Four countries absorbed 84% of all funding, with South Africa and Kenya alone accounting for more than half. Egypt followed. Nigeria slipped to 8%, its lowest share since 2019, after years as the top destination for large funding rounds.

However, Nigeria still closed more deals than any other country.

That contrast runs through Briter’s findings as deal volume stayed high, but cheque sizes grew larger and fewer. African startups are still forming and raising capital, but in 2025, funding became harder to access.

Fintech and climate-focused businesses received most of the funding by value, driven by large, capital-heavy deals. Agriculture, health, education and AI startups accounted for most transactions, keeping innovation spread wide even as funding clustered at the top.

How companies raised money also changed. Debt financing crossed $1 billion for the first time, overtaking equity as scaled startups leaned on loans, structured facilities and other non-dilutive instruments to grow. 

Revenue strength, assets and predictability are now more important than rapid expansion.

Exit activity hit a record. Sixty-three acquisitions were announced in 2025, the highest ever recorded. More than half involved startups being bought by corporates, not other startups or private equity firms. Few disclosed prices, but the volume alone shows a market where buying has become easier than building.

Foreign investors still dominate African venture funding, led by the United States and Europe. Briter, however, notes a gradual widening of the pool, with more inflows from Asia and the Gulf, alongside a stronger base of Africa-focused investors providing steadier capital.

The bigger picture is restraint, not retreat. Dario Giuliani, founder and managing director at Briter, said Africa’s investment landscape continues to move through cycles of expansion and preservation, with the current phase firmly in the latter. 

“Capital is more selective, risk appetite more measured, and growth expectations more realistic,” he noted. “Yet beneath this restraint, company formation remains active across the continent, even as a handful of ecosystems continue to dominate and true geographic diversification remains limited.”

In short, funding has returned but access has not. Africa’s tech sector is still moving forward, just with fewer passengers in first class.

Venture capital into African tech started to decline after 2022, forcing founders to ask if it was better to sell to consumers who can’t spend, or sell tools to the businesses that still can.

The economics of a difficult choice

I used to think consumer-first was the fast lane, but not anymore. Today, more costs of customer-acquisition, shrinking disposable incomes and selective VC chequebooks mean the logic of “growth at all costs” is a gift very few Nigerian founders can afford.

Recent industry reviews show venture capital flows into African tech softened over the years, with total African tech VC around $2.2 billion in 2024, a pullback in deals and more picky investing. Funders are backing fewer startups and favouring those with clear unit economics. 

So founders face a practical choice to keep focusing on individual consumer startups, and highly expensive attention, or pivot to B2B, embedded finance and infrastructure, where unit economics are clearer and customers (businesses) have repeatable budgets.

The B2C problem: why many consumer startups are burning out

Consumer startups in Nigeria are facing three structural challenges at once:

1. Higher customer-acquisition costs (CAC). Because everyone’s vying for clicks and impressions, the cost of customer acquisition has ballooned. Digital ad marketplaces are commoditised and pricey; getting someone’s first purchase now costs far more than it did in 2019–21. Benchmarks show CAC increasing across channels as competition for attention also increases. When you’re paying heavily just to get someone to try your app, your ROI horizon stretches uncomfortably long.
2. Squeezed spending power. Inflation has battered households. Nigeria’s headline inflation eased to 18.02% in September 2025, down from 20.12% in August, the sixth straight month of deceleration. But even at 18%, people are prioritising food, rent, transport, discretionary spends suffer.
3. Funding winter and selective capital. In tough times, VCs favour capital efficiency over growth stories. The IFC reports that venture funding across Africa has shifted toward startups with stronger unit economics and clearer paths to cashflow. 

So consumers have to prove real retention, strong margins and defensibility.

Why B2B (and embedded-finance) looks safer right now

If B2C is the high-variance play, B2B is the steady hand. Here’s why:

• Lower CAC per dollar of revenue. Selling to a business usually requires a longer sales process, but the ticket sizes are higher and the lifetime value is more predictable. When the numbers line up, monthly recurring revenue (MRR) beats one-off consumer spend every time.
• Clearer ROI for customers. Businesses pay for cost savings, compliance, productivity profits or revenue enablement. Those returns are easier to quantify, so you can price accordingly.
• Embedded finance & infrastructure scale. When you integrate payments, credit, or financial tools into business workflows, you capture value across transactions. Fintech firms embedding services into merchant flows or enterprise stacks are winning in this period.
• Reduced churn risk. Consumers abandon services quickly when times are hard. Businesses, even the informal ones, and especially those tied into operations, tend to stick unless value disappears.

In short, B2B gives you fewer customers, but each one is more likely to stick and to pay.

Hybrid doesn’t mean compromise: the smartest founders don’t treat this as binary

It’s not B2C or B2B, it’s how smart founders mix them.

The most resilient startups are those that:

• Build an infrastructure layer (payments, logistics, procurement) that serves businesses, and then expose consumer-facing products on top; or
• Start as B2C but quickly develop monetisable B2B channels (merchant tools, analytics, advertising for retailers); or
• Market directly to small businesses (MSMEs) that both buy and sell to consumers, a customer group with recurring cash flow. That’s monetising through cross-sell, e.g. merchant tools, data analytics, credit, even if the front door is consumer-facing.

In Nigeria, the informal economy, shops, kiosks, and traders, accounts for a huge share of activity. Moniepoint’s Informal Economy Report shows that 85% of informal businesses are sole proprietorships and only 40% employ labour; they buy goods via transfers and remain cash-heavy but represent concentrated purchasing power in local markets. 

Startups that serve these businesses indirectly serve consumers, while enjoying steadier revenues.

The founder’s checklist: questions you should ask now

If I were advising a founder deciding between consumer startups (B2C) or B2B today, I’d insist on answers to these:

• Can you prove payback in less than 12 months without heavy subsidy? If not, think twice about continuing consumer-first growth spend. If your cost to acquire a user is more than their lifetime value, you have a problem.
• Does your customer have a predictable spend line you can influence? Businesses that buy monthly or seasonally are better customers than an unstable consumer base.
• Is your product infrastructure-led? If others can replicate your consumer UI, you’ll be permanently on the defensive. The more you embed into workflows (payments, data, finance), the stickier your products become.
• Can you monetise through multiple channels? Can you diversify your revenue streams? Merchant fees, data services, and B2B subscriptions diversify risk. Don’t depend only on subscriptions or single product lines.

If you can’t answer them confidently, you risk building a house on sinking sand. In this market, metrics (downloads, DAU) are not a strategy.

Practical plays that work (examples and tactics)

Here are tactics I’ve seen succeed in Nigeria and across Africa:

• Merchant-first payments: Begin with payments or checkout solutions for small businesses, then layer credit, procurement, and analytics on top.
• Vertical SaaS + embedded payments: If you serve a vertical (e.g., agri-traders, clinics), embed payments, insurance and credit inside the software. You capture more of the value chain.
• Cost-reduction products: Logistics optimisation, energy-efficiency tools, inventory finance including products that reduce OPEX for clients are easier to sell in tight times.
• Anchor clients, then scale: Land a few enterprise contracts to validate your model, then expand horizontally.

These are high-leverage moves. They may require more sales tactics early, but bring more reward over time.

Where I’d put my chips now

If I were placing chips today, I’d lean into B2B and hybrid models while keeping a careful consumer startups arm alive for brand depth. The consumer market is fractured, loyalty is weak, attention is expensive, and regressions are common.

But businesses will always need tools, margin relief, and financial products. If you build what they can’t easily do without, you win.

So yes, B2C (consumer startups) is very much alive, but in this season of limitations, B2B is safer. And the hybrids? They’re the ones who will tell who thrives next.

The companies will also join Madica’s intensive 18-month support programme, designed to help early-stage founders build scalable, investment-ready businesses.

Madica is seeking to close Africa’s funding gap by backing founders and startups usually overlooked by traditional venture capital. 

Since launching in 2022, the programme has focused on entrepreneurs from underrepresented regions and industries, providing capital and the kind of mentorship as well as structure that can make or break early ventures.

Both startups bring artificial intelligence into real-world African contexts. Anavid, founded by Ahmed Chaari and David Nilsson, uses AI to integrate with retail surveillance systems, reducing theft losses and improving in-store experience. 

Hypeo AI, led by Meriam Bessa and Salah Eddine Mimouni, provides a software solution that automates influencer marketing, from brand matching to campaign payments.

For Madica, these investments will help enhance innovation, which is also thriving across Africa, not just in a few well-known hubs.

“At Madica, we believe and continue to prove that some of the world’s most transformative ideas come from places that are too often ignored,” said Emmanuel Adegboye, head of Madica. “The founders we’ve just welcomed are visionaries, building solutions with the power to uplift communities and shape industries. We’re proud to stand with them as they take on the next stage of their journey.”

For the founders, the partnership provides access to Madica’s growing investor network, business coaching, and two fully funded immersion trips to leading tech ecosystems both within and outside Africa. 

These trips, part of Madica’s structured learning model, give founders a platform to engage directly with investors, mentors, and other founders solving similar challenges.

Speaking on Hypeo AI’s mission, Meriam Bessa, the company’s co-founder and CEO, said, “Our region is rapidly growing with creative energy, but without the right digital backbone, it often goes untapped. We’re changing that by using AI to reimagine how brands and creators find each other, collaborate, and thrive. Backing by Madica will help us strengthen our AI capabilities to achieve this goal.”

Madica has also partnered with the African Business Angel Network (ABAN) to expand deal flow and co-investment opportunities for its portfolio companies. The collaboration, unveiled at the ABAN Congress in Lagos, aims to improve access to local capital and connect angel investors with institutional partners.

According to Yemi Keri, President of ABAN, “The future of Africa’s innovation economy depends on how effectively we can mobilise local capital and empower local investors. Our collaboration with Madica helps bridge the gap between angel investors and institutional capital, ensuring that more funding comes from within the continent, and that startups everywhere in Africa can access the right type of support to scale.”

Madica’s portfolio already includes a mix of standout startups such as Medikea, Daleela, Pixii Motors, and ToumAI, with a strong focus on gender diversity and regional inclusion. 

Its model combines funding with hands-on learning, helping founders refine governance, growth strategy, and personal well-being, areas often neglected in early-stage business building.

To date, Madica has continued to scout for new investment opportunities across the continent. Eligible startups must have a minimum viable product (MVP), ideally with paying customers, and be led by full-time African founders with limited prior institutional backing.

The team recently participated in Moonshot by TechCabal in Lagos and is heading to Big Angels Day Africa in Dakar this October, part of its approach to meet founders where they are, and to bring early-stage capital closer to the people shaping Africa’s digital future.