African Startups Raise $135 Million in May, Debt Funding Becomes Key

A recent report revealed that Africa's startup scene is slowly but surely getting back on its feet in May 2026. The number of deals went up compared to the previous two months, even though the total funding is still below last year's average. This really shows that investors are still being quite careful. According to a report from the platform Africa: The Big Deal, 37 African startups successfully closed funding rounds worth over $100,000 each in May 2026. These deals totaled $135 million, covering equity, debt, and grants. It's important to note that exit deals weren't included in this total. This is a nice improvement from April, which saw 32 deals totaling $110 million, and it's also up from the low point in March with just 22 deals. However, it's still less than the monthly average over the past twelve months, which was around 45 deals worth about $255 million.

Debt Instruments Continue to Boost Their Presence

The report highlighted an ongoing shift in how African startups are getting funded, with a growing reliance on debt instruments. This is a big change, as just a year to a year and a half ago, equity funding made up over 70% of all investments. In May, funding was almost equally split between equity and debt. Companies raised about $65 million through equity funding and $68 million through debt instruments, plus an additional $2 million in grants. Looking at the number of companies, 22 received equity funding, while 7 relied on debt instruments, and 8 companies secured grants. Data from the first five months of 2026 also shows this trend continuing. From the start of the year through the end of May, total funding reached about $843 million across 160 deals, each worth over $100,000. The funding was almost evenly split between equity and debt, really showing how debt instruments are becoming crucial for keeping funding levels stable in the market.

4 Major Deals Accounted for 75% of Funding

The report explained that May's performance was heavily influenced by just four major deals, which alone made up about three-quarters of all the funding announced that month. These big deals included Nala securing a $50 million credit facility, LemFi extending its Series B investment round by $30 million, Africa GreenCo raising $10 million, and Bfree closing a $10 million funding round. Together, these four deals totaled $100 million out of the $135 million announced in May. The report also noted 6 exit deals during the month, which weren't counted in the total funding figures. The most prominent was the acquisition of Bima, an InsurTech company, in a deal worth $119 million. This shows that acquisition and liquidity activities are still happening, even with the slowdown in initial investments. Geographically, West Africa and East Africa together accounted for about 85% of the total funding in May. Nigeria alone secured about 64% of all equity funding raised across the continent that month. On the other hand, the report clarified that the distribution of deals by number was more balanced across different African markets compared to the distribution of funding values. Sector-wise, FinTech continued to be the top sector for investments, boosted by the large deals secured by Nala and LemFi. The report pointed out that while the market still sees a variety of companies attracting investments, the majority of the funding value is concentrated in a limited number of big deals. The report concluded that May's performance reflects what it called the “new normal” for African startups in 2026. This means an average monthly activity of 30 to 40 deals, with total funding ranging from $100 million to $200 million per month. Debt instruments continue to play a key role in supporting the market and making up for the decrease in equity funding. It added that these levels are still lower than 2025, which saw an average of about 50 deals per month and funding around $300 million monthly, back when equity investments held the largest share of the market. The report suggested that the data for the first half of 2026 might show further improvement. This is because Spiro announced a new funding deal in early June, and there's a chance similar deals might close soon, which could boost the total funding recorded for the first six months of the year.