2025 was a year of recovery and renewed confidence for Africa’s VC ecosystem, with broad-based funding growth and more companies scaling successfully. As the continent’s entrepreneurial talent evolves and new pools of capital engage, the stage is set for a dynamic 2026. In this year’s outlook, we share perspectives on emerging markets and sectors, evolving exit dynamics, the rise of strategic partnerships, and how new global investors are shaping the African venture landscape.
Steve, this time last year, you were cautiously optimistic about a rebound in Africa’s VC and startup ecosystem following a two-year downturn. You predicted that capital would remain selective and disciplined but that patient investors committed to the region would continue to find exciting investment opportunities. Did these predictions play out and how do you see the ecosystem evolving in 2026?
Steve Beck: According to the Africa Big Deal, funding raised by African start-ups was up 40% in 2025. My cautious optimism was justified. More importantly, the recovery of startup funding in 2025 feels more sustainable than what we experienced in 2020–22. While headline growth was driven by a few $100m+ funding rounds, 69 companies raised $10m or more — up 70% on last year. That’s indicative of a broader-based rebound that I believe will be sustained in 2026.
Having been investing in African startups since 2009, I can confidently say the entrepreneurial talent and early-stage investment opportunity set has never been stronger. We’re seeing more serial founders now. And chastened by the challenging macro environment and capital constraints of the last few years, founders and their backers are paying more attention to building sustainably. The continued development of the ecosystem relies now on liquidity. I’m encouraged to see the rise in M&A deals and secondary transactions up and down the capital ladder returning capital to investors. What else for 2026? I think we’ll see more African startups with business models forged in the crucible of markets with limited spending power expand successfully outside the region.
Andrew, last year Novastar announced commitments to NVIII from a growing coalition of global investors, some of which are first-time LPs in Africa-focused venture funds. Do you see this as part of a wider trend of new regions and institutions looking to Africa for long-term growth opportunities? And will it go some way to filling the gaps in the equity and debt capital ladder for African entrepreneurs?
Andrew Carruthers: The arrival of new investors onto the African continent has been a particularly encouraging feature of 2025. Several years ago, we noticed that the most consistent engagement from corporates with our portfolio companies came from Japan. With this in mind, we began to test whether the Japanese investment community would also be interested in the continent by way of a participation in Novastar’s third fund. Our landmark partnership with the leading Japanese VC SBI Holdings in 2023 catalysed a series of discussions that brought Mitsubishi and Mitsui O.S.K. Logistics into the Novastar family in 2024, followed by JICA (the Japanese DFI) and SMBC at the TICAD conference in Yokohama in 2025. Indeed, this event marked an important milestone for the African ecosystem when nearly 30 entrepreneurs from the continent were able to showcase some exceptional businesses to Japanese investors and corporates, generating more than US$50 million of investments and partnerships.
The latest data for transactions and investments in 2025 not only confirms this interest from Japan, but also adds evidence of increasing investment interest coming from the Gulf. This is particularly true in North Africa, a feature we saw when making our first investment into Breadfast in Egypt. It is also encouraging to see the EBRD (European Bank of Reconstruction and Development) expanding its mandate to include sub-Sahara Africa at the end of 2025. Taken together, these mark very positive additions to the flows already coming from the US, UK and Europe. Each of these pools of capital bring different preferences for ticket size, stage and instrument, so will benefit entrepreneurs differently. I expect that most of the new investors will favour bigger tickets into more established businesses, increasing the flow debt like instruments, so I still see a gap in the earlier stage capital ladder. To that end, Novastar will continue to work in 2026 to stimulate interest from other pools of capital for earlier stage equity investment.
Abel, What sectors and markets in Africa will you be watching closely in 2026 and why?
Abel Boreto: In 2026, the key markets to watch are Egypt, South Africa, and Francophone West Africa, notably Côte d’Ivoire and Senegal. Egypt continues to stand out due to its stabilized macroeconomic environment, rapidly growing digital economy, and resilient founders who have strengthened business fundamentals amid recent volatility.
South Africa is another key market to watch in 2026. It recorded the highest number of startup exits and total equity raised in Africa in 2025. With mature capital markets, a relatively stable currency, and a rapidly growing digital economy, the country presents numerous opportunities.
Meanwhile, Francophone West Africa region is emerging as a hub for entrepreneurs due to its stable currency (the CFA franc) and harmonized regulatory frameworks that offer diversification from other volatile markets.
Across the continent, sectors to watch in 2026 include energy (spanning battery energy storage systems, energy-as-a-service and energy management), agritech, climate fintech, smart logistics, e-mobility, and carbon removal.
Mukami, what’s your investment outlook on secondary African VC markets, outside of the Big 4, particularly in Francophone West Africa and North Africa?
Mukami Wainaina: Beyond the headlines and concentrated capital pools of the Big 4 (Kenya, South Africa, Egypt and Nigeria — which together captured ~72% of total funding in 2025) lies a set of secondary markets that increasingly merit attention.
When the Big 4 from is removed the picture, Francophone Africa accounted for 68% of total equity funding volume with ~$250M raised (2025 Partech Africa Report). Senegal took the lion’s share of this, with funding volume driven by a small number of large transactions. Morocco, meanwhile, saw ~30 deals across sectors highlighting the growing breadth of the ecosystem.
Francophone West Africa and North Africa (excluding Egypt) are regions that benefit from structural advantages that offer scaling and market access opportunities. In Francophone West Africa, shared regulatory frameworks, currency alignment, and cultural proximity across WAEMU markets make cross-border expansion more achievable. In North Africa, geographic and trade proximity to Europe and the Middle East opens up export-oriented models and trade corridors that are harder to replicate elsewhere. Together, these dynamics encourage founders to think regionally from day one, rather than relying on single-country scale.
Looking ahead to 2026, the capital constraints faced by secondary markets will continue to act as a forcing function for discipline and durability. A meaningful signal will be seeing these markets moving beyond episodic ‘mega-deals’ to more consistent deal activity.
Brian, how are exits and liquidity dynamics evolving, and what does that mean for Africa focused investors and entrepreneurs?
Brian Waswani Odhiambo: Exits and liquidity in Africa will continue to evolve away from the long-held “wait for the IPO” mindset toward something more practical. This shift will be shaped by what the ecosystem has already lived through. Between 2023 and 2025, Africa recorded over 100 startup exits, the vast majority via trade sales and secondary transactions rather than listings. IPOs remained rare, while M&A by banks, telcos, FMCGs, energy players, and regional champions quietly became a common liquidity path.
In 2026 and beyond, this pattern will deepen. Secondary transactions — founder sell-downs, early investor liquidity, and structured partial exits — will become more normalized, helping recycle capital and reduce pressure for binary outcomes. Consolidation will accelerate in fintech, logistics, and market-access sectors as scaled players acquire distribution, licenses, and operating capability rather than building from scratch.
For Africa-focused investors, this will mean underwriting for cash outcomes, not just terminal multiples. Cleaner cap tables, governance, and exit readiness will also increasingly drive value. For founders, it will reward companies built to be acquirable i.e. profitable with compliant operations and strategic partnerships. Liquidity will feel slower, but also more achievable and more frequent than in the past.
Riki, what can we expect from Japanese and other new investors in Africa in 2026?
Riki Yamauchi: For Novastar, 2025 was a year to formalize various new Japanese LP investors, and to showcase the potential for innovation in Africa during our TICAD side event in Japan. We’re honored to have brought together 150+ leading founders and GPs from Africa together with our networks in Japan, spark new conversations, and witnessing new partnerships come to life.
Going into 2026, the focus will increasingly be on execution, and we have already seen large scale Africa-Japan deals including CFAO’s acquisition of Goodlife, Asahi’s purchase of EABL, and Marubeni’s investment into Phillips Pharma. It’s encouraging to see that new industries, notably Food & Beverage, FMCG, Mobility, Healthcare, are expressing interests and executing, and bringing value besides capital to cohesively harness the growth in Africa.
We’re also encouraged to see rising interests from other parts of Asia, such as Korea and India, where corporates, institutional investors and family offices are spending more time on the continent to explore growth and impactful opportunities in Africa. In 2026, we hope to continue to play a role in building strategic, long-lasting ties between Africa, Japan, as well as broader Asia.
Dieko, how will macroeconomic conditions in Nigeria impact businesses in 2026?
Dieko Ojo: In 2026, Nigeria’s macro story is likely to be “better directionally, still tight in practice.” The World Bank has upgraded its view and now expects 4.4% GDP growth in 2026 and 2027, which it describes as Nigeria’s fastest pace in over a decade. It says growth should be led by services, supported by a rebound in agriculture, and a modest pickup in non-oil industry.
The same report links the outlook to ongoing reforms (including tax reforms) and prudent monetary policy, which should help activity, improve investor sentiment, and keep pushing inflation down. It also flags that higher oil output could help offset weaker oil prices, supporting fiscal revenues and the external balance.
What this means for businesses: there’s room for demand to improve, but you still have to run a tight ship. Companies that win in 2026 will be the ones that manage cash like a product, price with discipline, reduce FX surprises (or hedge them where possible), and keep costs lean because financing and input costs can still bite even in a “recovery” year.
Dayo, what role will consolidation play in 2026 and beyond?
Dayo Oduleye: In 2026, mergers, acquisitions, and strategic partnerships are set to define the African tech ecosystem. A tighter funding environment, more disciplined investing, and maturing core markets mean capital is no longer used to subsidize unproven growth; investors now prioritize profitability, resilient unit economics, and defensible market positions.
M&A is emerging as a practical strategy for growth and survival, with companies increasingly acquired for technology, talent, regulatory licenses, or market share (e.g., Meta acquiring Play AI in Egypt, BAS Group acquiring Zuvy in Nigeria). Consolidation to strengthen products, expand geographically, or unify fragmented verticals is likely to accelerate in fintech, enterprise software, and AI-enabled platforms.
Investors are also taking a more tactical approach to exits. In 2025, secondary transactions accounted for 30–50% of exit activity, providing earlier liquidity amid slower public markets. With rising pressure from LPs to return capital, M&A and secondary sales are set to become core components of the African venture exit landscape.
Dom, where do you see the most investable climate tech opportunities emerging in Africa in 2026?
Dominic Michel: There are a number of interesting verticals. E-mobility is scaling faster in Africa than nearly anywhere else in the world, driven by commercial viability, fuel cost savings, and the rise of battery swapping infrastructure. I’ll also be closely watching climate smart agri-tech innovations. Agriculture in Africa is extremely vulnerable to climate shocks and yet remains severely underfunded — a climate adaptation gap of approx. $365bn is estimated by 2035. When you also consider this alongside the continent’s rapidly growing population, we expect rising demand for solutions that enhance the climate resilience of vulnerable people — e.g. regenerative agricultural innovations, agri-fintech solutions.
