ABAN says Africa’s startup funding recovery is “more grounded” than previous peaks

After three years of decline from the 2021 peak, African startups raised $3.4 billion in 2025, a 32% rebound from the previous year. But beneath that headline lies a less-discussed shift.  

Angel participation has recovered after two years of caution, and deals below $1 million, one of the few segments of the market that has expanded steadily since 2019, continue to grow.

For the African Business Angel Network (ABAN), an industry body representing angel investors across the continent, the growth validates a decade of work to organise Africa’s local angel base.

Since 2015, ABAN has served as a bridge for the continent’s angel investment ecosystem and now links more than 5,000 angel investors through 75-plus member networks across 37 African countries and the diaspora. Its 2025 Angel Investment Survey Report, released this month in partnership with the United Nations and Japan’s Ministry of Foreign Affairs, is the closest thing the ecosystem has to an audit of how early-stage capital moves on the continent.

The report found that 62 angel networks deployed at least $4.4 million in disclosed funding in 2025, with 65% of the startups they backed securing follow-on capital. Over 90% of individual angels are now writing cheques below $25,000, up from 76% in 2024, a compression that reflects both shifting risk appetite and the depreciating currencies most of these angels operate in.

What makes the findings worthy of discussion now, rather than at any other point in the past three years, is the structural question underlying the rebound. International capital is retreating, and the cheap-money era that fuelled 2021 and 2022 is no longer today’s reality.

If the early-stage layer of the African ecosystem is to hold, it will be because local and diaspora angels, organised through networks like ABAN’s, can move faster and write more cheques than they have historically. 

For this week’s Ask an Investor, I spoke to Favour Ubaka, one of the report’s creators and a stakeholder engagement officer at ABAN, to understand why angel deal participation rebounded in 2025 after a two-year decline, and what a $5,000–$10,000 cheque actually buys a founder in a market where the naira has lost more than 70% of its dollar value since 2022.

This interview has been edited lightly for clarity and length.

Data shows angel deal participation rebounded in 2025 after declining in 2023 and 2024. What’s driving it?

First, we are seeing early-stage funding become active again after a period of caution across the ecosystem. Many investors became more conservative in 2023 and 2024 because of global economic uncertainty, currency pressures, and the broader venture capital slowdown. 

But in 2025, there was renewed confidence around early-stage innovation, particularly around startups that could demonstrate traction and real market demand.

Second, local and diaspora investors are stepping in more intentionally. One of the strongest signals from the report is that angel investing in Africa is no longer being driven only by external capital. We are seeing more African founders, operators, executives, and diaspora professionals participating in angel investing. These investors understand local markets better and are often more willing to take early bets on African founders.

Third, the ecosystem itself is becoming more organised. Angel networks are more structured today than they were a few years ago. We now have stronger syndication models, matching funds like Catalytic Africa, investor education programmes, and vehicles like ABAN helping angels invest across borders more efficiently. All of this reduces friction and gives investors more confidence to participate in deals.

What is also interesting is that the rebound is not only happening in the traditional “Big Four” markets anymore. We are increasingly seeing activity in ecosystems like Zambia, Ghana, Senegal, Uganda, and Tanzania. This tells us the ecosystem is slowly becoming broader and more distributed across the continent.

African tech funding rose 32% to $3.8 billion in 2025, but the report notes deals below $1 million have been expanding steadily since 2019. What share of 2025’s $3.8B actually went to sub-$1M rounds, and how does that compare to other time periods?

What we are seeing is a bit of a split story. The $3.8 billion headline is still largely driven by bigger, later-stage rounds. But underneath that, sub-$1 million deals have been quietly growing and becoming more consistent since 2019.

So while they don’t dominate the total capital deployed, they make up a significant share of deal activity. In simple terms, most of the money is concentrated at the top, but most of the activity is happening at the early stage.

And compared to earlier periods like 2021 and 2022, the market leaned more towards larger rounds. What we are seeing now is a stronger, more active early-stage layer, with angels and angel networks continuing to fund that first cheque.

That is really what sustains the pipeline.

The report frames 2025 as an “uptick.” How fragile is that uptick given macro headwinds?

I would not describe the uptick as fragile, but I would say it is still early and very dependent on how the ecosystem continues to respond to current conditions.

What we are seeing in 2025 is not just a rebound driven by external capital coming back in. In many ways, it is being supported by a stronger foundation, particularly local investors, diaspora participation, and more organised angel networks stepping in at the early stage.

At the same time, the macro headwinds are real. We have seen reduced activity from some international funding sources, tighter global liquidity, and broader economic uncertainty. Those factors have not gone away.

But what is interesting is how the ecosystem is adjusting. Early-stage activity, especially below $1 million, has remained active and continues to grow. Angels are still writing those first cheques, and in many cases, they are filling gaps where larger capital has pulled back.

So rather than fragile, I would describe this as a more grounded recovery. It may not be as fast or as headline-heavy as previous peaks, but it is being built on more consistent early-stage activity and stronger local participation.

The real test going forward is whether we can keep mobilising domestic and diaspora capital and continue building the structures that make it easier for angels to invest. If that continues, the uptick becomes something much more sustainable.

More than 90% of individual angels wrote tickets below $25K in 2025, up from 77% in 2023 and 76% in 2024. What’s driving that?

A big part of it is how investors are managing risk in the current environment.

With more uncertainty in the market, many angels are choosing to write smaller cheques so they can spread their capital across more startups instead of concentrating it in a few bets. It is a bit like not putting all your eggs in one basket. That shift naturally brings average ticket sizes down.

The second thing is the stage at which angels are coming in. We are seeing more activity right at the very early stage, pre-seed and early traction. At that point, founders are not raising large rounds yet, so smaller tickets are more appropriate.

There is also a structural shift happening. More first-time angels are entering the ecosystem, including operators and diaspora professionals. Smaller ticket sizes make it easier for them to participate without taking on too much risk upfront. At the same time, more deals are being done through syndicates and angel networks, where individuals can contribute smaller amounts as part of a larger round.

So it is less about reduced appetite and more about a more deliberate approach. Angels are still very active; they are just being more measured in how they deploy capital.

With naira and other currencies depreciating sharply since 2022, what does a $5K–$10K angel cheque actually unlock for a founder?

It may sound small in dollar terms, but in practice, a $5K–$10K cheque can go quite far at the stage most angels are investing.

At that early point, founders are not trying to scale aggressively yet. They are trying to prove something very specific: does the product work, will customers pay, and can the model hold? That kind of capital is often enough to build an MVP, run initial pilots, acquire early users, or cover a few months of core operating costs.

When you factor in currency dynamics, it stretches even further locally. A founder spending in naira or other local currencies can deploy that capital more efficiently on talent, operations, and customer acquisition. So the same amount that might feel small elsewhere can meaningfully move a company from idea to traction.

Also, these cheques are rarely standalone. They are often combined, either through syndicates or angel networks, or matched with programmes like Catalytic Africa, which can double or even triple the capital going into a startup.

But beyond what it buys financially, there is another layer people often overlook. That first cheque is validation. It signals that someone believes in the founder early, and that can unlock follow-on funding, partnerships, and access to networks.

So it is not just about the amount, it is about what it helps unlock next.

Angels are writing smaller cheques and VCs are more selective at Series A, who’s filling the gap between initial angel rounds and institutional seed?

What we are seeing is that the gap is not being filled by one player; it is being filled by a mix of structures that are evolving around the early stage.

First, angel networks themselves are stepping up. Individual angels may be writing smaller cheques, but when they come together through syndicates, they can still deploy meaningful capital into a round. That is how you start to bridge the gap between a $5K cheque and a proper seed round.

Second, we are seeing more blended and catalytic capital coming in. Models like Catalytic Africa are a good example, where angel cheques are matched with grant funding. That effectively increases the size of the round without putting all the pressure on private investors alone.

Third, there is a growing layer of early-stage VCs, accelerators, and venture studios that are operating between angel and Series A. They are writing smaller, more structured seed cheques and helping founders get investor-ready.

And then there is the role of organised platforms like ABAIV, which make it easier to pool capital across borders and bring in diaspora investors. That kind of structure allows smaller individual tickets to add up to something much more substantial.

So the gap still exists, but it is increasingly being filled more collaboratively. Instead of relying on one big cheque, it is multiple actors coming together to move startups from the first cheque to institutional readiness.

Why do you think 80% of angel deals still concentrate in the Big Four?

It comes down to where the foundations are already strongest.

The Big Four markets have built more mature ecosystems over time. You have a higher concentration of startups that have already moved beyond the idea stage, stronger founder pipelines, more active investors, and better support structures like tech hubs, accelerators, and advisory networks. So naturally, that is where a lot of deal activity clusters.

There is also a practical side to it. Investors go where they can find consistent deal flow and where it is easier to do due diligence, close deals, and support founders after investing. In markets like Nigeria, Kenya, Egypt, and South Africa, that infrastructure is more established, so the friction is lower.

That said, the interesting shift we are seeing is that this concentration is starting to ease. The report shows growing activity in markets like Senegal, Zambia, Ghana, Uganda, and Tanzania.

So it is not that other markets lack potential; it is more that they are still building the structures that make investing easier. As more angel networks, local investors, and support systems develop in those ecosystems, you will continue to see deal activity spread more evenly across the continent.

A case study notes that seven of 10 exits came via secondaries, with the other three via M&A of non-African companies. Is the secondary market becoming the primary exit path for African angels, and what infrastructure is missing to scale?

What the case study is showing is a real shift we are starting to see, but I would not say the secondary market has fully become the primary exit path yet. It is becoming more common, especially because the traditional routes are still quite limited.

In many African markets, large-scale M&A activity is still developing, and IPOs are not a realistic path for most startups in the near term. So naturally, secondaries, where early investors sell to later-stage investors, are becoming a more practical way for angels to realise returns.

It makes sense when you think about how the ecosystem is structured. If a company is growing and attracting new investors at seed or Series A, that is often the first real opportunity for early angels to get liquidity. So secondaries are filling that gap.

That said, for this to scale properly, a few things are still missing.

First is more consistent late-stage capital. You need enough growth-stage investors coming in regularly for secondaries to happen at scale. Without that, there is no one to buy out early investors.

Second is more structured secondary platforms and processes. Right now, a lot of these transactions are still informal or relationship-driven. There is a need for more organised marketplaces, clearer pricing benchmarks, and standardised deal processes.

Third is stronger regulatory and legal clarity across markets. Cross-border transactions can still be complex, and that slows things down for both buyers and sellers.

And finally, more predictable exit pathways overall. The more confidence investors have that they can exit, whether through secondaries, M&A, or other routes, the more willing they are to deploy capital early.

So secondaries are becoming an important part of the picture, but really, they are stepping in to fill a gap. As the ecosystem matures, you would expect to see a more balanced mix of exit options.

21% of networks cited “limited exit opportunities and liquidity” as their top challenge. What does the African exit pipeline look like in 2026?

The exit pipeline in 2026 is improving, but it is still narrow and heavily concentrated around M&A and secondary transactions.

What we are seeing now is less of a traditional venture-style IPO pipeline and more of a consolidation pipeline. Larger African startups, regional incumbents, banks, telcos, fintechs, and private equity firms are increasingly becoming the buyers.

So the market is active, but the types of exits are changing. Instead of founders aiming only for massive IPO outcomes, many are now building towards strategic acquisitions or secondary sales. In practical terms, liquidity is happening, just through different routes.

We are also seeing more African companies acquiring other African startups. That is an important shift because it signals that parts of the ecosystem are maturing enough to become buyers themselves.

At the same time, the pipeline is still constrained in a few ways.

First, there are not yet enough late-stage growth investors and institutional buyers across the continent. That limits the number of companies that can absorb or acquire venture-backed startups at scale.

Second, IPO pathways remain limited. Most African public markets still do not have the liquidity depth or institutional participation needed for tech IPOs to become a consistent exit route.

Third, the secondary market is still relatively informal. Transactions often happen through relationships rather than structured platforms. There is still a need for more standardisation, better pricing benchmarks, clearer governance processes, and stronger cross-border legal infrastructure.

I would say the 2026 exit pipeline is becoming more active and more realistic, but it is still evolving. The good news is that liquidity conversations are no longer theoretical. We are seeing more acquisitions, more secondary transactions, and more local buyers entering the picture. That is a meaningful shift for the ecosystem.