Startups from Egypt, Kenya, Nigeria, South Africa, and other parts of the region raised $600 million in the first quarter of 2026, marking a 27 percent increase from $470 million in Q1 2025. The data, released by Africa: The Big Deal, highlights a significant shift toward debt financing.
The report revealed that debt funding expanded sixfold from $50 million in Q1 2025 to $305 million in Q1 2026. In contrast, equity funding declined by 27 percent, dropping from $400 million in Q1 2025 to $290 million in Q1 2026. For the first time in recent quarters, debt has become the dominant force in Africa’s startup funding landscape.
Max Cuvellier Giacomelli, co-founder of Africa: The Big Deal, commented: “The numbers look decent at first glance, but the sharp decline in equity and the disappearance of smaller deals point to a more challenging environment for early-stage startups.”
According to the report, the number of deals dropped by 34 percent, from 140 in Q1 2025 to 92 in Q1 2026. Smaller rounds between $100,000 and $500,000 were particularly hard hit, falling from 73 to 32. Meanwhile, deals worth $10 million or more rose from 14 to 18 and now represent 82 percent of total funding, up from 63 percent. This concentration pushed the median deal size more than double, from $0.5 million to $1.3 million.
The report also showed that exits doubled from six to 12, providing much-needed liquidity. Climate tech funding grew strongly by 48 percent to $184 million, increasing its share from 26 percent to 31 percent, even as energy deals declined. Fintech retained its position as the top sector.
Women founders and CEOs continued to face significant challenges. Funding for startups with at least one woman founder or CEO fell 56 percent, from $111 million in Q1 2025 to $49 million in Q1 2026. The number of such deals dropped from 46 to 20, and their share of total funding shrank from 24 percent to just eight percent. “Limited access to early-stage financing continues to constrain the pool of investable female founders,” said Daisy Liech, Director of Portfolio and Strategy at TLcom Capital.
Geographically, the Big Four markets—Nigeria, Kenya, South Africa, and Egypt—still dominated activity, though their relative share showed slight moderation.
The Q1 2026 data underscores a maturing African startup ecosystem where more established companies are turning to debt to fuel growth without heavy dilution, while early-stage and smaller ventures, especially those led by women, struggle for equity capital.
