |
|---|---|---|
| Equity Deal Volume | 362 | +17% (Q3 only) |
| Equity Deal Value | $1.4B | Flat vs. 2024 |
| Venture Debt Value | $1.6B | +60% YoY |
| Median Equity Deal Size | $3M | +20% YoY |
| Median Debt Deal Size | $7M | Slightly below the 2024 record |
Startups raised $1.6 billion in debt financing between January and September 2025, already surpassing the $1 billion total for 2024. This exceeded the $1.4 billion in equity investment spread across 362 deals, signalling a decisive pivot in Africa’s funding landscape.
Debt Moves Centre Stage: From Supplement to Strategy
The surge in venture debt was driven by six megadeals totalling $1.1 billion, including:
- Sun King (Kenya): $156M local currency securitisation
- Wave (Senegal): $137M debt raise
East Africa led the continent’s debt activity:
- Kenya accounted for 22% of all debt transactions, double the share of Egypt, Ghana, and Nigeria (each at ~11%).
“Debt has moved from the margins to become the main alternative to traditional venture capital in Africa,” AVCA reported.
Regional Equity Dynamics: Southern Africa Leads by Value
| Region | Share of Equity Deal Value |
|---|---|
| Southern Africa | 26% |
| North Africa | 23% |
| West Africa | 21% |
| East Africa | 11% |
| Central Africa | 1% |
| Multi-region | 18% |
Southern Africa’s lead was driven by a higher number of $20M+ funding rounds, particularly in South Africa. North Africa’s rise was powered by Egypt and Morocco, while West Africa, led by Nigeria, remained the most active by volume but lagged in value.
Sectoral Trends: FinTech Fades, IT and Industry Rise
| Sector | Share of Equity Deal Value |
|---|---|
| Financial Services | 31% |
| Information Technology | 20% |
| Industrials | 13% |
| Consumer Staples | 8% |
| Utilities | 8% |
- FinTech’s dominance is waning, with investor focus shifting to payments infrastructure and personal credit platforms like Sevi (Kenya), Leya (Côte d’Ivoire), and ValU (Egypt).
- Information technology and industrials are gaining ground, reflecting a pivot toward digital enablement and productivity-focused innovation.
Outlook for Q4 2025: Measured Momentum
With $3.0 billion raised across 417 deals by Q3, Africa’s venture market is on track to close 2025 with 550–570 deals worth ~$3.6 billion. Venture debt remains the crucial buffer, sustaining liquidity and growth amid subdued equity flows.
“Africa’s venture ecosystem is stabilising, disciplined, and quietly regaining momentum heading into 2026,” AVCA concludes.
Africa’s FDI Inflows Plunge 42% in Early 2025 Amid Global Investment Headwinds
