What do investors look for in African AI startups? Every Thursday, Delve into AI will offer nuanced insights about the trajectory of AI on the African continent. This column examines how AI impacts culture, policy, business, and vice versa. Learn more about the people, questions, and projects that are shaping Africa’s AI Future. Please let us know what you think about the column Please fill out this form
AI startups are growing globally. In the first half 2025, more than $100 billion has been raised in funding. This is nearly triple the $38.5 million raised in the same period of last year.
Africa’s share of this pie remains small but is steadily increasing. Last week, I highlighted eight notable deals made by startups on the continent who raised more than $40 million in this year.
This week, I interviewed several investors who have recently invested in AI focused startups to learn what types of AI-enabled products and services attract venture capital. I also asked them about their investment thesis for a sector that is rapidly evolving in a continent that is playing catch-up. Infrastructure gaps are an opportunity
Investors and stakeholders across the board cite a lack in infrastructure and datasets for AI innovation on the African continent. Adjei Boateng is the Chief Investment Officer of Black Star Group, an Accra-based investment company. He said, “We still lack critical infrastructure such as electricity and data.” These constraints will not disappear in the near future, but they do influence how investors decide to allocate their capital. Enza Capital in Nairobi, however, is not discouraged by the challenges of infrastructure.
Mike Mompi is the Managing Partner of Enza Capital. “We are most interested in AI use cases that address Africa’s infrastructure gaps and create value through local context,” he said. In February, Enza Capital participated in a pre-series-A round of $3 million for Widebot AI. The Egyptian-founded AI company is focused on building enterprise grade language solutions for corporations, government institutions, and other organizations in the MENA area.
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Widebot will use the funding to create an Arabic-focused large-language model called AQL Mind. Enza Capital believes that companies that create defensible data in contexts where global incumbents such as OpenAI and Anthropic can’t easily replicate them will bring more value.
Mompi said, “We will continue to support companies that treat the constraints of capital, infrastructure and talent as design principles rather than obstacles.”
Capria Ventures is a VC firm that focuses on the Global South. They take a different approach. The firm explicitly chooses not to invest in firms focused on building AI tools and models. Capria prefers investing in African startups that have applied AI use-cases, i.e. existing companies that are embedding AI within their existing fintech, jobtech or logistics solutions. The firm has six startups under its portfolio in Africa, including Moniepoint SeamlessHR and Helium Health. They have an AI innovation team who works closely with their startup to identify and develop profitable AI uses cases.
Mobola Da-Silva explained that investing in traditional AI companies was more within the reach of large investors from the US, UK and other developed markets. She is concerned about firms that build “AI for AI’s sake”.
Atlantic Ventures,””https://atlanticaventures.com/” ” rel=””noreferrer noopener nofollow”” target=””_blank” “> An African early-stage VC Fundtakes a broader view of AI startup investments. They believe that opportunities can arise at different stages.
We look at the entire AI stack from foundational models, infrastructure and customer-facing applications. Aniko Szigetvari is a founding partner of Atlantica Ventures. She said, “We back founders who are building where moats can easily be established.”
The firm will be launching its new product in February 2023. Participated in a $2.5M Venture Round to support Lelapa. This startup builds language models for African languages with low resources, such as isiZulu. Hausa. Yoruba. Afrikaans. In March 2025 they also backed Nosible’s $1 million preseed round. Nosible offers two main products: An API that provides real-time and historic data insights to businesses, and specialised AI agent designed to simplify tasks for global asset management. AI solutions primarily designed for developed countries and imported to Africa could fail to address local conditions, making localisation an advantage.
Uwem Uwemakpan is the head of investment for Launch Africa Ventures. He said, “We cannot simply import Silicon Valley AI models on to the continent.” “I’m saying we shouldn’t build our large language model; that will be too expensive. We should ask: How can we adapt and train models using data that is unique to Africa and turn them into solutions with global application?
Launch Africa in February Led a $1 million seed round for ToumAI. A Moroccan AI startup, ToumAI is focused on developing conversational AI and speech recognition tools for African businesses.
Does there exist a correct business model?
Mompi believes that it is important to balance hype and noise within the AI space. Enza Capital is looking for AI solutions that are built for specific industries, such as agriculture, fintech, and health, with a high level of willingness to pay. Szigetvari, of Atlantica Ventures, holds a similar opinion. “AI is not just LLMs. We see huge opportunity in applied AI, including cold chain logistics, agriculture and cybersecurity. Models without defensible IP, or those over-reliant on generic AI without a market moat, are less compelling.”
Launch Africa’s Uwemakpan wants to see more AI startups focused on B2B (business-to-business) and B2B2C (business-to-business-to-consumer) solutions. Startups that sell directly to businesses and those that sell directly to consumers are the two main types of startups.
He said that the reason for this was because there is a stable structure around revenues. You can predict this, particularly for B2B startup companies, by signing long-term agreements to lock organisations and institutes into a plan. “For B2B2C there are lower costs of customer acquisition.”
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Alternative strategy for AI founders.
Beyond B2B and the B2B2C models, VCs look for two other types of approaches for AI innovation.
The two main approaches are those that combine AI with human expertise in order to deliver automation and reliability and those that focus on frugal innovations. Edge computing, small-language models (SLMs), as well as infrastructure optimized for slow or unreliable Internet on the continent.
Edge Computing allows data to be processed nearer to where it was generated, rather than sending it away to distant cloud data centers in the US and Europe. This can make AI-powered tools in sectors such as healthcare diagnostics on the continent run faster and more reliably even in rural areas. SLMs are smaller, more efficient versions large language models. They don’t require as much computing power and are more suited to use cases where data protection is a priority. These tools are gaining in popularity amongst companies on the continent. UBA Bank, Nigeria’s tier-one bank, has been encouraging its ‘Advanced Analytics and AI team’ to develop SLM tools that can be used across departments since 2025. Chris Maranga is the regional director for East and West Africa of impact investment firm Acumen. He believes that AI startups who prioritize operating in low-resource environments with high constraints hold promise. Maranga told TechCabal that “we are looking for AI tools that seamlessly integrate with feature phones and environments that have low bandwidth because that’s where the biggest untapped user base” is.
Big Tech also watches
Big Tech also keeps an eye out for AI-focused startup companies on the continent. Google Google has committed $37 million for Africa’s AI innovations, including its latest Google for Startups Accelerator Africa Program. The cohort, The announcement was made in Juneand includes 15 AI driven startups from seven countries including Ghana, Rwanda Nigeria, South Africa, and South Africa.
“The inclusion of AI-focused startups is a reflection of a long-standing belief in Africa’s innovators’ ability to create solutions which can benefit both Africa and the world,” said Taiwo Kola-Ogunlade Communications & Public Relations Manager for Google West Africa.
Selected startups Mentorship will be provided to help develop and refine business strategies. They will also receive training in AI development, as well as $350,000 worth of credits on Google Cloud and the chance to meet investors and partners that will help them scale up their impact. Google intends to provide these resources to startups without requiring equity.
Uwemakpan thinks investors should be aware of the growing interest from global players in investing in AI startups across the continent. How are we investing in companies who are strategically positioning for acquisitions?” Who will the global brands potentially acquire when they begin to look at Africa?
Meta in June The call was issued for African startups in the early stages of development who are developing AI applications that are relevant to their local context, such as those that target education, healthcare and agriculture. The winning teams will receive up $25,000 in equity free funding to support their AI solutions. The program includes six weeks of accelerator support and six months of additional post-program assistance.
Although these investments may seem philanthropic at first glance, they can be an important strategy to secure Africa’s AI Market, which is expected be worth more than $16 billion by the year 2030.
Sceptics still remain
Some investors question whether these short-term-accelerator programs can have an impact on the continent’s evolving AI space.
David Lanre Messan is an angel investor and the founder of FirstFounders, a venture studio. He asked, “How many startups have you seen that went through accelerators and survived and succeeded?”
They believe that the studio’s three-year programs can unlock the potential for early-stage entrepreneurs in order to build high-value AI focused startups. FirstFounders currently has a portfolio of startups that includes PocketLawyers () is a Nigerian startup that provides AI-powered productivity tools to lawyers and clients with legal needs. Korinaiis a generative AI-music lab for Africans.
The AI landscape is still in its infancy. It may be safer to take a small risk on the continent’s developing space. It could also pre vent long-term gains from investing in startups that innovate despite infrastructure and resource gaps. Some investors see these gaps as limiting while others still see a chance to better support AI startups.
VCs should also think about the structures that support these startups. Messan said that they should start investing in partnership with venture studios. Boateng, Black Star Group, wants to see more long-term, patient capital invested in context-specific AI solutions, such as language models, for users on the African continent. He is pleased with efforts to lobby Ghanaian pension funds for 5% allocation to Venture Capital and Private Equity. “In a rapidly changing world, not taking risk is the biggest danger.”
The regulation landscape for AI startups in Africa is still in its infancy, with only 16 countries releasing national policies or strategies to support AI innovation. This regulatory uncertainty may discourage investment in AI startups across the continent.
We need regulatory sandboxes. People have ideas. Uwemakpan, Launch Africa’s Uwemakpan, said that people want to connect to certain databases. “It solves a couple of things: governments can watch what’s going on, and startups and founders are able to experiment.”
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