After enduring a sharp two-year contraction marked by risk aversion and capital scarcity, venture capital (VC) investment in Africa is showing the first signs of recovery. Industry leaders are calling 2025 a year of “cautious optimism,” as resilient startups and selective investors reposition for growth amid a shifting global financial landscape.
According to the 10th annual African Tech Startups Funding Report, total funding into African startups plunged more than 50% in 2024, falling to US$1.1 billion. This marked a continuation of the “funding winter” that began in 2022, driven by global macroeconomic tightening, inflation concerns and reduced capital flows into emerging markets.
The pain was broad-based. Not only did fewer startups raise funding in 2024 but the number of active investors, both institutional and individual, also collapsed, shrinking from 527 in 2023 to just 346 in 2024, a 34.3% decline. This followed a steep 46.6% drop the previous year, when investor numbers fell from 987 to 527. It was, in every sense, a market correction.
Turning the Corner?
But that correction may be bottoming out, according to Alison Collier, Managing Director of Endeavor South Africa, who believes Africa’s VC market is entering a phase of “cautious recovery and renewed opportunity.”
“After a turbulent period in 2022 and 2023, 2024 was a year of recalibration,” said Collier. “Now in 2025, we’re seeing signs of resilience and reawakening across African venture capital. The key differentiator has been quality, due to founders who are building real businesses with disciplined capital use, strong unit economics, and scalable platforms.”
One of the most promising indicators, Collier noted, was a strong Q4 in 2024, driven largely by three late-stage megadeals involving TymeBank, Zepz and Moniepoint which together accounted for nearly half of the total funding raised that year.
“While the volume of deals was still low, the return of nine-figure rounds was a key indicator that investor confidence is cautiously returning,” she said.
A Global Tailwind and a Local Lag
Endeavor and other stakeholders anticipate a gradual rebound in 2025, helped by easing global inflation and expected interest rate cuts that could free up capital for higher-risk investments. While AI innovation was the dominant magnet for VC dollars globally in 2024, that wave has yet to crest in Africa.
“The continent still awaits its AI boom,” Collier said. “But what we’re already seeing is high-quality African startups, especially in fintech, enterprise software and healthtech, begin to regain their growth footing.”
Founders, too, are recalibrating. The go-big-or-go-home mentality of the 2021 funding highs has been replaced by a focus on cash efficiency, runway extension, and selective capital raising.
“2025 won’t be a return to frothy 2021 valuations,” said Collier. “But it will be a year where high-quality startups can start moving again, with the right backing.”
Harvesting Growth: The Endeavor Approach
Evidence of this rebound can be seen in Endeavor’s Harvest Fund II, which closed out 2024 with average revenue growth of 49% across its 17 portfolio companies. Standout performers included:
- Tyme – a digital banking platform with a growing presence in Asia and Africa.
- Onafriq – a pan-African payments infrastructure firm.
- Sendmarc – a cybersecurity platform focused on email authentication.
With the fund now fully deployed, Endeavor launched Harvest Fund III in late 2024. Its first close raised ZAR190 million (US$10.6 million), exceeding expectations and attracting high-profile institutional investors like Standard Bank, Allan Gray and the SA SME Fund.
“What we’re seeing is a flight to trusted, strategic capital,” Collier said. “Endeavor’s rules-based co-investment model, backing only rigorously vetted, founder-led companies with strong inflection points, has given investors greater confidence in a period where diligence is more critical than ever.”
The Road Ahead: Selectivity Over Hype
As Africa’s VC sector enters this new chapter, the recovery is unlikely to be fast or frothy but it may be more sustainable. With quality startups taking center stage and investors prioritizing fundamentals over hype, the next generation of African tech success stories is likely to look very different from the unicorn-chasing days of 2021.
“This is a reset,” said Collier. “And in that reset, there’s opportunity, not just for founders who adapt, but for investors who are willing to take a long-term view on Africa’s innovation economy.”
While the funding winter cast a long shadow over African venture capital, 2025 may be remembered as the year the market stabilized and began its next growth cycle. In this new environment, quality, discipline, and strategic alignment are emerging as the defining characteristics of venture success on the continent.
As global conditions ease and local ecosystems mature, the continent’s next wave of innovators is poised not just to survive but to lead.
