Development capital financed Africa’s venture boom. It’s now slowing.

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For more than a decade, development finance institutions (DFIs) anchored venture funds across the continent, absorbing risk that commercial investors avoided and helping to finance the early growth of companies now regarded as Africa’s foremost technology champions.

However, this funding source is beginning to dry up. 

Africa’s venture capital fundraising fell for the first time in four years as Africa-focused fund managers raised only $107 million across final closes in six funds in 2025, an 87% year-on-year decline by value, according to a new report by the African Private Capital Association, the pan-African industry body that promotes private investment.

While capital continued to flow to African startups, $3.9 billion in 2025, its sources and underlying incentives are shifting. Funding from DFIs, long considered the backbone of startup investing across the continent, fell to 27% of total commitments in 2025.

The $107 million raised in 2025 marks the first time since 2021 that an Africa-focused venture fund reached a  $100 million close. The shift mirrors a broader global pullback, as institutional investors reassess venture exposure amid higher interest rates and tighter liquidity conditions.

Money / Ecosystem

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