Why the African tech ecosystem is turning into extra selective 

Not way back, Africa’s tech ecosystem was outlined by how shortly capital could possibly be raised and the way aggressively firms might develop. 

In 2025, that scorecard modified, as founders and traders entered an period the place the growth-at-all-costs mentality modified to certainly one of survival-at-all-costs. 2025 was a whole recalibration of what it means to construct and fund a enterprise on the continent, and the influence rippled throughout the ecosystem.

These shifts are mirrored within the State of Tech in Africa (SOTIA) report, an annual report by TechCabal Insights that tracks funding patterns, mergers and acquisitions (M&A), exits and job cuts, regulation, and broader ecosystem developments. To debate these findings, business leaders, together with traders, operators, and ecosystem stakeholders, gathered for a roundtable session on the launch of the report on Friday, January 23, 2026.

Lola Masha, accomplice at Antler, Segun Cole, Chief Govt Officer (CEO) of Maasai VC, and Dieko Ojo, funding affiliate at Novastar, sat with TechCabal’s Senior Editor, Ganiu Oloruntade, to replicate on the teachings from latest funding developments and the methods founders and traders are adopting to navigate a extra disciplined setting. 

In accordance with the SOTIA report, Africa’s tech ecosystem raised $3.42 billion throughout 502 offers, a 53% year-on-year improve in funding, however an 8% decline in deal rely from 546 in 2024. Masha argued that the drop displays a shift in investor behaviour, as fewer bets are being positioned and higher scrutiny is being utilized to how companies are constructed and scaled. This transformation in investor behaviour, she instructed, has pressured a rethink of what development means. 

Quite than chasing scale in any respect prices, traders are centered on whether or not firms perceive the basics of their enterprise. 

“What traders are on the lookout for is that you just perceive the unit economics, you’re not merely rising for the sake of development, and also you’ve considered how your margin can, in some unspecified time in the future within the (very brief) future, maintain the enterprise going,” she mentioned. “Traders anticipate a stage of self-discipline and a little bit of sophistication, from a data perspective on what it takes  to scale a enterprise.”

This demand for self-discipline has launched a brand new stage of depth for founders. The panellists agreed that stress has all the time existed in enterprise constructing, however its nature has modified. The place founders as soon as had time to experiment below beneficiant capital situations, right now’s setting compresses timelines and magnifies penalties. For Ojo, this depth is unavoidable. 

“The stress doesn’t go away,” she mentioned. “It adjustments. And so that you can need to take that leap of religion to begin a enterprise, it’s good to have come to phrases with the truth that you may be below stress.”

Though a lot of the stress falls on founders, Cole reminded the room that it typically originates from the obligations VCs themselves face. 

“Traders are loyal to their LPs (Restricted Companions),” he mentioned, explaining that whereas traders might empathise with a founder’s imaginative and prescient, their main loyalty is to the restricted companions who gave them capital. That loyalty shapes how affected person traders can afford to be with founders, notably when capital is scarce.

Confronted with these pressures, the panellists argued that founders and traders are responding with extra sensible methods, certainly one of which is mergers and acquisitions (M&A). The SOTIA report recorded 67 M&A transactions in 2025, numbers which have now been framed as instruments for each survival and enlargement. 

“M&A is now not a misery sign,” Cole mentioned, noting that acquisitions are more and more pushed by regulatory entry, licensing, and regional scale. In lots of circumstances, African firms are buying smaller companies to speed up their entry into new markets, moderately than ranging from scratch. 

Masha cautioned that not all acquisitions look the identical from the skin, acknowledging that some offers are defensive moderately than strategic. No matter motivation, she argued, the widespread thread is an emphasis on preserving long-term worth. 

“Founders are occupied with the most effective curiosity of the enterprise… whether or not it’s since you don’t need your corporation to die or as a result of it makes strategic sense,” she mentioned. “The purpose is, you might be creating worth proper on the stage that you just’re at in your shareholders.”

Because the session wrapped, panellists agreed that fewer offers don’t essentially sign a weaker ecosystem. As a substitute, they replicate higher selectivity forward of the brand new monetary yr.

“Not everyone’s going to get cash this yr,” Ojo mentioned, “however there will probably be a give attention to sustainable firms and sustainable development.”

For Masha, that selectivity is an indication of progress. “Are we within the promised land? Not but. Are we on the fitting path? Completely,” Masha mentioned. “We’re seeing an excellent sign that the ecosystem is maturing, each on the founder aspect, investor aspect, and different stakeholders.”