Mobility funding rises fastest in North Africa

From the newsletter

New money for mobility companies in North Africa rose faster than in any other region in February 2025, according to data from Africa: The Big Deal. The region accounted for 23% of the funding during the month, a sharp increase from 1.14% in February 2024. However, West Africa accounted for 77% of the overall funding – thanks to one deal.

• Debt and Series B funding dominated February 2025, accounting for 76.53% of the total funding, with $30 million being raised in West Africa. Pre-Series B funding followed, contributing 17.35% of the total, with Egypt's securing $6.8 million. Venture rounds represented 0.52%, with Tunisia raising $0.2 million.

• The high percentage of debt financing suggests that investors are shifting towards lower risk options, shying away from equity investments and favouring businesses with proven revenue models.

More details

• February 2025 funding data reveals a clear shift away from early-stage equity financing towards debt and more mature business models. Debt and Series B financing accounted for over 76% of total funding, indicating that investors are prioritising startups with proven financial sustainability over high-risk ventures. The decline in venture rounds and pre-Series B funding suggests that early-stage startups are struggling to attract investment, which could slow down innovation in the long run.

• Funding patterns over the past three years highlight a decrease in the number of deals but an increase in the size of individual investments. In February 2023, the average funding round was just $2.15 million, rising to $22.63 million in February 2024, before settling at $13.07 million in February 2025. The peak in 2024 was driven by a few massive deals, but the decline in 2025 suggests a more cautious, selective investment environment.

• North Africa led in the deal count, with Egypt and Tunisia securing multiple investments, but West Africa raised the highest total funding amounts. The $30 million Series B & Debt round for Gozem in Togo ensured that West Africa dominated in terms of total investment. This suggests North Africa remains a hub for early-stage startups, attracting venture rounds and pre-Series B investments, while West Africa has become the destination for large-scale, later-stage funding, as many of its mobility companies have been operating for several years.

• Funding trends from February 2023 to February 2025 show a shift towards later-stage investments, with Series B funding reaching 38% in 2025 and debt funding increasing from 20% in 2024 to 39% in 2025, according to data from Africa: The Big Deal. 

• North Africa’s rise in mobility investments suggests that transport and infrastructure are becoming key sectors for growth, possibly driven by government incentives for electric vehicles and smart transport solutions. However, the absence of major exits and more large-scale funding rounds means that North African startups still face challenges in scaling beyond early growth stages.

• Meanwhile, West Africa’s focus on later-stage investments and debt financing indicates that investors view the region as a more developed and financially stable market. The challenge for North Africa will be transitioning from an early-stage investment hub to a region that attracts large-scale, growth-stage capital. But given the region’s general maturity, that should be possible. 

• The continued dominance of debt financing and structured investments suggests a focus on startups with clear revenue models and strong financial management. But it could limit early-stage innovation and slow down the creation of disruptive new technologies.

Our take

• Investors appear to be shifting away from backing a large number of startups towards funding fewer, more established companies. As a result, emerging startups may find it challenging to attract traditional investment, forcing them to explore alternative funding avenues such as government grants, incubators, or strategic partnerships to sustain their growth.

• However, sentiment in major economies such as the US and Europe is turning against international aid, including grants, which form a crucial part of startup funding in Africa. The reduction in grant funding is likely to persist in the short-term, especially during US President Donald Trump’s tenure.  

• The division between North Africa’s early-stage investment focus and West Africa’s scale-up funding is likely to persist too – until some of the more mature North African companies themselves attract later-stage capital.