African startups had a successful start to 2025, securing $289 million in funding in January. This amount is the second-highest January for equity fundraising in six years, representing a startling 240% increase over the $85 million raised in January 2024. More than 90% of the total funding, approximately $262 million, came from equity financing, reinforcing investor confidence in the continent’s startup ecosystem. The majority of the funding was concentrated in Nigeria, Kenya, Egypt, and South Africa, which collectively accounted for 60% of the total amount raised.
Leading the financing race is LemFi, a cross-border payments firm based in Nigeria, with a $53 million Series B round aimed at expanding its remittance services into Europe and Asia. Following closely was PowerGen, a Kenyan company that obtained $50 million to build a portfolio of 120 MW of off-grid and metro-grid Renewable Energy projects in addition to commercial and industrial (C&I) projects. Strong investor interest in Africa’s renewable energy sector is shown by the company’s first concentration on Nigeria, Sierra Leone, and the Democratic Republic of the Congo.
Naked achieves a landmark insurtech funding milestone.
The PowerGen Investment supports the continent’s larger initiatives to solve the energy disparity by using sustainable solutions. Naked, a digital Insurance platform that leverages artificial intelligence to offer immediate coverage in South Africa, raised $38 million. This funding round is especially noteworthy as it represents the largest InsurTech investment in Africa’s history. Key participants included Hollard Insurance Group, Yellowwoods, the International Finance Corporation, and DEG, the German development finance organization. The round was led by global impact investor BlueOrchard.
This outstanding feat achieved by Naked highlights how AI-driven insurance solutions are becoming more and more important in lowering the cost and improving access to coverage. Enko Education of Cameroon raised $24 million to fund its ambitious plan to expand throughout Africa. The financing demonstrates the increasing attention being paid to educational Technology and the role of the Private Sector in closing the learning gaps in Africa. Traditionally regarded as Africa’s largest startup markets, South Africa, Kenya, and Nigeria accounted for three of the top four fundraisers in January.
Expansion-driven fundraising boosts Africa’s startup ecosystem.
Furthermore, three of these four firms raised money largely for expansion, indicating a change in focus from fundraising for survival to scaling operations. Larger deals are driving overall fundraising levels, as seen by the fact that these four businesses alone accounted for 57% of all capital raised in Africa last month. According to experts, the January 2025 increase represents a favorable turning point for Africa’s startup sector, which confronted challenges in the previous years. African businesses only raised $1.5 billion in equity funding last year, which is less than 1% of all startup investments worldwide.
Despite the encouraging beginning, January’s total funding was 15% less than the $340 million that the continent’s companies raised in December 2024. This implies that even if investor confidence is rising, financing swings are still frequent. Compared to January 2024, 2023, and 2022, fewer deals were made in January 2025, with 40 African businesses raising at least $100,000. Except for January 2022, the number of high-value deals in January 2025 exceeded prior years, with 26 of these startups obtaining at least $1 million.
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Overall, January 2025 stands as the second-best January for African startup funding since 2019, with only January 2022 surpassing it, when startups raised over $400 million. The $262 million in equity contributions accounted for over 90% of January’s overall fundraising. This is the second-strongest January for equity financing since at least 2019 and more than four times the amount raised in January 2024. The robust start to 2025 indicates that Investors are once again interested in African entrepreneurs, especially those in the fintech, renewable energy, insurance, and educational sectors. After two years of financial difficulties, the continent’s tech sector may be headed for a much-needed recovery if this momentum continues.