Start-Up Funding Trends in Q1 2025: An In-Depth Analysis

As we delve into the start-up funding landscape for the first quarter of 2025, the numbers reveal a mixed bag of insights. The total amount raised by start-ups reached $460 million through deals of $100,000 or more, marking a slight dip from the $486 million raised in Q1 2024. This represents a 5% year-over-year decrease, but it’s crucial to contextualize these figures. Notably, Q1 2024 was not particularly robust, and the current quarter stands as the second-lowest for start-up funding since late 2020.

The Bright Side: Start-Ups Raising Over $1 Million

While the overall funding figures may seem discouraging, there’s a silver lining when we examine the number of start-ups that successfully raised at least $1 million. In Q1 2025, 52 start-ups achieved this milestone, aligning with the average seen in 2023-2024. This statistic suggests a resilient entrepreneurial spirit, with many start-ups still managing to attract significant investments despite the broader funding challenges.

Geographical Distribution of Funding

A closer look at the geographical distribution of funding reveals that 83% of the total amount was concentrated in the Big Four countries: Kenya, Nigeria, South Africa, and Egypt. Each of these nations attracted approximately $100 million in funding, accounting for 24%, 24%, and 22% of the total, respectively. Egypt followed with $61 million, representing 14% of the total funding. Notably, Togo made its mark as well, thanks to Gozem’s impressive $30 million Series B funding round.

Sectoral Breakdown: Fintech Dominates

When analyzing the sectors that attracted the most funding, fintech emerged as the clear leader, capturing nearly half of the total investments at 46%. Notable players in this space included LemFi, which raised $53 million, and Naked, which secured $38 million. Following fintech, the energy sector accounted for 18% of the funding, while logistics and transportation garnered 10%. This sectoral distribution highlights the ongoing demand for innovative solutions in finance and energy, as well as the importance of efficient logistics in a rapidly evolving market.

Gender Representation in Funding

One of the more concerning aspects of the funding landscape is the representation of female CEOs. In Q1 2025, female-led ventures secured just over 2% of the total funding, amounting to $10 million. The largest round was a $6.2 million grant awarded to African Biologics, a South African biotech company. However, when excluding grants, the proportion of funding raised by female CEOs plummets to a mere 0.7%.

The funding landscape remains heavily skewed towards male founders, with 79% of the total funding going to either solo male founders (11%) or male-only founding teams (67%). Diverse founding teams, while still underrepresented, received 20% of the total funding—a relatively strong figure compared to previous quarters. Alarmingly, only 1% of the funding was allocated to solo female founders or female-only founding teams.

Conclusion

The funding landscape for start-ups in Q1 2025 presents a complex picture. While the overall figures may indicate a downturn, the resilience of start-ups raising over $1 million and the geographical and sectoral insights provide a more nuanced understanding of the current environment. The ongoing challenges regarding gender representation in funding highlight the need for continued advocacy and support for diverse founders.

Stay informed about the latest trends in tech and start-ups across Africa by joining our WhatsApp channel! From Cairo to Cape Town, Lagos to Nairobi, we cover all 54 countries. Subscribe now to stay ahead in this dynamic landscape!