Home / Business and Economy / African Startups Embrace Debt Over Equity in 2025
African Startups Embrace Debt Over Equity in 2025
13 Feb
Summary
- Debt funding for African startups surged 91% to $1.8 billion in 2025.
- Equity financing decreased 21% to $2.1 billion in the same year.
- African-based DFIs contributed 63% of total startup funding in 2025.
African startups saw a significant rise in debt fundraising, nearly doubling in 2025 to $1.8 billion, a 91% increase year-over-year. This debt funding constituted 46% of the total $3.9 billion secured by firms last year.
Simultaneously, equity financing experienced a 21% decline, totaling $2.1 billion. This trend reflects a global caution among investors and increased equity costs, driving startups towards debt as an alternative.
Africa-based development financial institutions (DFIs) emerged as major funders, contributing 63% of total startup financing in 2025. This marks a reversal from prior years when international DFIs dominated commitments.
Six large "megadeals" accounted for $1.1 billion, or 60%, of the total debt funding, indicating that debt's growing influence is concentrated among significant transactions. This evolving landscape signals a maturing venture capital ecosystem in Africa, with expectations for a broader range of financial instruments in the future.
