Tanzania missing in action as Africa’s start-up fundraising tops $2.2 billion

Although this is slightly below the average, it matches September 2024’s tally of $146 million and surpasses the $124 million raised in September 2023. The number of ventures raising at least $100,000 last month was also the second highest in a year, just behind July.

Of the $140 million raised, $105 million (75 percent) came from equity, with the remainder consisting mainly of debt ($32 million) and some grant funding ($3 million), including 16 match-funding grants from DEG Impulse as part of their new develop Ventures cohort in East Africa.

The five largest transactions of the month were all equity: Kredete (fintech, Nigeria) secured $22 million in a Series A round; Pura Beverage raised $15 million in Series B funding; Contactable (identity, South Africa) bagged $13.5 million; Intella (AI, Egypt) closed a $12.5 million Series A; and The Invigilator (education, South Africa) received $11 million.

On a quarterly basis, start-ups in Africa raised $785 million in Q3. While this is lower than the $963 million raised in Q2, it is significantly higher than Q1’s $461 million. It is also a strong Q3 compared to the same quarter in 2024 ($649 million), 2023 ($496 million) and 2022 ($612 million).

Start-ups have now raised $2.2 billion in 2025 to date, excluding exits, putting the continent only $40 million away from surpassing the total raised in the whole of 2024.

But as these figures rise across the continent, Tanzanian start-ups continue to struggle to maintain the fundraising momentum seen last year, raising questions about what the country must do to ensure consistency in attracting investment.

In 2024, Tanzanian start-ups raised a total of $53 million, with more than $40 million coming in the third quarter alone, placing the country third in Africa for funds raised during that period. This year, however, the picture is different.

According to Africa: The Big Deal, Tanzanian start-ups have so far not crossed the $10 million mark in 2025, while across the continent, start-ups collectively raised over $1.4 billion in the first half of the year.

However, TSA’s Senior Manager of Programmes and Operations, Mr Praygod Japhet, said that after conducting an internal assessment to identify what is hindering Tanzania from performing well in startup investment across Africa, TSA found a significant gap in access to funds, especially in early and mid-stage financing.

This led them to lobby the government to establish the National Venture Capital Trust Fund to enhance Tanzania's competitiveness with other countries in this area.

"In other countries that have succeeded in startup investment, they strengthened their early and mid-stage financing, which enabled them to reach where they are.

No country succeeds in startup investment if its systems are immature. We expect the National Venture Capital Trust Fund will do the revolution because investment institutions are key to the success of startup investments in a country," he said.

He went on to reveal that the process of establishing the fund is in its initial stages and is scheduled to be completed by the end of the year.

Furthermore, Mr Japhet said that accessing funds in the early and mid-stages for startups in the country has been one of the prime challenges that is hindering the country from attracting more startup funds.

For the co-founder of health-tech start-up Plate AI, Janeth Kareen Kilonzo, Tanzania’s subdued fundraising performance this year reflects both investor caution and structural gaps within the local ecosystem.

“Investors are increasingly looking for scale, traction and robust business models. Many early-stage Tanzanian start-ups are still at the proof-of-concept stage, with limited access to acceleration or growth-stage funding,” she said.

She noted that while the local ecosystem has made progress, particularly with regulatory reforms in the pipeline, more needs to be done to build strong pipelines and support systems for start-ups to grow beyond seed stage.

“There’s talent and innovation in Tanzania, but our ecosystem support is not yet as layered as in markets like Kenya or Nigeria. More targeted acceleration, mentorship and follow-on funding structures are needed if we’re to compete at continental level,” she added.

Meanwhile, CEO and co-founder of Kilimo Fresh Foods Africa Ltd, Mr Baraka Chijenga, attributed part of the slowdown to a mismatch between investor expectations and the realities of operating businesses locally.

“Many international investors come in expecting the same pace and scale they see in Nairobi or Lagos, but Tanzania has its own market dynamics. Regulatory timelines, infrastructure gaps and limited local capital participation can make growth slower,” he said.

Mr Chijenga emphasised that the focus should now shift to creating sustainable investment pathways rather than chasing short-term fundraising highs.

“If we can deepen local value chains, strengthen our agri-business infrastructure, and get more local corporates involved in co-investing, we can build stronger, more resilient ventures. This will give foreign investors more confidence and attract larger rounds over time,” he explained.

Sahara Ventures CEO and tech entrepreneur, Mr Jumanne Mtambalike, observed that Tanzania’s current fundraising landscape reflects a mix of global trends and domestic realities.

He pointed out that global capital movements, shifting investor preferences, and the tendency of funding to gravitate towards a few dominant African markets are factors largely beyond the country’s control.

However, he stressed that there is clear work to be done locally to boost competitiveness.

“We need to strengthen our policy environment and bring more clarity to regulations, expand the pool of local investors to work alongside foreign ones, and equip our start-ups with better investor-readiness skills,” he noted.

He added that quick interventions such as expediting the implementation of the Startup Policy, enhancing governance frameworks, and organising more deal showcase platforms, could help restore momentum in the short term.

Over the longer horizon, he said, mobilising domestic capital, incentivising corporate participation, and nurturing ventures in high-potential sectors like fintech, agritech and climate-tech will be crucial.

“The $53 million raised last year proved what’s achievable. This year’s slowdown is a reminder that sustained success requires deliberate effort, we need to put in place systems that make Tanzania a regular destination for investors, not a market that experiences occasional peaks,” he stressed.