The chill winds of economic uncertainty continue to sweep across Africa's startup landscape, as a significant decline in funding coincides with an alarming increase in startup shutdowns. Data from the first half of 2024 reveals a stark reality: African tech startups secured a mere $780 million in investment, the lowest figure recorded since late 2020 and a dramatic 57% drop compared to the same period in the previous year.
This funding scarcity has directly contributed to the demise of several once-promising ventures. Nigerian genomics pioneer 54gene and Kenyan logistics startup Sendy are among the notable companies that have ceased operations, citing funding constraints as a key factor in their closure.
Several converging factors have precipitated this funding downturn. The rise in global interest rates has made capital more expensive, prompting investors to adopt a more cautious approach, particularly towards the perceived higher risk associated with early-stage startups in emerging markets like Africa.
On a local level, African startups continue to grapple with systemic challenges that deter investment. Unreliable infrastructure, limited access to capital beyond initial seed rounds, and a fragmented regulatory environment all contribute to an environment where attracting and retaining investment remains a significant hurdle.
However, the reasons behind startup shutdowns extend beyond purely external economic pressures. Internal factors such as mismanagement and leadership missteps have also played a critical, and sometimes decisive, role. The cautionary tale of Dash, a once-vaunted pan-African fintech disruptor, serves as a stark reminder. Despite securing over $86 million in funding, Dash ultimately shuttered its doors in 2023, having failed to achieve crucial product-market fit.
The challenges that plagued startups in 2024 have seemingly persisted into the first quarter of 2025, as evidenced by the recent closure announcements of several more companies:
Joovlin: This Nigerian fintech startup, founded in 2020 with the aim of empowering micro-suppliers and retailers through supply chain tools, ceased operations in January 2025 after nearly four years. Joovlin's platform offered vendors tools for online sales, order management, and e-commerce website creation. Despite initial traction with over 2,000 active resellers and 6,000 listed products, the company struggled to scale its user base and generate sustainable revenue. Having raised $100,000 in pre-seed funding in 2020, Joovlin was unable to secure further capital, ultimately leading to its shutdown.
Edukoya: Nigerian edtech startup Edukoya, established in 2021 with a mission to revolutionize K-12 education in Africa through digital content and live tutoring, closed its doors in February 2025 after nearly three years. Edukoya garnered significant early investment, raising a record-breaking $3.5 million in pre-seed funding in late 2021. Despite achieving considerable traction with over 80,000 students, facilitating millions of answered questions, and conducting thousands of daily live classes, the startup struggled to translate this engagement into a viable business model. Market readiness issues, widespread connectivity problems, limited access to devices, and low disposable income among its target audience were cited as key challenges that hindered mass-market adoption, leading the company to conclude it was ahead of its time. After exploring various strategic options without success, Edukoya opted to wind down operations and return capital to investors.
Bento Africa: Nigerian HR and payroll technology startup Bento Africa temporarily halted operations in February 2025 amidst a confluence of internal and external crises. Founded in 2019 to streamline payroll and benefits management, Bento Africa faced serious allegations of tax and pension remittance fraud, triggering investigations by the Lagos State Inland Revenue Service (LIRS) and the Economic and Financial Crimes Commission (EFCC). These issues were compounded by internal strife, including the resignation of its CEO and the mass layoff of the engineering team due to salary disputes. The company's board announced a temporary shutdown to address these critical issues and restore stability, causing significant disruption to its clients' payroll services. While efforts are underway to rehire staff and address outstanding obligations, Bento Africa's future remains uncertain.
Lipa Later: Kenyan Buy Now, Pay Later (BNPL) fintech startup Lipa Later, a prominent player in East Africa's fintech scene since its founding in 2018, was placed under administration on March 24, 2025. Despite raising over $15 million in funding, including significant equity and debt rounds, Lipa Later succumbed to mounting debts and failed to secure further investment in 2024. Its acquisition of the struggling e-commerce platform Sky Garden in late 2023 further fueled concerns about its financial health. The administration process now involves creditors submitting claims, potentially leading to a restructuring or liquidation of the company's assets.
Interestingly, a survey by San Francisco-based startup studio Wilbur Labs suggests a potential silver lining to these failures. Their research, involving 150 startup founders, indicates that analyzing the reasons behind shutdowns can ultimately lead to the development of more resilient and adaptable business models within the ecosystem.
However, the prevailing narrative remains one of fragility within Africa's startup ecosystem. Despite instances of record-breaking funding rounds and promising initial traction, many startups are finding it exceedingly difficult to navigate economic headwinds, establish sustainable business models, and overcome governance challenges. The current wave of shutdowns serves as a stark reminder of the complexities and risks inherent in building and scaling ventures in the African tech landscape.