Africa’s next wave of innovation will likely emerge not from Lagos or Nairobi but from Kigali, Dakar, or Tunis — offering global investors the chance to discover untapped potential in the continent’s diverse and rapidly-evolving markets.
Late last year, Penelope Terranova posted a call to action on LinkedIn. Her post wasn’t just another entry in the digital ether; it was a rallying cry to experts. She sought professionals skilled in accounting, legal, and business growth to help transform Africa’s overlooked startup ecosystems. The post, which listed 18 priority countries — excluding the continent’s ‘Big 4’ of Nigeria, Egypt, Kenya, and South Africa — sparked a reaction.
One comment from a Nigerian LinkedIn user encapsulated a common sentiment: “Coming to Africa and leaving out Africa’s most populous nation and biggest economy, which is Nigeria, is very strange.”
Terranova responded with a measured explanation. “The Big 4 capture over 80% of all investment on the continent,” she wrote. “That is why they are not in our priority countries to invest in.”
Her reasoning was clear: Africa’s startup landscape is evolving, but much of the attention — and funding — remains concentrated in a handful of countries.
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Initiatives are now on the rise with a mission to bridge that gap, focusing on regions often ignored by mainstream investors.
The Shift To Emerging Markets
This new approach reflects a broader trend. In 2024, startup funding across Africa dropped by 25%, down to $2.2 billion. However, beneath the surface of this contraction, new markets were emerging as hotbeds of innovation.
Ghana and Tanzania led the charge outside the Big 4, securing 26 deals each and raising $67 million and $53 million, respectively.
Senegal and the Ivory Coast, bolstered by regional trade integration and supportive policies, competed for leadership in Francophone West Africa.
In North Africa, the Tunisian Startup Act continued to bear fruit, making the country a leader in deep tech, spanning AI, biotech, and cloud computing, which show promise for global adoption.
“These regions have an abundance of technical talent, a low cost of living, and proximity to major markets,”- Emmanuel Adegboye.
Emmanuel Adegboye, Head of Madica, a structured investment program for African pre-seed stage companies, highlights the unique advantages of North African markets like Tunisia. “These regions have an abundance of technical talent, a low cost of living, and proximity to major markets,” Adegboye notes to FORBES AFRICA.
Morocco, with its robust research and development (R&D) infrastructure and proximity to European markets, remained a magnet for deal activity.
Meanwhile, in East Africa, Rwanda’s innovation-friendly policies and Uganda’s steady investment attraction turned them into rising stars.
Terranova shares with FORBES AFRICA: “Sectorally, fintech remains the clear leader and is likely to remain so, even in untapped markets, as we see the rapid expansion of digital payments, lending platforms, and financial inclusion initiatives. However, other sectors such as agritech, healthtech and edtech are advancing quickly, addressing Africa’s pressing challenges of affordable and scalable solutions in those industries, with AI as a common thread driving innovation across these sectors.’’
Untapped Potential In Underserved Regions
Terranova’s team at Digital Africa focuses on pre-seed and seed-stage startups, the most vulnerable phases in a company’s journey. Their model combines funding with robust support systems: mentorship, tools, and networking opportunities tailored to the unique challenges of operating in underserved markets. In 2024, their investment in media startup Makifaa reportedly marked the only recorded startup deal in Togo.
The impact of this strategy is two-fold. It fosters localized growth, reducing dependency on the Big 4, while also presenting new opportunities for global investors.
“Several countries shine as bright spots for investment,’’ Terranova tells FORBES AFRICA. “Countries possess varying levels of the essential ‘ingredients’ for success, which can enhance or limit the chances of local startups to thrive – such as the quality of the infrastructure, the ease of doing business, the availability of capital, the market depth, or the level of education and availability of talent.’’
Catalyzing Inclusive Innovation
For Adegboye, the approach goes beyond financial investment. “It requires building the ecosystem—strengthening local leaders, providing patient capital, and offering guidance on governance and scalability. This model ensures the long-term sustainability of startups, even in the most challenging markets.’’
Inclusivity is at the heart of Digital Africa’s mission. Gender diversity is a key metric; 50% of its portfolio consists of gender-diverse teams. The Talent4Startups initiative has trained tech professionals, bridging the talent gap for startups. “As a subsidiary of Proparco within the AFD Group and in collaboration with 60+ Startup Support Organizations across the continent, we amplify our reach, including co-investment opportunities, aligning with both financial sustainability and our mission to propel African startups,’’ Terranova explains.
The future of African startups lies not in a few dominant markets but in the collective rise of many. Channeling resources to underserved regions, promoting inclusivity, and investing in early-stage ventures, initiatives are reshaping the narrative.
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