Why Africa’s VC Boom in 2025 Is Mostly Debt, Not Equity

The primary article under review claims that many of Africa’s largest tech funding headlines in 2025 conceal non-equity components—in fact, at least five of them are debt or receivables-based, including Sun King ($156m securitization), Wave ($137m debt), SolarAfrica ($98m project financing), Nawy ($75m blended but $23m debt), and d.light ($300m receivables facility) [1]. These five deals collectively involve non-equity capital of $714m, nearly a quarter of the $3bn reported in total “startup capital raises”. If we assume similar hidden debt content in other large rounds, then equity-only venture capital may total closer to $1.5bn—only half the reported number. This framing implies the long-celebrated rebound in African VC funding is more nuanced: not a broad return of venture equity risk capital, but an upswing in structured finance for companies that already have scale.

Corroborating reports reinforce that trend. Partech’s 2024 Africa VC report indicates that total funding—including both debt and equity—fell by just 7% from 2023 to 2024 (~$3.5bn to ~$3.2bn), but that debt represented ~31% of all capital raised in 2024; equity fell more modestly (~2%) [6][9]. Mixed financing is thus already visible and structural. Moreover, Series A and B equity ticket sizes declined significantly (Series A -18%, Series B -27%) in 2024 [6][9]. Those declines hit firms seeking venture equity most deeply, even as early-stage seed metrics showed signs of stability or modest growth [6][9].

The nature of the non-equity deals in the primary article further clarifies what kinds of companies are eligible. Sun King, Wave, and d.light—all cited—serve millions of customers through contractual payment plans; SolarAfrica has power purchase agreements and long tenure, cashflow-generating infrastructure; Nawy has demonstrated strong financial performance in a volatile environment [1]. By contrast, early-stage firms with projections but without revenue, or those without collateral, are excluded from these instruments by definition. Thus, most seed and Series A startups are not benefiting from this structured finance wave. Instead, they face shrinking equity multiple, lengthening fundraising intervals, and tougher terms [4][6].

Strategic implications for ecosystem health, policymaking, and investment strategy are significant. The headlines around multi-$50-million “mega-rounds” are being boosted by structured finance; this obscures the remaining VC drought at frontier stages. For founders, misreading those headlines may set unrealistic benchmarks, especially for raising equity. For LPs and VCs, the shift suggests that risk is being shifted toward development finance institutions or mezzanine layers—senior lenders and banks take safer seniority or cashflows, while DFIs absorb more risk [1]. Public and donor policy should differentiate instruments—equity vs. debt—in reporting, support instruments for early-stage firms, and address foreign‐currency risk where non-equity capital is denominated in dollars [6].

In short, while headline capital totals in 2025 look stronger, the underlying equity market remains constrained. The “winter” is lifting—for companies with size; for early risers, it persists. The risk is that optimism will overshoot what the data support, potentially misallocating attention, expectations or policy resources toward visible large firms while neglecting the foundational early-stage deals that catalyze innovation.