African venture capital shifts toward growth-stage firms, squeezing seed startups

VC firms across Africa are favoring later-stage companies with proven revenue, leaving early-stage startups with tighter funding.

African venture capitalists are increasingly allocating money to growth-stage firms, reducing the pool available for seed and Series A ventures. Although total funding in the first half of the year stayed near $1.4 billion, the deal count dropped and average investment sizes rose, benefitting companies with solid revenues and clear customer traction. Executives like Ibrahim Sagna of Silverbacks Holdings note that “exit discipline” now dictates investment decisions, while Justin Stanford of 4Di Capital observes heightened scrutiny on cash returns.

To adapt, 4Di and Norrsken22 are considering secondary transactions to acquire stakes in later-stage startups. Partech Africa’s data shows a 25 % annual rise in average growth-stage checks, reaching $50 million in 2025. Despite the shift, investors such as Eloho Omame of TLCOM continue to back early-stage founders, especially repeat entrepreneurs, and a base of seed-focused investors still exists, according to Mazen Mohamed AL-Morshedy of LoftyInc Capital.