African Startups Shift to Debt Fundraising Amid Equity Drop

In 2024, African startups raised $1.8 billion through debt financing, marking a 91% increase compared to 2023, while equity funding saw a significant decline of 21%, totaling $2.1 billion. This shift towards debt fundraising is attributed to cautious investor sentiment and tighter capital conditions globally, as noted in the African Private Capital Association (AVCA) 2025 venture capital report released on Thursday.

Nadia Coulibali, head of research at AVCA, indicated that the growing reliance on credit is part of a broader global trend and signifies a maturation of the startup ecosystem in Africa. The report highlights that debt accounted for 46% of the total $3.9 billion raised by African startups in 2024.

Notable transactions include significant funding rounds for high-growth startups like Kenya's Sun King and Senegal's Wave. The trend towards debt financing compels startup founders to maintain financial discipline and plan effectively to ensure sustainable growth.