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

The 2025 Investor Reality Check

Who is writing checks today? Select an investor profile to see how their participation shifted in 2025 and what it means for your pitch.

DFIs European VCs African Corporates

Development Finance Institutions

Share of total VC commitments

-40%

Historical Average (2022-2024) 45%

The 2025 Reality 27%

What this means for founders

With competing priorities like climate finance taking precedence in Europe, DFIs are scaling back their high-risk venture exposure. You can still target them for large fund anchors, but expect tighter liquidity constraints.

Powered by TechCabal Insights Data: AVCA 2025

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The backbone scales back

Unlike venture ecosystems in North America or Europe, where pension funds and sovereign wealth funds dominate capital allocations, Africa’s venture industry has historically relied heavily on DFIs to anchor fundraising rounds.

Institutions such as the International Finance Corporation, British International Investment, the European Investment Bank, and the African Development Bank have served as cornerstone investors in Africa-focused venture funds, providing patient capital aimed at supporting long-term economic development alongside financial returns.

DFIs typically accept higher levels of commercial risk than private investors, enabling venture managers to fund sectors and markets that might otherwise struggle to attract capital.

In 2023 alone, the continent accounted for roughly 40% of global new DFI commitments, totalling €3.8 billion ($3.22 billion). 

Between 2022 and 2024, DFIs accounted for roughly 45% of commitments into Africa-focused venture funds. This stood at 27% in 2025.

The retreat came as global venture capital fundraising entered a third consecutive year of contraction. Worldwide, fresh commitments declined by 46% to $118 billion amid higher interest rates and geopolitical uncertainty.

For DFIs, competing priorities are also reshaping capital deployment. Across Europe, development finance agendas are increasingly shifting toward climate finance and energy transition investments, tightening allocations for higher-risk venture exposure in emerging markets.

European investors, historically the largest source of venture commitments into African funds, accounted for just 21% of fundraising in 2025, down from 70% between 2022 and 2024.

Africa begins to fund itself

As philanthropic and development capital fell, African corporate investors emerged as the largest contributors to fundraising in 2025. Their share of commitments rose from 7% between 2022 and 2024 to 41% in 2025, according to AVCA.

Private wealth capital also increased its relative share of commitments, helping offset declining participation among family offices. Funds of funds and pension investors, after elevated participation in 2024, reduced allocations, while banks and insurance companies continued to face regulatory and risk constraints limiting venture exposure.

In several markets, governments are also beginning to play a more direct role in venture financing.
In November 2025, the Nigerian government participated in the $64 million close of Ventures Platform’s latest fund, signalling growing interest in domestic capital mobilisation as foreign development funding slows.

Domestic investors are increasingly anchoring Africa’s venture fundraising landscape. Despite the broader decline in absolute fundraising volumes, locally mobilised capital accounted for roughly 45% of final closes in 2025.

African DFIs and corporate investors drove much of this shift, and “North American LPs increased their share of fundraising, led predominantly by corporates,” AVCA said. 

What this means for startups

DFIs traditionally pursue long-term ecosystem development goals alongside financial returns, often backing early-stage strategies designed to expand entrepreneurial pipelines.

For corporate investors, strategic interests, access to innovation, and proximity to commercially viable sectors increasingly shape capital deployment decisions, potentially favouring startups aligned with corporate priorities or clearer revenue pathways.

While domestic investors bring stronger market familiarity and longer-term conviction, DFIs historically diversified funding sources and absorbed macroeconomic shocks.

Their reduced presence may leave venture ecosystems more exposed to currency volatility or economic downturns that affect local capital availability.

AVCA expects DFI participation to rebound. “Some rebound in DFI representation may emerge as larger funds—where DFIs often act as anchor investors—reach final close,” is said. “Still, the 2025 shift underscores the importance of broadening Africa’s VC investor base beyond DFIs to support longer-term ecosystem sustainability.” 

Africa’s startup boom was built with developmental capital willing to bet on emerging markets. With DFIs shifting their priorities, the next phase of Africa’s startup ecosystem will increasingly depend on the risk appetite of domestic investors.