JOHANNESBURG, Feb 13 – African startups sharply increased their use of debt financing in 2025, nearly doubling funds raised through credit instruments even as equity investment declined.
According to the 2025 Venture Capital Report released by the African Private Capital Association, startups across the continent secured 1.8 billion dollars in debt last year, marking a 91 percent increase compared to 2024.
Debt financing represented 46 percent of the total 3.9 billion dollars raised by African startups in 2025, highlighting a notable shift in capital structure preferences.
By contrast, equity funding fell significantly. Startups attracted 2.1 billion dollars in equity investment during the year, reflecting a 21 percent decline from the previous year as venture capital firms adopted a more cautious stance amid tighter global liquidity conditions.
Industry Perspective
Nadia Coulibaly, Head of Research at AVCA, said the growing reliance on credit aligns with broader international trends.
She noted that the movement toward debt reflects tougher equity markets and increased investor caution. With equity capital becoming more expensive and selective, startups are increasingly exploring alternative financing mechanisms to sustain growth.
Coulibaly described debt as emerging as a defining anchor within Africa’s venture capital landscape, adding that the shift signals a maturing ecosystem capable of supporting a wider range of funding instruments in the coming years.
The evolving funding mix suggests that African startups are adapting to global capital realities while building more diversified and resilient financing strategies.
