Artificial Intelligence is attracting significant funding from Venture Capital (VC) firms and fuelling global startup funding in 2025. According to research by KPMG, global VC funding increased from $112 billion in Q2 2025 to $120.7 billion in Q3 2025, marking four consecutive quarters above $100 billion — a level last seen in 2021–2022. The Americas accounted for $85.1 billion (70% of global VC investment), with the US alone attracting $80.9 billion. This illustrates the continued concentration of AI funding within the US ecosystem. Ten $1 billion+ deals occurred in Q3 2025 — eight in the US. The largest included four AI-Native startups: Anthropic ($13 billion), xAI ($10 billion), Reflection AI ($1 billion), & Databricks ($1 billion). This reveals intense investor competition for foundational AI model builders. Europe attracted $17.4 billion, with two major AI raises: Mistral (France) – $1.5 billion & Nscale (UK) – $1.5 billion. Asia attracted $16.8 billion, with AI still among the few sectors attracting large deals (e.g., MiniMax AI $300 million, Rebellions $244 million). Overall activity remains subdued due to geopolitical tensions.

These global VC trends highlight the integral role AI startups are playing in driving funding in 2025. But where does Africa feature in all this? Are there any AI startups attracting significant funding in Africa? This article shares insights into the level of VC investment in AI startups over the past five years, especially at an early-stage funding level.

There’s no denying Africa’s AI market potential. A recent study by Mastercard revealed that Africa’s AI market is projected to grow from US$4.5 billion (2025) to US$16.5 billion (2030), a 27.42% annual growth rate, showing strong long-term investment potential. Furthermore, AI is expected to contribute to the creation of up to 230 million digital jobs in Sub-Saharan Africa by 2030, positioning AI as a major engine of youth employment.

To realise this potential, VC firms must play a significant role in creating enabling environments by financing emerging African AI startups. Although there is a lack of conclusive evidence on the value of VC funding for AI startups in Africa, data from different studies suggest that AI startups have attracted between $803 million & $2.2 billion over the last five years across the continent. Despite growth, Africa captures just 1–1.5% of global AI investment, highlighting a major capital gap compared to global AI spending.

Data from our Seed Watch database —our database tracking global pre-seed & seed VC investments— reveals that AI startups in Africa ($6.9 million) have attracted significantly less funding compared to other regions, such as North America ($3.8 billion), Europe ($251.8 million), the Middle East ($132.5 million), and Asia ($89.9 million) in 2025.

Africa runs the risk of AI development inequality as research reveals highly fragmented investment levels across the continent. TechCabal states that Sub-Saharan Africa attracts 60–65% of AI funding, while North Africa receives about 20–25%, reflecting differing economic maturity, market size, and infrastructure readiness. However, the tide could be shifting. For the first time in 5 years, North Africa led VC deal flow in Q2 2025, driven primarily by Egypt’s fast-growing AI ecosystem and strong government support. Worryingly, Nigeria, Kenya, South Africa, and Egypt account for 83% of AI funding in early 2025 and 87% of all funding raised since 2019 ($1.25 billion). This concentration leaves smaller markets far behind. Let’s see how VC investment in AI startups has evolved in these key markets over the past decade.

South African AI startups have received $537.23 million in VC investments since 2016, according to OECD data. However, 34% of this was raised during the AI boom in 2021. South Africa captured the lion’s share of AI funding from 2018-2025, accounting for 43% of AI funding raised by the traditional Big Four.

AI startups in Nigeria have raised $259.09 million since 2018, according to OECD. Similar to South Africa, a significant portion (62.9%) was raised in 2021. AI funding appears to have slowed down significantly since 2023, as Nigeria is the only Big Four country which attracted less than $10 million in 2024 & 2025.

Egyptian AI startups have attracted $219.65 million since 2017. As per the latest OECD statistics, Egypt is leading the way in 2025, having raised $67.3 million in the first half of the year.

Lastly, Kenya’s AI startups have attracted $206.60 million in VC investments. Despite investments slowing down, Kenya is still expected to be a major player in shaping the future of AI in Africa.

VC investments into AI startups in Africa will only increase when Africa’s AI market is developed: AI startups need enabling environments to thrive. Therefore, leading companies are taking a keen interest in Africa’s AI market. Microsoft and Google are at the forefront of this movement.

Google announced a $37 million investment to accelerate AI innovation across Africa, launching with a new AI Community Centre in Accra, Ghana. The funding will support research, language inclusion, food security tools, and startup development in sectors like health, agriculture, and education. Key initiatives include the AI Collaborative for Food Security, new startup funding streams, and $7 million in AI education programs across Nigeria, Kenya, South Africa, and Ghana. Local institutions and groups like Masakhane will receive targeted grants to advance African language AI and science. For founders, this signals rising opportunities in climate tech, agri-tech, health innovation, and localised AI solutions.

Microsoft will invest ZAR 5.4 billion in South Africa by 2027 to expand its cloud and AI infrastructure, reinforcing its earlier ZAR 20.4 billion investment that built local Azure datacentres. This upgrade aims to give startups, corporates, and government improved access to world-class AI tools, boosting efficiency and innovation across sectors like finance, health, retail, and agriculture. Alongside infrastructure, Microsoft will accelerate digital talent development—planning to skill one million South Africans and fund 50,000 new certifications in high-demand fields. The company frames this as part of a long-term vision: positioning South Africa as a producer of AI technology and strengthening the continent’s competitiveness.

As these investments are used to develop integral infrastructure, skills and startups, we expect VC investments in local AI startups to significantly increase within the next five years.