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After five straight years of growth, the share of African startups raising capital from outside the continent is on course to shrink, leading founders to rely more on domestic investors.

Last year, African startup rounds with non-African participation reached an all-time high of 65.2%, according to PitchBook data. This year, that trend looks to be reversing, with 60.5% of the region’s deal count featuring non-African investors so far.

The shift coincides with a broader slowdown in VC dealmaking in the region. So far this year, African startups have raised $490.4 million across 119 rounds.

Total deal value is tracking to be at a similar level to 2025, which saw a third consecutive annual decline, while round count is projected to be at its lowest in almost a decade.

The retreat of foreign capital from African deals reflects a shift in global priorities. With AI commanding an ever-greater share of global funding, investors are gravitating toward markets with the infrastructure and talent density to support large-scale AI bets.

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Geopolitical headwinds have added to an already cautious mood among investors for foreign opportunities.

Domestic investors are, therefore, becoming more prominent in the local startup scene. The proportion of deals with only domestic investors rose by around 5 percentage points to 20.2%.

But even local investors are scaling back as African VCs struggle to raise capital. In 2025, only 10 funds closed, worth around $500 million, less than half the amount raised the year before.

Fundraising is showing no signs of picking up this year, leaving African startups competing for a smaller pool of capital, with foreign investors filling the gap.

While foreign investors are less present in African VC deals, they are writing much larger checks when they do commit. The share of deal value involving foreign investors is at its highest level since 2018, at almost 90%. The median deal size has jumped up from $1.5 million to $2.2 million this year.

The implication is that foreign investors have raised the bar rather than retreated. Instead of spreading capital across early-stage bets, they are concentrating it in fewer, higher-conviction, later-stage opportunities.

This article originally appeared on PitchBook News