Investor Funding for African E-Commerce Startups Drops 47% in Q1 2025

BREAKING NEWSMay 21, 2025 at 11:13 AM UTC

TLDR

Investor funding in African e-commerce startups fell sharply in the first quarter of 2025, dropping 47.2% year-on-year to $11.3 million
The decline reflects tightening private markets and growing investor caution amid concerns about competition, weak unit economics, and slowing growth
No seed rounds were recorded during the quarter, compared to $3 million raised in Q1 2024 by startups like Badili and Dawa Mkononi

Investor funding in African e-commerce startups fell sharply in the first quarter of 2025, dropping 47.2% year-on-year to $11.3 million, according to data from Africa: The Big Deal. The sector raised $21.4 million during the same period in 2024.

The decline reflects tightening private markets and growing investor caution amid concerns about competition, weak unit economics, and slowing growth. No seed rounds were recorded during the quarter, compared to $3 million raised in Q1 2024 by startups like Badili and Dawa Mkononi.

Despite the slowdown, a few notable deals were closed. Egypt-based Taager raised $6.8 million in a Pre-Series B round led by Breyer Capital, while Kenya’s Kapu secured $2 million in Pre-Series A funding from Base Capital.

E-commerce startups face headwinds including rising customer acquisition costs and dominance by established players like Jumia, Zando, and Konga. These challenges appear to have shifted investor interest toward sectors offering faster paths to profitability.

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Key Takeaways

The drop in e-commerce funding suggests a rebalancing of capital toward sectors with more predictable returns. While Africa’s e-commerce market was valued at $317 billion in 2024 and is projected to exceed $1 trillion by 2033, the path to profitability remains uncertain for early-stage players. Investors are increasingly favouring business models with stronger unit economics and lower burn rates. Rising competition, logistics inefficiencies, and customer churn make scaling difficult for smaller platforms. As a result, investor attention may shift toward fintech, SaaS, and climate tech sectors perceived as more resilient to macro pressures. However, the long-term fundamentals for e-commerce remain strong, driven by rising internet access, mobile payments, and a growing digital consumer base. The funding dip may represent a temporary correction rather than a permanent retreat, with larger, more proven e-commerce players likely to dominate funding flows in the near term.

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