Grace Ashiru
African startups closed 44 disclosed rounds worth $100,000 or more in July 2026, raising a combined $102 million. While the number of funded companies stayed near the 12-month average, the total raised came in 60% below the monthly average of $258 million, making it the weakest month since March 2025.
What stood out wasn’t just the total, but how it was put together. Equity funding sank to just $25 million, the lowest monthly figure Africa: The Big Deal has tracked since April 2019. Debt made up the rest, supplying roughly $75 million, or 74% of everything raised during the month.
That doesn’t signal African venture capital drying up. It points to investors tightening their criteria, while more mature startups lean on debt to fund activities with predictable, trackable repayment.
Four debt transactions drove most of the month’s numbers: M-KOPA ($30 million), Bridgement ($20 million), BioLite ($11 million), and Nesa Power (around $9 million), together accounting for roughly $70 million.
M-KOPA’s deal illustrates why debt suits certain businesses well. Its Kenyan mobility arm secured $30 million in senior debt from Dutch development bank FMO, with up to $23 million earmarked for electric motorcycles and batteries and the remainder refinancing an earlier shareholder loan. The company processes over two million payments daily, has served 10 million customers, and has extended more than $2 billion in credit, giving lenders the kind of repayment history early-stage startups simply don’t have yet.
Equity investors, by contrast, are being more cautious because their returns hinge on exits, acquisitions, IPOs, or later share sales, and those exit paths remain constrained. The African Private Capital Association points to liquidity and slow capital recycling as ongoing drags, with 27% of limited partners expecting to pull back their commitments this year despite stronger deal pipelines and more attractive valuations. Globally, venture capital has also concentrated heavily around a small number of companies, with PitchBook noting that five firms absorbed most US venture investment in Q1 2026, squeezing out smaller funds and emerging managers.
Debt appeals to founders precisely because it doesn’t require giving up more ownership, which matters when valuations are lower than expected and a down round is the alternative. It buys time to wait out weak market conditions before returning to equity. Partech recorded $1.6 billion in African startup debt in 2025, a 63% jump from the year before, with debt now representing 41% of all capital deployed versus just 17% in 2019. Lenders like it too: scheduled interest, contractual protections, and downside cover that plain equity doesn’t offer. But debt still has to be repaid regardless of how revenue performs, and dollar-denominated loans get more expensive fast when local currencies slide.
The businesses best positioned to use debt are those with predictable revenue or hard assets: fintech and lending platforms borrowing against receivables, pay-as-you-go companies with steady instalment income, energy and mobility firms tied to physical assets and long-term contracts, B2B invoice financiers, and later-stage companies with a track record. Nesa Power’s $9.1 million mezzanine debt raise, aimed at expanding its commercial solar and power-purchase agreement portfolio, fits this pattern. Pre-revenue startups generally can’t access this kind of financing since they lack the cash flow or collateral lenders need.
Zooming out, the picture is more nuanced. From January through July 2026, African startups raised about $1.46 billion total, down 27% year-on-year. Equity fell a milder 9% to $921 million, while debt actually dropped 44% to $529 million over the same period, meaning July’s debt-heavy skew was driven by a concentrated cluster of large deals rather than a sustained shift.
The takeaway isn’t that debt is replacing equity outright. It’s that successful African startups are building more varied capital structures, with equity still essential for early-stage risk-taking and debt increasingly used for financing assets, inventory, and proven revenue streams. AVCA’s survey found 87% of limited partners plan to maintain or grow their African allocations over the next three years despite near-term caution, suggesting capital hasn’t disappeared so much as it’s become more selective about how it’s deployed and more demanding about how it gets repaid.
