Grace Ashiru
Africa’s startup ecosystem is no longer in recovery mode — it’s in expansion.
After a funding slowdown in 2024, the continent’s startups bounced back hard, raising $3.1 billion in 2025, up from $2.2 billion the year prior — and the biggest headline to come out of those numbers is a shift in the pecking order. Kenya has overtaken Nigeria as the continent’s top destination for venture capital, according to the Startup Ecosystem Report 2026. Kenyan startups raised $984 million in 2025 — a 52% jump from the previous year — claiming roughly one-third of all startup investment across Africa. The climb wasn’t powered by fintech as many expected. Five companies — d.light, Sun King, M-Kopa, Burn, and PowerGen — secured 82% of the total funding, underscoring how energy and climate tech have become Kenya’s primary capital magnet.
Nigeria, meanwhile, led on volume. The country recorded 205 deals in 2025, but the average deal size was just $1.6 million, compared to Kenya’s $6.9 million. Nigeria closed no megadeals, while Kenya closed four major rounds. Macroeconomic pressure compounds the gap — by early 2026, the naira had devalued to approximately ₦1,420 per dollar, with inflation running between 25–30%, eroding purchasing power and dampening investor appetite.
The funding gap isn’t the only shift. In the Financial Times’ 2026 ranking of Africa’s fastest-growing companies — compiled with data firm Statista — Kenya placed 17 firms, edging past Nigeria’s 16, making it the second most represented country on the continent after South Africa. This marks a break from prior years, when Nigeria consistently ranked ahead on the back of its large market and active startup scene.
Still, some analysts urge caution about reading too much into the headline. Of Kenya’s 17 firms on the FT list, only a handful fit a conventional startup definition — M-KOPA, Turaco, 4G Capital, Sun King, and Craft Silicon. The rest are banks, utilities, supermarkets, and established corporates. The implication: Kenya’s 2026 ranking is being carried by institutional momentum, not a new wave of venture-backed founders.
Africa’s growth story is also being shaped by intra-African acquisitions. In 2025, there were 66 acquisitions continent-wide — a 69% increase from the previous year — signalling a maturing ecosystem where consolidation is becoming as common as first cheques. The bigger picture remains compelling regardless. More than 22% of Africa’s working-age population is engaged in starting or running new ventures — the highest entrepreneurial participation rate globally. The funding volumes may not rival Asia or North America yet, but the foundation being built across the continent is unlike anywhere else.
