Africa must deploy at least $120 million annually in pre-seed capital to prevent further weakening of its startup pipeline and secure the future of its innovation ecosystem, according to an analysis by Grégoire de Padirac, CEO of Digital Africa.
Pre-seed funding remains severely underdeveloped on the continent, accounting for just 1.5 per cent of total venture capital in 2025, far below the 4–6 per cent seen in mature markets. De Padirac warned that this gap threatens the flow of viable startups into later funding rounds, even as overall African venture funding rebounds.
Data from Africa: The Big Deal shows that 281 startups raised $46.5 million in pre-seed funding in 2025, virtually unchanged from 2024, despite a 40 per cent growth in the wider venture market. Typical pre-seed rounds range from $100,000 to $500,000, a critical stage where African founders often lack personal or family capital.
The investor base is also shrinking. Active pre-seed investors fell to 135 in 2025, down from 200 in 2022, while deal activity per investor declined sharply. Funding remains concentrated in Nigeria, Kenya, South Africa and Egypt, which together received nearly 60 per cent of pre-seed capital.
Grants now account for 42 per cent of pre-seed funding, up from 20 per cent in 2021, a trend de Padirac said weakens market discipline. The situation has worsened with the exit or repositioning of major private players such as Techstars, Y Combinator and the Google Black Founders Fund, reducing private pre-seed capacity by over 60 per cent since 2019.
To restore the pipeline, de Padirac recommends directing at least three per cent of total venture funding to pre-seed rounds. With total African startup funding projected at $4 billion in 2026, this implies deploying $120 million annually to support about 800 startups, using patient public capital combined with private-sector discipline.
Without urgent action, he warned, Africa risks starving its innovation ecosystem at its most fragile stage.
