In the first half of 2025, the African startup ecosystem appears to have regained momentum, with disclosed funding surging and investor confidence returning. Yet behind the positive numbers lies a structural reality: Kenya, Egypt, Nigeria, and South Africa, often referred to as the “Big Four” continue to dominate capital allocation across the continent. Their outsized share raises serious questions about equity, growth bottlenecks in smaller ecosystems, and the risk of reinforcing regional imbalances.
Across Africa, startups raised approximately US$1.055 billion in the first five months of 2025, marking a 40 percent increase over the same period in 2024. Broader estimates place the total for H1 2025 at US$1.35 billion, a rebound that represents a 78 percent rise compared to the roughly US$800 million in H1 2024.
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These headline numbers suggest a revived investor appetite after years of constrained growth. In 2024, ecosystem-wide funding had declined: startups obtained about US$2.2 billion in fundraising, a 25 percent drop from 2023 levels. That downtrend had sparked fears of a prolonged “funding winter,” but 2025’s early data offers cautious optimism.
More importantly, the rebound is observable in deal dynamics: venture capital and private equity deal volumes in Q1 2025 accounted for roughly US$1 billion across 109 deals, with early-stage VC showing 9 percent year-on-year volume growth. In Q2 2025, deal value increased by 38 percent year-on-year, and venture deal volume in H1 was up 11 percent relative to H1 2024. These metrics suggest that capital is flowing not just in a handful of mega-rounds but into more diversified stages of growth.
The Big Four’s Share
Yet this flow is overwhelmingly concentrated. From the outset of 2025, the Big Four have drawn the lion’s share of funding. In Q1, Kenya, Nigeria and South Africa each received about US$100 million (24 percent, 24 percent, and 22 percent respectively) while Egypt followed with about US$61 million (14 percent). Combined, these four accounted for roughly 83 percent of disclosed funding across the continent. In H1 2025, the dominance deepened, with the Big Four capturing 78 percent of activity. Reports also place South Africa’s share at 26 percent, Nigeria’s at 15 percent, and Kenya’s at 12 percent.
In effect, the rest of the continent is left competing for the remaining 20–25 percent of capital, a structural imbalance with long-term implications.
Fintech remains the most heavily funded sector, pulling in about 45 percent of disclosed funding in the first half of the year. Other sectors such as energy, logistics, healthtech, climate tech, and AI are growing in investor interest but still receive only a fraction compared to fintech’s share.
Why Concentration Matters
From a global standpoint, such concentration is not unique. In many mature startup ecosystems, the majority of venture capital gravitates to a few cities or hubs (for example, Silicon Valley in the U.S., London and Berlin in Europe). However, in those markets, informal buffers such as spillover effects and regional satellite offices soften inequalities. In Africa, where infrastructure, regulatory regimes, institutional frameworks, and connectivity vary vastly, the gravitational pull toward a few ecosystems imposes a steeper cost.
First, smaller and emerging ecosystems in East, Central, and West Africa beyond the Big Four struggle to retain talent and raise marquee rounds. Because capital is scarce, many promising startups must relocate (or remain nascent) to attract serious funding. This brain drain across borders contributes to a feedback loop where investors view only the dominant hubs as “safe bets,” reinforcing the stranglehold.
Second, region-wide risk becomes concentrated. Political or economic shocks in the Big Four (currency risk, policy insecurity, regulatory clampdowns) can disproportionately ripple through continental portfolios. When capital is less diversified geographically, systemic vulnerability increases.
Third, innovation becomes less inclusive. Problems unique to small or rural markets may go unaddressed when most venture capital is chasing scale within dense, urban hubs. The result is that innovation is shaped by the demands of a few markets, potentially leaving large segments of the continent underserved.
Finally, dependence on foreign capital, especially from global VCs risks misalignment with local needs, timing, and resilience. If foreign investors back only in the Big Four, they further entrench those hubs relative to peripheral ones.
The Four Titans
Kenya has long been a leading East African hub, leveraging success stories in mobile payments and renewable energy startups. Still, Kenya’s share in H1 2025 (12 percent) makes it vulnerable to shifts in investor sentiment.
Nigeria remains a powerhouse in population, consumer base, and developer talent. Its 15 percent share in H1 2025 underscores strength, but the country wrestles with macroeconomic volatility, currency depreciation, inflation, and regulatory uncertainty.
South Africa offers infrastructure, strong universities, and relative regulatory sophistication. Its 26 percent share is the largest among the Big Four, but the country faces challenges in inequality, social unrest, and confidence in policy continuity.
Egypt is emerging strongly. In 2025’s early funding rounds, Egypt often leads in deal volume and is crafting regulatory reforms to support startups. Its ability to bridge the Arab and African markets gives it strategic appeal, but foreign exchange risk and local bureaucracy remain headwinds.
Each country’s dominance is enabled by stronger institutional ecosystems, deeper investor networks, better legal systems, and, crucially, higher visibility. Those are advantages that many emerging ecosystems still lack.
What This Means for the Rest of Africa
For startups situated outside the Big Four, the environment is increasingly challenging. When capital flows predominantly to a few, the barriers to entry in underfunded regions become steeper. Founders must exert more effort to signal credibility, often relocating or aligning with partners in the Big Four just to get noticed.
Local venture funds and angel networks play a critical role in bridging the gap, but many are undercapitalised, underexposed, or lacking deep domain experience. In many African ecosystems, early-stage financing remains largely informal or reliant on diaspora networks. This constrains scaling potential before the “growth” stages, when large check sizes become necessary.
In some cases, regional or cross-border fund structures are attempting to redress the balance. But these often still anchor in the Big Four as operational centres, thereby reinforcing the structural bias.
Moreover, smaller ecosystems tend to suffer from weaker infrastructure, regulatory uncertainty, and limited startup support systems such as accelerators, mentors, and legal counsel. The imbalance in capital exacerbates those disadvantages, making it harder to build self-sustaining ecosystems.
Finally, the talent pool often migrates. Engineers, product designers, and founders may relocate to Kenya, Nigeria, Egypt or South Africa because of better opportunities, leaving peripheral markets with a brain drain.
Toward a More Balanced Ecosystem
To counter the chokehold, several strategies merit attention. Regional capital decentralisation is essential, with development finance institutions, multilateral funds, and impact investors purposefully channelling funding into emerging ecosystems to alter investor perceptions of risk. Alongside this, capacity building and ecosystem strengthening in smaller markets must be prioritised through legal reform, reliable regulation, better connectivity, and tailored acceleration programmes, with success in even one or two non-Big Four markets capable of breaking investor inertia.
Collaboration and knowledge transfer across ecosystems should also be institutionalised, enabling the Big Four’s networks to mentor and incubate startups in smaller hubs, thereby giving founders visibility among global investors while maintaining local roots. Furthermore, innovative financing instruments such as revenue-based financing, local currency debt, and hybrid models can reduce reliance on foreign venture capital, which often favours low-risk, high-visibility markets. Finally, improved reporting and greater data transparency would ease due diligence for investors exploring new geographies, while institutional support in standardising deal disclosures could strengthen the credibility of smaller ecosystems.
Risks and Opportunities
The resurgence in 2025 is encouraging, but the dominance of the Big Four suggests the continent is not yet on a level playing field. As capital tightens globally, investors may retreat to their safest bets, which could further entrench the funding stranglehold unless corrective action is taken.
On the opportunity side, there is increased interest in sectors beyond fintech. Climate tech, healthtech, agritech, and AI are gaining traction, especially in markets underserved by large players. Investors willing to look beyond the Big Four may capture outsized returns if they back local founders solving deep, localised problems.
Another bright spot is cross-border tech adoption. Startups that can scale horizontally across smaller markets, linking regional demand may find compelling growth paths without needing to relocate to the Big Four.
Ultimately, the key test in the second half of 2025 and beyond will be whether the capital inflows translate into sustainable scaling, exits, and reinvestment. If those dynamics remain concentrated in a few hubs, the structural imbalance will persist and Africa’s promise as a diverse and inclusive startup continent may falter.
