Equity funding into Africa declines rapidly in 2026 as startups raise $708m

Venture funding into the African startup ecosystem has continued to yield a mixed bag in 2026, with founders on the continent raising $708 million in the first four months of the year. This is according to data provided by Africa the Big Deal and crunched by Technext.

This is significantly less than the $813 million raised during the same period in 2025, representing a 13% decline. But more importantly, the number of startups attracting these investments as data paints a rather dour picture.

In the first four months of the year, 124 startups which announced funding of $100,000 or more were responsible for the total funding. This is far less than 180 startups responsible for the total funding during the first four months of 2025, a 31.1 per cent decline.

Thus, the industry is witnessing fewer startups raising larger rounds, a fact that may not augur well for the future of the tech space.

See also: AFC to reduce African startups’ dependence on foreign investors with $100m investment

Equity funding is also on the decline

An important story developing in the African funding space is the dwindling amount of equity funding in 2026.

Of the $708 million raised across the first four months of the year, $364 million has come in the form of debt, representing 51.4 per cent. $340 million, representing 48 per cent of the total, has been in the form of debt, indicating a rising preference for debt funding by investors.

In contrast, of the $813 million raised between January and April 2025, $652 million came in the form of equity, representing 80.2 per cent of the total. Only $138 million, representing 17 per cent came in the form of debt. The rest came in the form of grants.

While it is not clear exactly why the rise in debt financing, it is probably connected to the fact that a majority of the funding has been larger rounds attracted by the larger startups. These startups have probably hit a limit to how much equity they can trade for financing and are therefore obliged to seek repayable debt financing to invest in their operations and scale.

It could also be connected to the diminishing investment in early-stage startups as smaller rounds appear to be coming less frequently. These smaller startups usually have more equity to exchange for funding, and the drying up of funds coming to them may naturally mean a drying up of equity investments.

These may mean a general trust deficit in the space.

Speaking of trust deficits, this may not necessarily be in the African tech space and the startups operating in them. It may be in more subjective facts like the rise of artificial intelligence and how global institutional investors are actively seeking startups developing businesses around the technology.

Artificial intelligence

Artificial intelligence is the largest tech industry today, larger even than fintech. And because of its possibilities, investors might rather own equity in such companies than anywhere else. Sadly, Africa isn’t a hub for AI development and as such, it could expect investments into its tech space to experience a squeeze.

There is also the US-Iran war, the blockade of Hormuz and the economic squeeze it has put on the rest of the world. At a time of global economic upheavals like this, institutional investors and venture capitalists are usually wary about where they put their money.

Laws, regulations and expectations could change at a whim, and quickly destroy the opportunities of the startups they have invested in.

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