Investor appetite for e-commerce startups in Africa is dwindling as year-on-year funding figures dropped by 47.2% in Q1 2025. According to data from Africa: The Big Deal, a database for startup deals, the total funding received by African startups in the e-commerce sector in the first quarter of 2025 dropped to $11.3 million, down from $21.4 million during the same period last year.
The tightening of investments reflects a cooling of private markets and a reassessment of the sector by investors in terms of competition, unit economics, and general growth. Uncertainties in these areas may have pushed investors to make more conservative bets in other sectors.
While a few notable rounds were still closed—such as Egypt’s Taager, a social e-commerce platform that supports online merchants with end-to-end logistics, raising $6.8 million in a Pre-Series B round led by Breyer Capital, and Kenya’s Kapu, a grocery-buying service focused on group purchases, securing $2 million in a Pre-Series A from Base Capital—the average deal size shrank compared to the first quarter of 2024.
Seed funding rounds in this sector were nought, compared to the $3 million raised by Badili and Dawa Mkononi in Q1 2024, signalling a waning appetite for risk.
African e-commerce startups face increasing challenges, including difficulty gaining market share due to intense competition from established giants like Jumia, Zando, and Konga, and the rising cost of acquiring customers. These challenges may contribute to the pullback in investment as investors want to prioritise profitability over high growth, opting for sectors with stronger unit economics.
This decline in e-commerce startup investment may persist if investors remain cautious. The size of Africa’s e-commerce market was valued at $317 billion in 2024 and is expected to cross $1 trillion in 2033. With increased internet penetration and evolving consumer preferences, the long-term outlook for investments in this sector remains positive.
