African tech funding rebounded strongly in 2025, with startups raising $3.42bn across 502 disclosed deals, marking a 53% increase over 2024 even as deal volume fell to a four-year low, according to the State of Tech in Africa (SOTIA) report by TechCabal.

The recovery was driven by larger, later-stage cheques rather than a broad surge in early-stage activity, signalling a shift toward capital concentration and operational maturity.

“2025 marked a turning point for African technology, shifting the focus from mere resilience to sustained scaling and institutional maturity,” said Dr Ola Brown, Founding Partner, HealthCap Africa, in the foreword to the report, outlining four main trends that spurred African tech’s shifted from survival to structured growth.

First, domestic and regional investors stepped up as foreign capital slowed, with firms like Helios, DPI and Sango Capital deepening late-stage support and recycling liquidity. Second, funding rebounded strongly, with startups raising over $3bn — more than 30% higher year on year — driven by larger, higher-quality deals rather than volume, she said.

The year also saw landmark exits and record M&A activity, including Optasia’s JSE listing and Moniepoint’s $200mn+ raise, signalling consolidation around proven leaders, Brown said. And finally, governments introduced more supportive policies, such as Ghana–Rwanda fintech passporting and Ghana’s pension fund allocation rules, helping channel local capital into innovation.

According to the SOTIA report, capital flows increasingly favoured scale and proven business models. Mega and growth-stage rounds above $10mn captured 83% of total funding, while ventures raising under $1mn attracted only 2%, reflecting heightened investor selectivity. Debt financing also expanded sharply, rising 65% year-on-year to $1.08bn, indicating lenders’ growing confidence in startups with predictable revenue streams.

Sectorally, fintech dominated, securing $1.37bn — about 40% of all capital deployed — followed by energy & water ($857mn) and logistics & transport ($398mn). High-growth gains were also seen in healthcare and deeptech, while agriculture funding dipped as investors rotated toward climate and AI-aligned sectors.

Geographically, the “Big Four” — South Africa, Kenya, Egypt and Nigeria — continued to anchor the ecosystem, collectively attracting around 80% of total funding. However, emerging hubs such as Senegal, Morocco and Benin posted notable gains, underscoring a gradual broadening of the continent’s innovation footprint beyond Tier-1 markets.

Beyond fundraising, 2025 was defined by record M&A activity, with 67 deals, representing a 72% increase from the 39 deals seen in 2024, rising layoffs as firms pursued leaner operating models, and a surge in cross-border expansion — including a growing number of African startups entering markets outside the continent.

Fintech accounted for 31 deals, or nearly 46% of total M&A activity. Companies such as Moniepoint, Stitch and Rank executed multiple acquisitions to strengthen banking licences and expand infrastructure. E-commerce, with 8 deals, and logistics and transport, with 6 deals, also recorded significant consolidation. Twiga Foods acquired three distributors — Raisons, Sojpar and Jumra — to strengthen its supply chain, while Chowdeck acquired Mira and Global Shop Group purchased Anka to enhance delivery networks.

Telecom, media and entertainment saw 6 deals, including AXIAN Telecom acquiring Wananchi Group and a strategic stake in Jumia Technologies(NYSE:JMIA). Healthcare, with 6 deals, and deeptech, with 4 deals, also demonstrated growing maturity, with HearX acquiring Eargo and Adapt IT (JSE:ADI) purchasing ResRequest. Climate tech recorded 3 deals, while edtech, proptech and services each had 1 deal, showing consolidation expanding beyond fintech and e-commerce into emerging and niche areas.

Tier-1 markets dominated acquisitions, accounting for 75% of acquired startups in 2025. South Africa topped the leaderboard with 16 acquisitions, driven by exits including digital bank Bank Zero, TaxTim and Namola. Kenya followed with 14 deals, including transactions linked to Mobius Motors and other strategic companies. Egypt saw 11 acquisitions, while Nigeria had 9 deals, including Fatura and Pensions Alliance Limited. African tech assets also expanded globally, with two deals apiece recorded in the UK and the US, and one deal each in the UAE, the Netherlands, Ireland and Brazil.

According to the SOTIA report, established players are aggressively buying other startups to grow, get licences and take more of the market. “This surge signals a definitive shift from a fragmented ecosystem to one defined by strategic consolidation and the emergence of deeper, more integrated platform businesses,” the report stated.

Lexi Novitske, partner at Lagos-based Norrsken22, said most mergers and acquisitions in 2025 were strategic, driven by companies acquiring startups to expand geographically or enhance product and technology capabilities.

“While we are still seeing some exits out of necessity where companies can no longer raise capital, scale, or are running into licensing issues, I think this year the majority of exits have actually been strategic,” she said.

“We have seen more traditional players, including banks, acquiring technology companies, plus broader consolidation in the space. Some of this has been for geographic expansion, and in other cases technology-led acquisitions to add product capabilities.”