In 2025, Kenyan startups raised $984 million in venture capital — a 52% jump year-on-year — allowing Nairobi to overtake Lagos as Africa's premier investment destination. It is the first time Kenya has surpassed Nigeria on this key metric. Across the continent, African startups collectively raised $3.1 billion in 2025, up from $2.2 billion in 2024.
Climate Tech Drives the Surge
Contrary to expectations, it was not fintech but climate technology and clean energy that drove Kenya's performance. Five companies — d.light, Sun King, M-Kopa, Burn and PowerGen — captured 82% of the total funding. The average deal size in Kenya reached $6.9 million, compared to $1.6 million in Nigeria, reflecting a market that favours quality over volume.
Nigeria: Volume Without the Megadeals
Lagos maintained the highest deal count on the continent with 205 transactions in 2025, but the absence of major funding rounds ultimately cost Nigeria its top position. Kenya secured four large deals that proved decisive. This divergence illustrates the structural difference between the two ecosystems: Nigeria generates high-volume, lower-ticket activity; Kenya bets on fewer but higher-impact champions with regional reach.
A Maturing Ecosystem
Intra-African acquisitions surged by 69% to 66 transactions in 2025, signalling a market entering a consolidation phase. The Financial Times ranked 17 Kenyan companies among Africa's fastest-growing firms — one ahead of Nigeria's 16. Nairobi has also been selected as the first regional headquarters of the International Trade Centre (ITC) outside Geneva, further cementing its hub status.
Why It Matters
This shift redistributes tech attractiveness across East Africa. For the Indian Ocean region, the message is clear: international capital is increasingly targeting East Africa as a strategic investment frontier. Mauritius, set to host the US-Africa Business Summit in December 2026, and Madagascar, actively courting foreign investors, must incorporate this new competitive landscape into their attraction strategies. The race for talent and funding in East Africa is intensifying.
Sources: TechInAfrica, BusinessDay NG, Rio Times Online.