The Next African Startup That Will Fail

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When we were younger, our mothers would often send us on errands: “Take this money, go to the market, and buy what we need for dinner.” Some children returned quickly, their hands full of tomatoes, peppers, or palm oil. Others never came back on time. They got distracted, wandered into the game center, spent the money on sweets or betting, and came back empty-handed, or didn’t return at all.

That childhood story serves as a perfect metaphor for many African startups today. They raise millions of dollars with clear instructions: build a business, serve customers, grow sustainably. Yet somewhere along the way, the money gets lost in oversized offices, bloated teams, or endless investor roadshows. And just like those children who never delivered the food, the startups vanish from sight, leaving everyone waiting.

Well, here we are again: sitting and waiting for those who went to the market to come back. Only this time, we’re waiting for real businesses. And too many of them don’t return.

Africa’s Startup Promise

Make no mistake: Africa’s startup ecosystem has delivered real impact. From fintech apps enabling payments in rural towns to agritech platforms boosting farmer incomes, startups are reshaping economies and improving lives. In the past decade, they’ve created thousands of jobs and attracted the attention of global investors eager to back the continent’s potential.

But behind every Flutterwave or Andela lies a growing list of startups that don’t survive. For every headline about a unicorn, there’s a quieter story of layoffs, shutdowns, or fire sales.

What the Data Tells Us

Funding Growth, Then Contraction

  • In 2021, 564 startups in Africa raised over US$2.148 billion, marking a record year for investment across the continent. (Disrupt Africa)
  • In 2022, funding across the ecosystem grew further: 633 startups raised US$3.33 billion — a ~55% increase over 2021. (Vault Investments, Bic Africa)
  • In 2023, the trend reversed: 406 startups raised US$2.4 billion, a 27.8% drop from 2022. This was the first year since 2016 during which total funding did not expand. (Flourish Ventures)
  • By 2024, funding had shrunk further: full-year totals dropped to US$1.1 billion, and the number of funded startups roughly halved compared to 2023. (Disrupt Africa via Dabafinance)

These figures give us a grounded view of the “boom then contraction” narrative.

Warning Signs of the Next Collapse

  • Misplaced Priorities: Chasing flashy awards, PR headlines, and expansion instead of solving customer problems.
  • Financial Mismanagement: Lavish offices, inflated salaries, and reckless spending. Konga, once a giant of Nigerian e-commerce, burned through millions before being sold at a bargain price in 2018.
  • Cofounder Conflicts: Leadership disputes destroy startups faster than competition — Pivo (Nigeria, fintech) is a recent example.
  • The Engineer Wars: Internal fights — backend vs frontend, tech vs design — slow execution while customers wait.
  • Fundraising Over Customers: Jumia raised hundreds of millions and went public, but struggled with heavy losses and credibility issues after inflated data revelations.

Why Many African Startups Fail: Verified Causes

According to Tech in Africa’s “10 Reasons Why African Startups Fail” (2025):

  • 42% of failed startups cited misaligned market strategies (i.e., lack of real demand).
  • 38% cited funding/cash flow issues as a cause of failure.
  • Other reasons listed include ineffective business management, regulatory complexity, and weak infrastructure (power, internet, logistics).

In Connecting Africa, when discussing fintech startups, experts point to infrastructure deficits, talent shortages, and high operational costs as key challenges. They note that access to funding remains a critical bottleneck.

To wrap up this matter

Africa’s startup scene is not defined by failure, far from it. Many ventures have changed lives, fueled innovation, and attracted global capital. But the next startup that will fail is not falling because the idea wasn’t bold. It will fail because the fundamentals were ignored: poor execution, internal strife, financial recklessness, and chasing capital instead of customers.

The charted collapse in funding from 2022 to 2024 (from US$3.33 billion to US$1.1 billion) is a warning: money is less forgiving now. According to Tech in Africa, 42% of failed African startups cite misaligned market strategies, and 38% cite cash flow problems. The numbers don’t lie.

If founders want to beat the odds, they must resist the temptation to treat fundraising as success; they must build lean, manage wisely, and stay rooted in their customers’ real needs. The ecosystem is maturing, and those who survive will be the ones who learn from failure, not repeat it.

In the end, many startups may walk to the market and never return. The question is: will yours be one of them, or one that returns, delivered and enduring?

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The Villpress Insider team is a collective of seasoned editors and industry experts dedicated to delivering high-quality content on the latest trends and innovations in business, technology, artificial intelligence, advertising, and more.