81 African startups stuck at seed stage despite funding rebound

A new report has found that 81 African startups that raised seed funding in 2022 have not yet secured Series A investment, highlighting a widening gap in the continent’s startup pipeline even as overall venture funding rebounds.

The analysis, published by Condia, shows that only 10 of the 105 startups that raised seed capital in 2022 have gone on to close Series A rounds within 34 months. Eleven have shut down or been acquired, while the remaining 81 are still active but stuck at the early stage.

The findings point to a growing structural issue in Africa’s startup ecosystem in that fewer startups are making it to the next growth stage.

The report comes at a time when headline funding figures suggest recovery. African startups raised about $1.55 billion in equity in 2025, a 39 percent increase from $1.12 billion in 2024. Total disclosed funding, including debt and hybrid instruments, reached $2.2 billion.

But behind those numbers, the early-stage pipeline is shrinking.

Seed-stage activity has fallen sharply over the past three years. The number of startups raising seed rounds dropped from 105 in 2022 to 46 in 2023, 31 in 2024, and a partial recovery to 42 in 2025.

That decline is now feeding into future growth concerns.

The findings are published in The State of Startup Funding in Africa, the second edition of Condia’s annual report on the continent’s venture capital ecosystem, supported by HubOne, FCMB’s innovation platform.

“Most funding reports tell you what happened in the last twelve months. We wanted to ask a different question: what happened to the companies that raised three years ago? The answer reframes how we should think about Africa’s funding recovery. The headline number is up. The pipeline behind it is contracting,” said Benjamin Dada, publisher of Condia.

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The report argues that the real constraint is not capital availability but deal flow quality and quantity. With fewer startups entering the system, the number capable of advancing to Series A is expected to fall in coming years, regardless of investor appetite.

Africa’s seed-to-Series-A ratio has also tightened, moving from 3.8:1 in 2022 to 2.2:1 in 2024 and 2025. While this might appear to show greater efficiency, Condia says it reflects a thinner pipeline rather than stronger conversion.

“A narrowing ratio might sound like efficiency. It isn’t. It means fewer companies are entering the funnel. The companies closing Series A today were seeded in 2021 and 2022. If Africa seeds 42 companies a year instead of 100, the Series A class of 2027 will be smaller — regardless of how much capital is available,” Dada said.

The 81 startups still waiting for Series A funding include a mix of fintech, healthtech and infrastructure companies. They include Egypt-based Telda, Nigeria’s EarniPay, Klasha, Maplerad, Healthtracka, Stears and South Africa’s Floatpays.

Many of these companies operate in sectors that were heavily funded during the 2021–2022 venture boom but now face stricter investor scrutiny.

The report notes that investors are increasingly prioritizing profitability signals, revenue visibility and capital efficiency over rapid growth. High burn rates and weak margins are becoming key reasons for delayed or rejected follow-on funding.

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While early-stage funding has slowed, overall capital deployment has recovered. South Africa led the continent in 2025 with $507 million in equity funding across 40 deals. Egypt followed with $352 million, while Nigeria and Kenya recorded $264 million and $176 million respectively. Together, these four markets accounted for 84 percent of total equity funding.

At the same time, sector trends are shifting. Fintech’s share of equity capital fell from 66 percent in 2024 to 34 percent in 2025, as CleanTech ($308M), HealthTech ($149M), and Mobility ($146M) each returned to scale. The sector rotation anticipated since 2022 has finally arrived in volume.

Despite the rebound, the recovery remains uneven.

In the first quarter of 2026, equity funding fell 39 percent year-on-year to $213 million, while debt and hybrid instruments accounted for more than $490 million of total $705 million funding. It was the first time non-equity capital exceeded equity in both volume and deal share.

That shift suggests startups are increasingly relying on structured finance rather than risk capital, a sign that investors are becoming more cautious.

The report warns that this transition could reshape Africa’s startup landscape, with fewer high-growth companies emerging from early-stage funding rounds.

The analysis was compiled using Condia’s proprietary funding tracker, alongside data from Partech Africa and Disrupt Africa.