Nigeria’s LemFi leads as African startups raised $289 million in January 2025

January is traditionally a slow month for venture funding but January of 2025 got off to quite an impressive start for African startups as they raised $289 million in the first month. This is according to data from African startup funding analytics company, Africa the Big Deal.

The $289 million raised is a significant improvement from the $85 million raised within the same period in 2024 and represents a 240% increase. January’s total, however, represents a 15 per cent monthly decline compared to the previous month of December (2024) when African startups raised about $340 million.

A total of 40 African startups that raised at least $100,000 accounted for the numbers. This is less than the volume of deals within the same period in 2024, 2023 and 2022. However, with 26 of those 40 startups raising at least $1 million or more, January 2025 has more startups raising above a million dollars than the other Januarys, except for 2022.

Overall, January 2025 is the second-best January recorded since 2019, bested only by January 2022, when African startups raised over $400 million in the heart of the funding heatwave.

Equity funding on the rise

Another important data is that $262 million of the $289 million raised last month came in the form of equity. This represents 90.6 per cent of the total. more than 90 per cent of the funding raised last month was equity ($262m), Per the report, this is over four times more than in January 2024, and the second-best month of January when it comes to equity fundraising since at least 2019.

Equity funding has declined as investors’ interest in the continent’s tech space continues to wane. One possible reason for the decline in the global funding winter is last year’s global inflation. It could also be attributable to the high rate of startup failures and shutdowns recorded over two years.

With so many failure stories, VC confidence will be negatively affected.

Therefore, investors are treading carefully, with many of them choosing the safer route of debt financing than funding for equity. Indeed, equity funding into African fintechs, a darling of the African tech startup space, declined by 25 per cent in 2024.

But the positive side of that story is that the 2024 decline is the slowest recorded since 2022 when fintech startups raised $1.1 billion in equity funding, representing a 35.3 per cent decline from the $1.7 billion raised in 2021.

Also, African fintech startups raised equity funding of $800 million in 2023, representing a significant 27.2 per cent decline from the 2022 total. This decline showed that investor confidence might be returning. A 90.6 per cent share of January funding buttresses the return in confidence and one could only hope it continues through the year.

See also: Equity funding constitutes 58% of $1.03 bn invested in African fintech startups in 2024

Nigeria’s LemFi leads African startups in January

While 40 startups may have been responsible for the $289 million raised in January 2025, four startups led the pack with the largest fundraisers recorded during the month. Leading the pack is Nigerian cross-border payment startup, LemFi which raised $53 million in a Series B round to expand its remittance offerings into Europe and Asia.

The second-largest deal in January was Kenya-based PowerGen which secured $50 million to develop a 120MW portfolio of commercial and industrial (C&I) and off/metro-grid renewable power projects, with an initial focus on projects in Nigeria, Sierra Leone and the Democratic Republic of the Congo.

The next is Naked, a South African digital insurance platform that uses artificial intelligence to provide instant coverage to users. The startup raised $38 million last month, considered the largest insure tech funding Africa has ever seen.

The round was led by global impact investor BlueOrchard with participation from Hollard Insurance Group, Yellowwoods investment holding company, International Finance Corporation and DEG, the German development finance institution.

Cameroon’s Enko Education makes up the top four with its $24 million equity funding round powered by Adiwale Fund I and Africa CapitalWorks. The funding will power the startup’s large-scale acquisition strategy across Africa and is set to assist the educational organisation in its aim to grow its student body from 7,500 learners to 20,000 by 2029.

Three of the top four fundings are from three of the traditional Big 4 startup markets in Africa; Nigeria, Kenya and South Africa. Three out of all four fundings are for expansion. And together all four startups are responsible for 57 per cent of all the funding raised on the continent last month.