The report, titled Zero to Funded: A Founder’s Guide to Pre-Seed Fundraising in Africa, was released by Madica, drawing on insights from investors and ecosystem leaders across the continent.

The report takes a closer look at how fundraising actually works at the pre-seed stage and where many African founders get it wrong.

Venture capital is not free money, the report stressed, noting that founders who take it on are entering a long-term relationship that comes with pressure to grow fast, give up equity and eventually provide returns through an exit.

Despite this, many founders still approach fundraising with the wrong assumptions.

One of the most common mistakes, according to the report, is trying to raise money before proving anything in the market. Investors, it says, are not backing ideas alone, they want to see early signs of execution.

“The reality is that investors back passion plus some kind of momentum. Founders with grit can often build that momentum even before they get their first outside cheques.”

That momentum could come in different forms, a basic product, early users, partnerships or even tested assumptions. Without it, founders risk getting stuck in endless pitch cycles.

The report by Madica also challenges the belief, which most African startups have, that building a strong product is enough to attract funding. It says many founders spend too much time developing technology without confirming whether customers actually need it.

“Most founders are super focused on building really good technology, but often they end up solving a problem the customer doesn’t think is a problem.”

Instead, investors want to see clear evidence that founders understand customer pain points and are building solutions people are willing to use and pay for.

Valuation is another area where founders usually get it wrong. While a high valuation may look impressive, the report warns it can create problems later if the business cannot meet expectations.

Startups that raise at inflated valuations risk being forced into down rounds, which can damage investor confidence and weaken the business.

Beyond these misconceptions, the report outlines what signals readiness at the pre-seed stage. Investors are looking for clarity, credibility and early traction rather than polished financial models.

A working product, even if basic, carries more weight than a well-designed pitch deck.

“At pre-seed, the most important thing you really want to focus on is launching the product, testing your hypothesis and identifying your road map to product market fit.”

Growth, the report adds, does not have to be large at this stage. What counts is consistency and the ability to show a pattern.

“What I want to see is repeatability: $10 this month, $20 the next, $30 after that, growth that shows a pattern I can trust.”

Across Africa, the fundraising sector varies by region, but the expectations are largely the same.

West Africa recorded 475 pre-seed deals worth about $219.43 million between 2019 and 2025, making it the most active region. However, most of that capital is concentrated in Nigeria.

North Africa followed with 307 deals valued at $165.58 million, driven largely by Egypt, while East Africa saw 213 deals worth $84.51 million. Southern Africa recorded the lowest activity, with $45.78 million raised across 118 deals.

Even with these differences, investors apply similar standards across the board.

Madica also makes it clear that venture capital is not suitable for every African startups business. It is designed for companies that can scale quickly and deliver large returns within a set timeframe.

For founders building smaller or more localised businesses, other funding options may be more appropriate.

In the end, the report returns to the point that founders who focus on customers, test their ideas early and show progress are more likely to attract funding.

Those who focus only on raising money risk missing the basics that investors care about most.

The post Only 0.05% of Startups Raise VC as Madica Report Reveals What African Founders Get Wrong appeared first on Tech | Business | Economy.

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.

The post Why Nigeria is Losing its Venture Capital Crown to Kenya, Egypt, and South Africa appeared first on Tech | Business | Economy.

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.

The post Madica Invests $400,000 in Two New AI Startups to Drive Inclusive Innovation Across Africa appeared first on Tech | Business | Economy.

Over the past decade, angel networks across Africa have invested $35 million into more than 1,200 early-stage startups, a solid foundation, but tiny compared to the continent’s potential. 

In the East African economic block alone, 18 active networks, from Nairobi Business Angel Network to Ajax Capital Group, form one of the region’s most active clusters. However, real capital flows usually lag behind policy results.

At ABAN Congress 2025 in Lagos, themed “Accelerating Local Capital Participation,” this gap will be addressed. African startups raised $289 million in 2025 alone, with 90% in equity deals, revealing a shift toward more structured, scalable investment. 

Angel syndicates now account for 46% of investments, enabling pooled capital, shared risk, and larger deals. Catalytic Africa, ABAN’s co-investment platform, has mobilised 10× more capital since 2022, backing startups across 15+ countries. Despite these advances, we wonder why policy is not translating into capital in the hands of founders?

To understand why these policies haven’t fully translated into funding, Techeconomy spoke with Martin Warioba, managing partner at Warioba Ventures and a leading voice in East Africa’s investment ecosystem, to dissect the gap between policy intentions and actual capital deployment, and explore ways to turn investor-friendly frameworks into real-world funding.

Turning Policy into Capital

On the disconnect between policy and execution, Warioba says: “Policies like the Startup Act or tax incentives mainly exist but are undermined by unclear implementation guidelines, slow regulatory approvals, and minimal awareness among local stakeholders.”

“The real gap is execution muscle and ecosystem feedback loops. Without collaboration between policymakers and actual capital deployers, policies risk becoming symbolic rather than catalytic.”

A policy in East Africa that has already had a measurable impact on early-stage investment is Rwanda’s Capital Markets Authority (CMA) regulatory framework for Collective Investment Schemes (CIS).

“This has provided a clear path for registering venture capital funds and has attracted cross-border investment. Warioba Ventures has leveraged this policy to structure its Pan-African VC fund with domiciliation in Kigali.

“Catalytic Africa’s matching fund could be another example – though not a policy per se – has operationalised policy intentions by directly channelling local and foreign capital into early-stage startups.”

While Rwanda shows what’s possible with the right framework, scaling impact across East Africa also requires active participation from angel networks.

The Role of Angel Networks

Angel investor networks, Warioba explains, are essential to bridging the gap between policy and capital: “Angel networks are the frontline of early-stage capital. They see firsthand what policies work, where frictions lie, and what founders need to thrive. Angel networks can translate these insights into actionable policy proposals – on tax breaks, capital gains treatment, investor protection, and cross-border capital mobility.

“More importantly, angel networks can pilot co-investment models, like Catalytic Africa, that demonstrate what’s possible when policy meets private initiative.”

Warioba stresses that inclusive policy must extend beyond urban hubs: “Governments must decentralise innovation infrastructure – innovation hubs, access capital, and capacity building programs – beyond major cities. Policies should include incentives for investors who support startups in rural or underserved regions.

“Digital infrastructure and interoperable payment systems remain foundational to building inclusive ecosystems across East Africa’s secondary cities and border regions.”

On government agencies to partner with in order to unlock capital flows immediately, he says: “I will work with the Ministry of Finance to establish the Startup Investment Guarantee Facility backed by public and philanthropic capital.

“This facility would de-risk private and foreign capital entering early-stage startups through first-loss guarantees and co-investment structures into early-stage funds managed by licensed local GPs. This would signal long-term national commitment and crowd in institutional and private participation across the region.”

With ABAN Congress 2025 approaching, Warioba stresses that policies alone do not move capital for any startup; but combined with strategic co-investment models, engaged angel networks, and targeted government initiatives, East Africa has the potential to become a thriving region where startups can scale successfully.

The post ABAN at 10: Martin Warioba on How East Africa can Turn Policy into Real Startup Capital appeared first on Tech | Business | Economy.