But in 2025, the tables have turned. The ‘Giant of Africa’ now looks like the continent’s middle child, still the great startup hub, but subtly losing attention.

Across Africa, startups have raised about $2.2 billion in funding so far this year, through September. It’s not a bad figure, in fact, it shows a comeback after 2024’s sluggish performance. 

But Nigeria’s share of that pot is behind. Once the darling of venture capital, the country now follows Kenya, South Africa, and Egypt behind in investor flow and deal flow. We could say this decline reveals cracks in policy, perception, and predictability.

The Numbers

Let’s look at the facts. In the third quarter of 2025, African startups collectively pulled in hundreds of millions, a steady rebound from the funding winter of 2023-2024.

September alone saw between $140 million and $160 million in disclosed deals, a strong 430% recovery from August’s slump. South Africa topped with roughly $64 million, followed by Nigeria’s $44 million, Kenya’s $22 million, and Egypt’s $15 million.

Yes, Nigeria ranked second that month, but context matters. A single month’s uptick doesn’t reverse a year-long slide. The $44 million figure looks good until you recall that just two years ago, Nigeria regularly attracted over 40% of Africa’s total venture capital. Today, that has thinned, the rebound is real, but the lead is gone.

It’s not that Nigeria didn’t have highlights. Lagos-based Kredete closed a $22 million Series A round, one of the continent’s biggest in the month. But a handful of bright spots cannot disguise the bigger difference. Nigeria’s once-dominant startup sector is now fighting for air.

Why the Slide? The Risk Equation

There’s no single villain here. It’s a mix of currency challenges, policy inconsistency, and investor fatigue.

1. Currency Risk and FX Instability
Let’s start with the obvious, the naira. Investors hate surprises, and Nigeria’s currency offers plenty. A venture capitalist can invest $5 million today and see its real value drop by a quarter within months. For startups, it’s a nightmare: revenues in naira, debts in dollars, and no way to plan beyond next quarter.

Currency instability doesn’t just kill profit margins; it kills patience.

2. Regulatory Whiplash
One month, a fintech is celebrated for innovation; the next, it’s hit with a compliance directive or policy change that halts operations. The Central Bank’s unpredictable stance on digital assets, tax laws, and banking limits has left founders second-guessing the next move. For investors, unpredictability is more frightening than failure, you can’t plan for confusion.

3. Investor Confidence Erosion
Venture capital is about risk, but it’s also about trust. And Nigeria’s perception problem runs deep. The inflation rate, the liquidity problem of 2024, and the fear of policy reversals have pushed many funds to look elsewhere.

Kenya’s climate-tech growth looks more predictable. Egypt’s structured reforms provide clearer returns. South Africa’s venture-debt model gives investors better exit options. In comparison, Nigeria? Quite unstable.

4. Cost and Infrastructure Burden

Even the best Nigerian startups fight a heavier battle. Cost of power bites into margins, logistics are inconsistent, and security concerns increase overheads. The same $5 million that can comfortably sustain a startup in Nairobi or Cairo barely covers the basics in Lagos. Investors see this, and they price it in, or calmly move their money elsewhere.

5. Lack of Exit Opportunities

And then there’s the silence after success. Since Paystack’s 2020 acquisition, Nigeria has produced few visible exits. No IPOs, no major mergers, no new liquidity events. For investors, that’s a red flag. Without an exit, even the best-performing portfolio company becomes a waiting game. Venture capital doesn’t thrive on patience, it thrives on movement.

Meanwhile, Elsewhere in Africa…

Kenya, Egypt, and South Africa have been rebalancing the equation.

Kenya has turned climate-tech into a national asset. Its policy environment rewards clean-energy startups and provides tax incentives that attract green investors. 

Egypt, after years of reforms, now has one of the most transparent startup ecosystems on the continent. Its currency stabilisation plan and government support for digital infrastructure are winning back foreign confidence.

South Africa, on the other hand, plays a more sophisticated game. Its venture-debt market gives startups more flexibility and gives investors partial liquidity, a balance Nigeria still hasn’t mastered. 

Together, these hubs have built something Nigeria once had, predictability.

Reclaiming the Edge: What Nigeria Must Do Next

The thing is that Nigeria still has the best talent pool in Africa. Its entrepreneurs are fearless, resourceful, and globally aware. Innovation isn’t the problem; the system is.

To get back in the game of venture capital investment, Nigeria needs credibility, the kind that comes from action, not announcements.

1. Ensure FX Stability:
   A predictable currency policy restores trust faster than any PR campaign.
2. Create a Transparent Regulatory Environment:
   Investors can live with tough regulations, they can’t live with arbitrary ones. Nigeria must fix its fintech and crypto regulatory frameworks if it wants long-term funding.
3. Mobilise Local Capital:
   Pension funds, sovereign wealth vehicles, and high-net-worth individuals must be encouraged to fund innovation. Relying solely on foreign dollars is a risk in itself, unsustainable.
4. Build Exit Pipeline:
   Encourage IPOs, mergers, and acquisitions. When investors see others cash out, they come back, fast.
5. Fix the Basics:
   Energy, internet reliability, and logistics are not “startup issues”, they’re national competitiveness issues. Solving them will reduce risk and attract fresh capital.
6. Promote Investor Dialogue:
   Nigeria’s public and private sectors need to start speaking the same language. Investors hate surprises more than they hate losses.

The venture capital hasn’t left Africa; it’s just gotten pickier, and Nigeria has to earn trust again. The ideas, the founders, the products, they’re all here. What’s missing is a sense that the system itself won’t betray them.

If Nigeria can steady its currency, clean up its regulations, and show genuine respect for investor logic, its startup sector will recover faster than many expect.

Investors go where stability lives. If Nigeria can steady its policy, stabilise its currency, and show a consistent commitment to reform, its startup sector would reignite, with more venture capital investments.

Revealed by Africa: The Big Deal, the resurgence has been driven by a steady stream of sizeable deals in equity and debt, with June standing out as a particularly aggressive month. 

Alone, the month saw $365 million in funding, the highest monthly total in nearly a year. This pushed the monthly average for H1 to $237 million, a rise from $133 million in H1 2024 and even above the 2024 full-year average of $187 million.

But this rebound didn’t happen overnight. Of the six months in H1 2025, four crossed $250 million. Even March, which saw a steep dip, has faded from memory in the face of strong activity in both equity and debt funding.

Equity deals made up the lion’s share, reaching $950 million, up 79% year-on-year. However, it came in just below the $1.02 billion raised in the second half of 2024, showing signs of stabilisation. 

The debt market, on the other hand, had a slower start. By May, debt funding stood at $177 million, down from $255 million during the same period last year. 

Then came June, Wave’s $137 million debt round changed the game. With that and a few other sizeable deals, H1 closed with $400 million in total debt funding, matching H2 2024 and improving 55% from H1 2024.

East and West Africa painted a contrasting picture. Kenya and Senegal emerged as the strongest performers, accounting for several of the top ten deals in June. 

Senegal’s Wave led with the $137 million debt round to strengthen its mobile money infrastructure. Kenya followed closely with M-KOPA securing a $51 million loan to scale its digital financial services and PowerGen closing $50 million for clean energy expansion. 

In contrast, Nigeria, long regarded as the continent’s funding magnet, slipped noticeably. No Nigerian startup featured among the top ten fundraisers in May.

There’s also been a transition in the sectors attracting capital. Fintech still commands the largest slice of the pie, but cleantech and healthtech are no longer niche. 

Companies like Burn Manufacturing in Kenya and Wetility in South Africa raised sizeable rounds for clean energy projects. MyDawa, a Kenyan healthtech platform, secured $9.6 million to grow its digital pharmaceutical services.

Despite the strong H1 showing, total funding in H1 2025 is almost identical to H2 2024, down just 1.5%. That shows a market that may have found its ceiling, at least for now.

Still, the recovery for African startups is real. Compared to the funding drought of early 2024, what we’re seeing now is a reversal. The challenge going forward is whether this growth is sustainable, or simply the system catching its breath before the next storm.

A full breakdown is expected at the Africa: The Big Deal LinkedIn Live event on July 22.