Africa’s Startups Are Raising Billions. So Why Is the First Cheque Still Hard to Find?

Africa’s technology investment market is recovering after two difficult years. Billions of dollars are flowing into startups, investors are writing larger cheques, and new financing models are gaining ground. Yet, behind these encouraging figures, a different story is emerging for founders trying to secure their first investment. As Africa prepares for the 11th AfriLabs Annual Gathering in Cotonou, the question is how the continent can build a financing system that supports businesses at every stage of growth.

 

In January 2026, Africa’s technology ecosystem received some encouraging news. After two difficult years, startup investment was showing signs of recovery.

 

According to Partech’s 2025 Africa Tech Venture Capital Report, African technology startups raised $4.1 billion in equity and debt financing in 2025, representing a 25% increase from the previous year.

 

For founders and investors across the continent, this was a welcome development. Capital was flowing again, and African businesses were continuing to attract significant investment.

 

But behind those billions was another story.

 

While funding increased, fewer companies were securing their first investments. The African Private Capital Association (AVCA) reported that first-time fundraisers accounted for just 26% of venture capital deals in 2025, down from 34% in 2024. Meanwhile, the median deal size rose by 33% to $4 million.

By September 2026, Africa: The Big Deal reported that only 311 African startups had raised at least $100,000.00 during the year, the lowest number recorded for that period since its tracking began in 2021.

 

The figures raise an important question: If Africa is attracting billions in startup investment, why are fewer businesses accessing their first cheque?

 

The challenge behind the numbers

 

For an established startup with paying customers and a proven business model, raising investment can provide the resources needed to expand into new markets.

 

For a young entrepreneur developing an idea, the experience can be considerably different.

 

Many founders begin with personal savings, small grants and support from innovation hubs. They need funding to build products, hire skilled employees and demonstrate that their businesses can succeed.

 

Yet investors understandably want evidence that a business can generate returns. This creates a difficult situation for founders who need capital to reach the very milestones investors expect them to have achieved.

 

Geography presents another challenge.

 

In 2025, Kenya, South Africa, Egypt and Nigeria attracted approximately 72% of Africa’s technology startup funding, according to Partech.

While these markets have developed strong investment ecosystems, entrepreneurs in other African countries may face additional difficulties connecting with investors and accessing suitable financing.

 

The challenge, therefore, extends beyond increasing the amount of investment available. It also concerns how that investment reaches promising businesses across different markets and stages of development.

 

Rethinking how Africa finances innovation

Africa’s investment landscape is changing. Debt financing, for example, reached approximately $1.64 billion in 2025, growing 63% from the previous year.

 

For established businesses with predictable revenues, debt can support expansion. But for early-stage startups still developing their products, other forms of financing may be more appropriate.

 

This is why patient capital, development finance, grants, venture capital and stronger investment-support institutions all have important roles to play.

Innovation hubs are particularly relevant. They help entrepreneurs develop business models, test products, access mentorship and prepare for investment. Strengthening these institutions can help more startups become ready for financing.

 

Building a stronger investment ecosystem will require closer collaboration among investors, governments, development finance institutions and organisations supporting entrepreneurs.

 

Taking the conversation to Cotonou

 

These questions will be central to the Investor/Investment Track at the 11th AfriLabs Annual Gathering, taking place from 18 to 20 November 2026 in Cotonou, Benin.

 

The track will explore how governments, venture capital firms, development finance institutions, corporate investors and philanthropic organisations can mobilise patient capital, reduce investment risks and establish stronger financial systems to support startups from inception to scale.

 

Africa has demonstrated its ability to attract billions in startup investment. The next challenge is ensuring that promising businesses have access to appropriate capital at the stages when they need it most.

Because the future of Africa’s innovation ecosystem will depend as much on the businesses securing their first investment today as on those raising millions to expand tomorrow.

 

Join the conversation at AAG 2026.

18–20 November 2026 | Cotonou, Benin

Register: https://bit.ly/AAG2026