Lagos has been named the leading African startup city for 2026, according to a new report on the continent's tech ecosystems. The Nigerian commercial hub continues to attract the highest levels of venture funding, while Cape Town has surged to second place, reflecting a dynamic shift in the continent's startup landscape.
Lagos Maintains Dominance in Startup Funding
The report, released by a leading tech research firm, indicates that Lagos-based startups raised a combined total of $1.2 billion in 2025, a 15% increase from the previous year. This figure represents nearly a third of all funding secured by African startups during the period. The city's robust fintech sector, including major players like Flutterwave and Paystack, has been a primary driver of this growth.
According to the report's lead analyst, "Lagos has built a self-sustaining ecosystem with deep investor networks and a large pool of technical talent. Its ability to scale startups from inception to unicorn status is unmatched on the continent." The city also benefits from a large consumer market, making it a testbed for innovative solutions.
Cape Town's Rise to Second Place
Cape Town's ascent to the second position is notable, with its startups raising $650 million in 2025, a 40% year-on-year increase. The city's thriving tech scene, particularly in the areas of enterprise software and clean energy, has attracted significant international investment. The report highlights Cape Town's supportive government policies and high quality of life as key factors drawing entrepreneurs and investors.
The shift sees Cape Town leapfrog Nairobi, which fell to third place despite a 10% increase in funding to $550 million. Nairobi remains a major hub, especially in agritech and healthtech, but faces challenges such as infrastructure bottlenecks and political instability.
Other Top Cities and Emerging Trends
The top ten list also includes Cairo, Johannesburg, Accra, Kigali, and Casablanca, each showing steady growth. Notably, Kigali has emerged as a fast-rising star, with a 60% increase in startup funding to $200 million, driven by its reputation as a business-friendly environment and a hub for tech innovation in Central Africa.
According to the report, the overall African startup funding reached $3.5 billion in 2025, a 20% increase from the previous year. This growth is attributed to a maturing ecosystem, increased diaspora investment, and a growing number of successful exits. The report projects that Lagos and Cape Town will continue to lead, but predicts that secondary cities like Kigali and Accra will gain more traction in the coming years.
The report's findings underscore the increasing global attention on African startups, with international venture capital firms expanding their presence in these key cities. As the continent's digital economy grows, these urban centers are poised to play a pivotal role in shaping the future of innovation.
