Despite the incredible growth we’ve seen in African tech over the past decade – exemplified by successes like M-Pesa in Kenya and Flutterwave’s pan-African ambitions – 2025 proved a challenging year for achieving ‘unicorn’ status. Our continent did not mint a single new billion-dollar startup, a significant pause after a period of exciting momentum. This slowdown reflects broader trends in global equity funding and initial public offering (IPO) activity, but presents a crucial moment for introspection within our ecosystem.

Funding Slump Dampens Unicorn Prospects

Equity funding for African tech startups experienced a notable decline in 2025, reaching its lowest level in recent years. While specific figures aren’t available, the overall trend indicates a more cautious investment climate. This impacts the ability of promising ventures to scale rapidly, a key requirement for achieving a $1 billion valuation. Investors like TLcom and Partech, typically active in Series A and B rounds, likely faced increased scrutiny from their limited partners, leading to more conservative deal-making.

IPO Activity Remains Subdued

The lack of new unicorns is also linked to a sluggish IPO market. Taking a company public requires substantial preparation and favorable market conditions, neither of which were consistently present throughout 2025. A successful IPO not only provides capital for growth but also validates a startup’s business model and attracts further investment. Without this exit route, investors may be less inclined to fund late-stage rounds, hindering the creation of billion-dollar companies.

Regional Variations in Investment

Although continent-wide unicorn creation stalled, investment patterns varied across regions. We anticipate that hubs like Lagos, Nairobi, and Cape Town continued to attract the lion’s share of funding, but even within these ecosystems, securing large rounds became more competitive. Startups focused on sectors like fintech, agritech, and healthtech likely remained attractive to investors, but due diligence processes intensified, and valuations were carefully assessed.

Building Resilience for Future Growth

This period of consolidation shouldn’t be viewed as a failure, but rather as an opportunity to build a more sustainable and resilient tech ecosystem. Our entrepreneurs need to focus on strong fundamentals – profitability, efficient operations, and demonstrable impact. While the unicorn chase is exciting, building businesses that solve real African problems and generate consistent returns will ultimately attract more long-term investment. We expect to see renewed focus on these areas, setting the stage for a potential rebound in unicorn creation in the coming years, with investors like Norrsken playing a key role.