The event brought together founders, venture capital investors, corporate venture arms, philanthropic organisations and policymakers to examine the state of Africa’s private capital ecosystem.

AVCA Chief Executive Officer Abi Mustapha-Maduakor opened the summit and commended the resilience of the venture capital sector through difficult funding cycles.

She said that despite tougher fundraising conditions, “venture-backed exits reached a record high in 2025,” pointing to what she described as a shift in the market. She added, “The centre of gravity is moving toward local capital, local expertise, and local conviction.”

A keynote fireside conversation followed between actor and investor Boris Kodjoe and AVCA’s CEO. Kodjoe focused on how perception influences investment decisions and market behaviour. He said, “Storytelling is economic architecture, those who control the narrative shape valuation, and perception is what drives investment.”

The AVCA VC summit then moved into deeper industry discussions on the structure of venture capital in Africa.

A panel titled From Hype to Fundamentals: Resetting the African VC Story brought together Tidjane Dème of Partech Partners, Sapna Shah of Novastar Ventures, Fatoumata Bâ of Janngo Capital, and Mohamed Eissa of the International Finance Corporation (IFC).

The session focused on whether global venture capital models align with African market realities and where expectations have not matched outcomes.

Tidjane Dème pushed back against the idea that the ecosystem is underperforming. He quoted Ido Sum, saying, “African venture capital isn’t broken, it’s just young.” 

He added, “A decade ago, we saw around 30 deals a year; today, that number exceeds 500. We’re still building, and we can’t compare ourselves to a 50-year-old U.S ecosystem just yet. We have time.”

Mohamed Eissa also highlighted the scale of growth in funding. “This ecosystem is still very young, but it has grown from about $400 million of annual investment to roughly $4 billion in just over a decade, clear evidence that the capital base is expanding, even if it’s still not enough.”

Attention later shifted to exit routes and liquidity challenges in the market. Industry participants including Patricia Rinke of AfricInvest, Ibrahim Sagna of Silverbacks Holdings, and Andreata Muforo of TLcom Capital discussed the importance of collaboration in improving exits.

They also pointed to mergers, acquisitions and strategic sales as more practical liquidity options than public listings in many cases.

Speaking on the role of domestic capital, Alex Rumanyika of Uganda’s National Social Security Fund (NSSF) called for stronger participation from African institutional investors.

He said, “If we don’t get into this space, it is going to be an existential threat for NSSF and many pension funds. We need to diversify away from overexposure to government assets and into the sectors where jobs are actually being created.”

The conference was followed by a Private Credit Summit, where investors discussed new financing approaches shaping Africa’s private capital market. The focus shifted to credit strategies and how they are expanding funding options for businesses across the region.

Nathaniel Micklem of Ninety One said, “Private credit is one of the most exciting parts of our asset management platform, but it cannot be built using imported public equity or private-equity instincts. What works in Africa is deploying into stronger, more resilient businesses and sectors, not earlier-stage ventures or smaller SME exposures.”

Walid Cherif of BluePeak Private Capital said private credit continues to gain relevance in Africa due to its flexibility in markets where exits remain limited.

He said, “Private credit is especially suited to African markets because companies continue to perform even when exits are hard to achieve. It is an easier conversation today than it was years ago.”

He added that discipline is essential in the sector, noting that credibility with investors depends on long-term execution and returns, not just strong market narratives.

The year also marked one of Africa’s strongest exit cycles on record, signalling improving liquidity pathways and a steadily maturing investment ecosystem, even as fundraising moderated in line with global headwinds.

Key insights:

• US$5.1bn was invested across 530 deals, making Africa the only global region to record deal volume growth in 2025 (+8%), while global deal volumes fell by 7%
• Africa recorded 81 exits in 2025, up 27% YoY, marking the second highest exit volume on record.
• Fundraising fell 34% YoY to US$2.7bn as liquidity pressures caught up with fund managers.

Deal Activity Rises and Sets a Higher Baseline

Investment activity in Africa remained resilient in 2025, with deal volumes rising for the third consecutive year.

Although the total deal value edged slightly lower to US$5.1bn, fund managers continued to deploy capital, shifting towards smaller midmarket opportunities as they adjusted to tighter global conditions.

Deals in the US$50–99mn range doubled as managers scaled back from capital-intensive transactions and focused on more targeted investments.

Private Debt gained momentum, with deal volume rising 57% YoY supported by greater use of venture debt. The asset class is now firmly established alongside Private Equity and Venture Capital as a key source of financing on the continent.

Financials continued to drive activity, reflecting ongoing demand for Fintech which accounted for 82% of all transactions in the sector.

The Information Sector was the second most active sector with investments targeting the finance, healthcare, retail and logistics sectors.

Southern remained the most active region, while East Africa and North Africa were strong performers, supported respectively by the growth in Energy and Information Technology investments.

Africa’s Exit Market Strengthens Amid Global Decline 

Africa’s exit market strengthened in 2025 as fund managers prioritised liquidity. Exit volumes rose 27% YoY to 81 transactions, the second highest- level on record, lifting the exit to- -investment ratio to 0.2x (double the level seen in 2024). This momentum stood in contrast to global markets, where exit activity declined by 15% over the same period.

The exit landscape continued to evolve. Trade buyers remained the primary route, accounting for 38% of all exits, while sponsor-to-sponsor transactions reached a record 26%, reflecting growing secondary market depth. IPO activity also improved modestly, with four listings recorded during the year.

Domestic capital was a key source of liquidity, representing 68% of private capital acquisitions. International buyers accounted for the remaining 32%, led by Asian strategic acquirers seeking to expand or deepen their presence in African markets.

Fundraising Slows Amid Liquidity Pressures While Domestic Capital Deepens

Fundraising moderated in 2025 as liquidity pressures persisted globally. A total of US$2.7bn was raised during the year, reflecting a 34% YoY decline in line with broader market headwinds. Development finance institutions continued to anchor the market, accounting for 64% of all commitments.

Domestic capital continued to deepen. African institutional investors contributed 21% of total commitments, led by sovereign wealth funds and pension funds whose allocations to private capital have expanded steadily in recent years.

This growing participation highlights a structural shift toward locally sourced capital, even as overall fundraising conditions remained challenging.

Abi Mustapha-Maduakor, chief executive officer, AVCA, said: 

“This year’s report tells a clear story: Africa is decoupling from the global slowdown. Stronger exit performance, deeper participation from domestic institutional capital, and sustained commitments from development finance institutions all point to a maturing ecosystem. We expect this momentum to build further as capital providers increase their exposure to sectors driving Africa’s next phase of economic transformation.”

According to the 2025 Venture Capital Activity in Africa report by the African Private Equity and Venture Capital Association (AVCA), startups across the continent raised US$3.9 billion across 506 deals in 2025.

While this figure remains below the highs recorded during the 2021–2022 boom cycle, the underlying signals point to a healthier and more resilient market structure.

For investors, founders, and policymakers, the message is clear: Africa’s venture market is not shrinking, it is recalibrating.

A market stabilising, not retreating

Africa entered 2025 with tempered expectations. Global venture capital flows remained under pressure, exit timelines lengthened, and risk appetite stayed selective across most regions. Against this backdrop, Africa emerged as a relative outlier.

Deal volume on the continent grew by 4% year-on-year, making Africa the only global region to record growth in venture activity in 2025. While total capital raised declined modestly compared to peak years, deal flow stability suggests sustained entrepreneurial momentum.

This resilience was most visible at the early stages.

Seed and early-stage funding expanded during the year, with median deal sizes at both stages reaching multi-year highs. This indicates stronger conviction among investors at entry points, even as capital became more selective.

The report also highlights shorter fundraising timelines from Seed to Series A, suggesting improved capital efficiency and clearer growth narratives among early-stage startups.

At the other end of the spectrum, late-stage equity funding continued to contract. Only eight megadeals closed in 2025, raising a combined US$1.3 billion. While these large rounds provided partial relief to total capital figures, late-stage equity activity fell to its lowest level since 2020, reflecting global caution around high-valuation growth bets.

Venture debt moves into the mainstream

Perhaps the most significant structural shift in Africa’s venture ecosystem in 2025 was the rapid rise of venture debt.

Venture debt financing reached US$1.8 billion, nearly doubling year-on-year and extending a three-year growth trajectory. What was once considered a complementary financing option has increasingly become a core layer of capital for African startups, particularly at the growth stage.

Founders are turning to venture debt to extend runway, manage dilution, and fund expansion without resetting valuations in a cautious equity environment. For investors, debt offers a more structured risk profile in markets where exit timelines can be extended.

East Africa accounted for over two-thirds of venture debt deal value, reinforcing the region’s reputation for capital innovation and alternative financing models. This shift also brings Africa closer to capital structures seen in more mature emerging markets, where blended equity-debt financing is standard practice.

For policymakers, the rise of venture debt highlights the importance of regulatory clarity around credit instruments, cross-border lending, and capital repatriation, all critical to sustaining this momentum.

Exit activity quietly improves

While exits rarely dominate headlines during market downturns, 2025 delivered encouraging signals.

Venture-backed exits across Africa reached 34 transactions, representing a 31% year-on-year increase — significantly outperforming the 1% global growth rate in exits during the same period.

North Africa led in exit volume, while Southern Africa accounted for the largest share of exit value at US$288 million.

Trade sales remained the dominant exit route, accounting for over 70% of both exit volume and value. However, the composition of buyers is gradually diversifying. Financial sponsors recorded their highest participation on record, particularly in more mature sectors such as fintech.

Notably, Africa-based buyers accounted for 54% of all exits, signalling a growing pool of local and regional acquirers. This marks a shift away from historical dependence on foreign buyers and underscores the gradual maturation of Africa’s corporate and private equity landscape.

Domestic capital takes centre stage

One of the most consequential trends in 2025 was the growing role of domestic capital.

African investors accounted for 45% of total venture fund commitments, the highest share ever recorded and a sharp rise from the 23% average between 2022 and 2024. This shift was largely driven by African corporates and development finance institutions (DFIs).

While overall DFI participation declined to 27% of total commitments, the composition changed significantly. African DFIs contributed 63% of total DFI capital deployed, reversing a long-standing pattern where international DFIs dominated venture funding on the continent.

This localisation of capital is critical. Domestic investors are typically more patient, better aligned with local market realities, and less susceptible to global risk-off cycles. Their growing presence strengthens the ecosystem’s resilience and reduces vulnerability to sudden external capital withdrawals.

For founders, this trend improves capital availability that understands regulatory nuance, currency risk, and operational complexity. For policymakers, it reinforces the importance of strengthening local institutional capital pools, including pensions, insurance funds, and sovereign vehicles — to sustainably support innovation.

What this means for investors and founders

The 2025 data paints a picture of an African venture ecosystem moving from experimentation to discipline.

Growth is no longer driven by unchecked capital inflows but by:

• More selective equity deployment
• Increased use of venture debt
• Stronger early-stage fundamentals
• A maturing exit environment
• A structurally larger role for domestic capital

For investors, Africa’s venture market is offering clearer signals of long-term investability, particularly in sectors with proven revenue models and regional scalability.

For founders, the funding environment demands sharper execution, capital efficiency, and realistic growth narratives, but also offers more diverse financing options than ever before.

Policy implications: building durable capital markets

Commenting on the report, Abi Mustapha-Maduakor, AVCA CEO noted that Africa’s venture ecosystem is “recalibrating towards patient, structured and locally anchored capital.”

This recalibration presents a clear policy opportunity.

Governments and regulators can accelerate progress by:

• Supporting domestic institutional participation in venture funds
• Clarifying frameworks for venture debt and alternative financing
• Strengthening exit pathways through M&A-friendly regulations
• Improving capital market depth to complement private funding

If sustained, these measures could help Africa move from episodic venture cycles to a more predictable innovation economy.

Thus, Africa did not rebound in 2025 by returning to excess. Instead, it stabilised by evolving.

With US$3.9 billion raised, venture debt nearing US$2 billion, and domestic investors anchoring nearly half of commitments, the continent’s venture ecosystem is becoming more grounded, more local, and more durable.

For long-term investors, tech founders, and policymakers, the signal is not one of retreat, but of recalibration toward a more sustainable African venture capital market.

This was revealed in a new report by the African Private Capital Association (AVCA), developed in partnership with the Chamber of Corporate Trustees of Ghana and British International Investment (BII) under the Ghana Investment Support Programme (GHISP).

The report discloses a steep increase in pension funds’ appetite for alternative investments. More than half of Ghanaian pension providers now hold exposure to private capital, and 65% say they intend to raise allocations to private equity within the next five years.

By the end of 2024, total pension assets under management in Ghana reached GHS 86.4 billion ($6.2 billion), yet only 4.4% of the 25% limit set by regulators is being channelled into alternatives such as private equity and venture capital. 

This figure lags far behind Nigeria’s 34% utilisation of a 5% cap and South Africa’s 8% allocation under its 15% ceiling.

Despite this underutilisation, the report says that Ghana’s pension funds are gradually shifting from conservative savings strategies to more productive, growth-oriented investments. 

Many are targeting healthcare (55%), agribusiness (45%), and technology (40%), while by asset class, 38% favour property and infrastructure, 24% prefer private equity, and 19% are exploring venture capital.

However, AVCA’s findings also expose major obstacles preventing deeper engagement with private markets. Pension providers identified currency volatility, complex fund licensing processes, limited investable pipelines, and weak institutional capacity as key challenges. 

Nearly nine in ten pension funds (89%) interacted with fewer than three fund managers in the past year, underlining the limited depth of Ghana’s investment ecosystem.

The government’s May 2025 directive, which encourages pension funds and insurers to allocate at least 5% of assets to private equity and venture capital by 2026, has provided much-needed policy backing. This move is expected to mobilise domestic capital and drive growth across productive sectors.

To speed up progress, AVCA’s report outlines four key strategies:

• Enhancing data transparency and engagement between funds and managers
• Building institutional capacity through targeted training and pooled investment structures
• Deploying blended finance and co-investment tools to mitigate risk
• Advancing regulatory reforms to recognise Limited Partnerships and streamline fund licensing.

Commenting on the report, Abi Mustapha-Maduakor, chief executive officer of AVCA, stated:

“Ghana’s pension funds are at an inflexion point. The data highlights both the scale of investable domestic capital and the practical barriers that continue to hold it back. Unlocking this potential will require a combination of regulatory clarity, institutional capacity-building, and deeper collaboration between fund managers and local investors. 

“This mirrors a broader shift across Africa, where governments are enacting policies to channel domestic savings into productive investments at home and across borders. With these foundations in place, Ghana’s pension system can become a catalyst for long-term, sustainable growth.”

AVCA projects that Ghana could become a leader in pension-led private capital mobilisation in West Africa within five years if this momentum is sustained. The report forms part of AVCA’s Knowledge Exchange Initiative (KEI), a year-long capacity-building initiative launched in partnership with BII to enhance local institutional participation in private markets.

If Ghana’s pension reforms and fund managers align effectively, the country could bring in billions of local investment, turning its pension base into a new engine for national development.

• Africa secured US$3.6 billion in venture capital funding, including US$1.0 billion from venture debt.
• African investors formed the single largest group of active VC participants in the region for the first time, up from 19% a decade ago
• Technology-enabled companies drove VC deal flow across various sectors – with FinTech leading while CleanTech and AI gain momentum
• Despite global fundraising headwinds, the value of final fund closes in Africa rose to US$736 million (+41% YoY), reflecting continued investor confidence in the region.

AVCA—the African Private Capital Association—has announced the release of the 2024 Venture Capital in Africa Report.

This comprehensive analysis provides in-depth insights on market trends, fundraising, exits and investor dynamics, backed by AVCA’s unrivalled decade-long data sets.

The sixth edition of AVCA’s annual report reveals that Africa experienced a market correction a year after global markets, with the continent reaching its funding low in H1 2024—highlighting the delayed but pronounced impact on dealmaking during a period of inflation, supply chain disruptions and geopolitical shocks.

The report finds that 2024 was a challenging year for African startups, noting a 22% year-over-year (YoY) decline in deal value and 28% drop in deal volume.

While global venture capital value rose 6% and volume fell 24%, Africa’s sharper contractions reflect the continent’s delayed downturn cycle.

Venture debt lenders comprised only 12% of deal volume yet generated 37% of VC deal value in 2024. The 3% YoY increase in deal value and volume signals continued investor appetite for the asset class.

The geographic distribution reveals that West Africa maintained its lead as the most active region for the fourth consecutive year, accounting for 23% of total deal volume, with Nigeria leading at 16%.

The ‘Big 4’ markets (Nigeria, Egypt, Kenya, South Africa) represented 55% of volume and 64% of value.

FinTech remained dominant with 116 deals raising US$1.4 billion (34% of all tech-enabled rounds). Clean & ClimateТech rose to 13% of tech-enabled deal volume, up from a 7% five-year average, while AI made its first appearance among the top four most funded verticals with 42 deals raising US$108 million.

In a significant milestone, African investors emerged as the single largest group of active participants in VC, representing 31% of the total investor pool compared to 19% a decade ago.

This underscores the momentum in domestic capital formation despite overall investor participation declining 21% from 2023 to 614 active investors.

The fundraising environment showed remarkable resilience, with eight funds closing at US$736 million in 2024 alone, a 41% YoY increase that underscores the positive, long-term growth of Africa’s VC ecosystem despite global headwinds.

Since 2015, 35 fund managers across 41 funds have raised US$2.7 billion in final closes, reflecting a 25% CAGR.

The exit landscape is gaining momentum, with 138 exits recorded between 2019 and 2024—reflecting a clear upward trend over time, despite remaining flat in 2024 with 26 exits recorded.

Trade sales continued to dominate that year, accounting for 84% of all exits with an average holding period of 3.8 years.

Abi Mustapha-Maduakor, CEO of AVCA, said:

“The data demonstrates how Africa’s venture ecosystem is responding to global challenges with notable resilience. While overall funding has contracted, we’re seeing strategic adaptations—higher quality deals, sector diversification beyond fintech, increased venture debt utilisation, and the strengthening role of African investors. These responses reflect a maturing market that continues to present compelling opportunities. We remain optimistic about the venture landscape in Africa, particularly as it offers investors unique exposure to fast-growing markets with demographic advantages and innovation potential compared to more traditional investment destinations.”

After 10 years, Africa’s largest private capital gathering will return to the region’s largest economy, Nigeria.

This follows the successful AVCA Conference and VC summit held in Johannesburg last week, which attracted 700+ delegates from more than 60 countries.

More than 300 delegates attended the 3rd Annual VC Summit where panellists took stock of the global decline of VC funding and explored a range of solutions to catalyse growth.

Speakers marked the influence of rapidly emerging technologies shaping African innovation and driving the digital economy, creating new skills and increasing efficiency, such as artificial intelligence, blockchain and quantum computing.

Speaking on the panel, ‘The DeepTech Potential in African Tech’, Andre Jr. Ayotte, Partner, Modus Capital, highlighted how founders can apply technology to build companies solving problems at scale.

Despite progress in tech-enabled sectors, Nick Allen, Managing Partner, Savant, noted that gaps in Africa’s tertiary education system have led to a lack of skilled graduates with sufficient engineering knowledge.

He added that in comparison to more developed markets such as Europe and the US, there is a lack of investors who understand how to finance deep tech in Africa.

Speaking during the panel, ‘Seasons Change: Lessons Learned in Winter and the Path to Spring’, panellists took stock of the global decline of funding within the VC ecosystem.

Seasoned investor, Khaled Ben Jilani, Senior Partner, AfricInvest, raised the importance of active strategies to make businesses less capital intensive in order to anticipate new risks and navigate a lack of liquidity in the market.

Steve Beck, Co-Founder and Managing Partner, Novastar Ventures, expressed that private equity firms and development finance institutions (DFIs) with dedicated VC teams had stepped in to partially fill the funding gaps, particularly in the early stages. 

Other panel highlights included ‘Catwalks, Canvases, & Choruses: Sector Spotlight on the Creative Industry’, ‘Debt Dynamics: Unlocking Liquidity with Venture Debt in Africa’,‘Green Ventures: VC for Climate’, ‘Founders First: Building a Platform for Success in African’ and ‘The Real Deal” – Venture Capital in the Real Economy’.

The VC summit saw participation from Africa-focussed venture capital funds, DFIs and global investors including AfricInvest, African Renaissance Partners, Aves Lair, Altree Capital, Breega, Enza Capital, European Investment Bank (EIB), Flat6Labs, LoftyInc Capital, Lightship Anchor Fund, Octerra Capital,  Proparco, Savant, Sango Capital, Sawari Ventures, Standard Bank, TL Com Capital, USAID Prosper Africa, Ventures Platform, 500 Global, and more. 

Looking ahead, Nigeria’s position at the forefront of venture capital and private equity investment in Africa, backed up by a tech-savvy population and the recent rise in local investment funds and angel investors, sets the scene for a dynamic summit in 2025.  

Abi Mustapha-Maduakor, Chief Executive Officer, AVCA, said: 

“Nigeria has emerged over the last decade as an investment hotspot in Africa. The country’s entrepreneurial spirit and well-established pools of local capital gave rise to some of Africa’s earliest unicorns, particularly in the payments sector. As we wrap up the conference in Johannesburg, we look forward to our next event in a city that has played an equally catalytic role in Africa’s investment landscape”.

The event sought to build on the level of climate and social impact ambition generated at the recently held Africa Climate Summit and set the agenda for private capital allocators in Africa.

The opening panel, Seizing the Sustainable Opportunity in Private Capital, explored the evolution of impact investing over the past 20 years.

Panellists underlined the importance of innovation in blended finance and the transformative role of technology in enabling embedded finance to expand access to affordable clean energy solutions. Highlighting the emerging consensus around the convergence of profit and purpose, the panel made a compelling call to move beyond outdated perceptions of the need for investors to calculate trade-offs between impact and returns.

‘Tokunboh Ishmael, co-founder and Managing Director of Alitheia Capital, urged investors to adopt intentionality through gender lens investing and highlighted the value of “greenifying and techifying” businesses to make them more competitive and sustainable.

Fellow panellists, including Amal-Lee Amin, Managing Director and Head of Climate, Diversity and Advisory, British International Investment; Karima Ola, Partner, LeapFrog Investments; and Jiwoo Choi, Chief of Strategic Initiatives, Acumen Fund, were united on the vital need for more investments that reach the grassroots level – ensuring that capital flows to where it is needed most.

Panellists in the Deep Dive: Investing for Resilience Amidst & In Post-Conflict Regions session focused on the impact that can be created by investing in frontier markets often starved of capital.

They shared practical examples of structures such as the Africa Resilience Investment Accelerator (ARIA) that pool market mapping, origination and due diligence for DFIs to lower transaction costs and create an enabling ecosystem for investments designed to support economic revival and resilience. Barthout Van Slingelandt, Managing Partner XSML Capital, emphasised the value of strong local partners – both in terms of risk mitigation and identifying buyers at exit.

The Decarbonisation of Heavy Industries case study convened Sadio Wade, Principal, Actis; Sam Senbanjo, Managing Director, A.P. Moller Capital; and Paras Patel, Managing Partner, E3 Capital. Speakers traded views on the opportunities for decarbonisation strategies to propel green growth.

Egypt, Namibia, Morocco, and South Africa were cited as high-priority markets to build sustainable value chains in green manufacturing through new climate technologies such as green hydrogen.

The panel Technology as a Tool for Sustainable Investing celebrated the power of technology and data to build both trust – in the form of measurable and verifiable impact – and scale. Speakers acknowledged the transformative impact taking place through the disruptive nature of AI, data analytics, and tech-enabled investment decision-making.

During the panel A Blueprint for Change: Innovative Approaches to Sustainable Infrastructure in Africa, Kolawole Owodunni, Executive Director and Chief Investment Officer of the Nigeria Sovereign Investment Authority (NSIA), drove a strong argument for the development of local currency financing and private debt, referring to these instruments “as effective mechanisms that could improve the bankability of infrastructure projects of the future.”

The final panel, Moving the Needle: The Power of Private Capital for Sustainable Development, explored the growing synergies between financial return and social impact – a recurring theme throughout the day.

The benefits of embedding the SDGs and ESG into values and strategic investments are clear, and as Eric Kump, Partner, Alterra Capital Partners summarised, investors should “practice ESG for value creation and not for obligation.”

Speakers recognised risk perception as the main impediment to more significant capital flows, noting the tendency to treat Africa as having a homogenous risk profile.

Panellists unanimously agreed that capital still lags opportunity when it comes to impact investing in Africa and the Summit closed with a collective call for more firepower to accelerate progress towards the SDGs by the diverse stakeholders in the room, from foundations to development finance institutions, fund managers and family offices.

Albert Alsina, Founder and Chief Executive Officer of Mediterrania Capital Partners, concluded that “the perception of risk in Africa is much higher than it (really) is. There are incredible businesses across the region – they just require the right support.”

Key findings in the report:

• Africa’s private capital and venture ecosystems defy odds in one of the strongest half-year results to date
• Private capital investment in Africa in H1 2022 saw total deal volume of 338 deals; cumulative deal value of US$4.7 billion
• Cumulative value of H1 VC deals reported in Africa reached US$3.5 billion; on track for US$7 billion by year-end

The reports present an overview of the venture ecosystem, private capital fundraising, dealmaking, and exits in Africa in the first half of 2022, and set out projections for the remainder of the year.

Private Capital in Africa Shows Promise for Year Ahead

In one of the strongest half-year of private capital activity ever recorded, private capital investment in Africa in H1 2022 saw a total deal volume of 338 deals with a cumulative deal value of US$4.7 billion.

There are three main factors that contributed to strong deal activity: the substantial amount of fresh capital raised by fund managers in 2021 as investors made deployments across various strategies and sectors, an increasing interest in Africa’s venture ecosystem which has not only attracted international investors and supported the development of domestic venture capital firms but has also encouraged pan-African private equity firms to broaden their strategy to include a dedicated focus on venture capital, and overall larger ticket sizes.

Unsurprisingly, given its enormous potential, the continent’s financial services industry has continued to attract investors from all over the world, with FinTech companies, in particular, comprising 89% of the total number of deals within Financials.

Financials was the most active sector in 2022 H1 by volume (attracting 103 private capital investments at almost 2x levels recorded in 2021 H1), followed by the Industrials sector which also emerged as the second most active sector by value.

From a regional perspective, West Africa continues to dominate private capital deals by volume (34%).

Senegal now holds third place, overtaking Côte d’Ivoire, to follow Nigeria and Ghana as having the largest shares of deal volume in the region.

East Africa experienced the strongest growth in its share of deal volume compared to the corresponding period last year.

Kenya’s role in this was key, with early-stage venture deals in Financials and Consumer Discretionary – mainly online retailing – contributing significantly to this remarkable growth.

Private capital exit activity also experienced notable growth in the first half of 2022. Fund managers achieved 22 full exits, which represents a 29% increase compared to the corresponding period in 2021.

This was driven mainly by growth in Trade and Secondary Sales.

However, private capital fundraising in Africa slowed down in the first half of 2022 reaching US$0.7 billion in final closes, a 20% drop compared to the corresponding period last year. This decline in the value of African private capital fundraising, mirroring global trends, is mainly the result of a more challenging and competitive fundraising environment for fund managers globally and fears of a global economic downturn.

Africa’s Venture Ecosystem Goes from Strength to Strength in 2022

In 2022 H1, Africa’s Venture Capital (VC) ecosystem remained bullish despite inflation and an unfavourable macroeconomic environment. In a record-breaking start to the year, the cumulative value of VC deals reported in Africa reached US$3.5 billion, raised by 300 unique companies. This equates to a 133% YoY increase from 2021 H1.

The report predicts that the total value of VC deals will reach US$7.0 billion by the close of 2022 – a 35% YoY increase from the US$5.2 billion raised in 2021 if this pattern continues. Africa is the only market to register more than single-digit growth for the period.

This growth in startup funding, unlike global trends this year, demonstrates the depth of opportunity, the continent’s growth potential, and increased supportive action from governments to enable entrepreneurship in areas that were previously underserved.

The report finds that the region attracting the largest share of VC investment by deal volume remains largely unchanged with West Africa (33%) leading.

Interestingly, East Africa has now surpassed North and Southern Africa, attributable to Kenya achieving the second largest share of deals by value (US$330 million).

The report’s sector focus highlights that Financials remains a titan of the ecosystem as the most active sector by both volume (32%) and value (44%).

Three sectors emerged from the margins to the mainstream in 2022 H1: Health Care (50% YoY growth); Education (64% YoY growth) and Utilities (23% YoY growth).

Nadia Kouassi Coulibaly, Head of Research at AVCA, commented: “Record-breaking H1 performance is a powerful demonstration of the continued growth of the African private capital and venture capital ecosystem, despite significant global headwinds. The industry is on track for stellar performance in H2 and we are working closely with members to provide the insight and support they need to grow their portfolios.”

To download the reports, click here.

The conference convened over 500 leaders in the private equity (PE) and venture capital industry to discuss emerging trends and strategies to maintain sustainable growth of VC investment in Africa.

‘Tokunboh Ishmael, co-Founder and Managing Director of Alitheia Capital, opened the summit with a welcome address where she described the surge of international interest in Africa’s thriving VC sector as a decisive opportunity to learn from Africa’s evolving private equity ecosystem over the years. 

She said, “There is still much to learn from African PE. We have the investors and skill to solve some of the continent’s most pressing problems.”

Advocating for knowledge exchange and deeper collaboration in a growing industry, she continued by saying: “Let’s use the insight and expertise that has catalysed success across geographies to unlock the scale and growth of more bright ideas and ambitious companies leaping us further into the future. I can’t wait to see the next 20 years of Africa’s PE and VC landscape.”

The summit proceeded with a panel charting the development of Africa’s early-stage investment landscape over the years, unpacking how it has become a recognised and distinguished investment class.

Speakers including Tarek Assaad, Managing Partner, Algebra Ventures; Maurizio Caio, Founder and Managing Partner, TLcom Capital; Michael Oluwagbemi, Co-Fund Manager, LoftyInc Capital Management; and Shruti Chandrasekhar, Regional Head, Africa, International Finance Corporation, exchanged perspectives on the continent’s expanding technology ecosystems; trading views on how to bridge the “valley of death” that ensnares so many high-potential African start-ups and addressed the increasing participation of private equity firms in the venture capital space.

Maurizio Caio, Founder and Managing Partner, TLcom Capital, commented: “It’s important that we focus on how to make sure that the ecosystem’s growth is healthy. Let’s turn the excitement from capital deployment into an impetus that makes sure global capital investors see VC in Africa as the destination to go to. More PE investors should allocate capital to VC.”

A conversation exploring the concept of unicorns harked back to 2021, a year that saw a record four African start-ups reach billion+ dollar valuations.

VC champions Tidjane Deme, General Partner, Partech; Hany Al-Sonbaty, Managing Partner, Sawari Ventures; Khaled Ben Jilani, Senior Partner, AfricInvest and Brian Waswani Odhiambo, West Africa Director, Novastar Ventures examined the business models attracting high-level investor interest as well as the prospects for the industry seeing similar stories of success in the future.

The summit continued with a series of plenary sessions centred on how early-stage VC investors are faring in Africa’s growing late-stage market; diversity, equality and inclusion; and workshops focussed on data, governance, and effective solutions to navigate complex country-specific and regional financial, legal, and regulatory frameworks.

The summit progressed with an entrepreneur showcase and sessions addressing the implications for the diversification of capital streams. 

Thabiso Foto, Chief Financial Officer, Founders Factory Africa; Ory Okolloh, Partner, Verod Kepple Africa Ventures; Nthabiseng Thema, Director, Sango Capital, and Folake Elias-Adebowale, Partner, Udo Udoma & Belo-Osagie discussed strategies to overcome the bottlenecks – posing viable routes for corporate ventures, investment holding companies, fund of funds and private equity firms to crowd into the early-stage investing space.

In a panel bringing together global perspectives speakers addressed the market drivers for Africa’s continued attractiveness to international investors, the rising diversification of actors in Africa’s VC ecosystem, and the spread of corporate venture capital supporting new and dynamic entrepreneurial ventures in Africa.

Highlighting the vast opportunities within a flourishing and nascent VC ecosystem in Africa, Ben Marrel, Managing Partner, Breega, said: “It is undeniable – Africa has strong demographics. Like all markets, they are never perfect – but it’s important to identify how massive problems can be transferred into massive opportunities, and this is how pioneering companies are formed.”

As AVCA marks the onward journey ahead for a private capital industry at an inflexion point, the association announces new Board Chairs and Committee Members.

Accordingly, the Board of Directors of the African Private Equity and Venture Capital Association (AVCA) has appointed Paul Botha as Chair; Genevieve Sangudi as Vice-Chair; Mark Kenderdine-Davies and Jennifer Mbaluto as Chair, and Co-Chair of the Legal & Regulatory Committee (LRC), effective immediately.

Abi Mustapha-Maduakor, Chief Executive Officer, AVCA, added: “I am delighted to have Paul and Genevieve as AVCA’s Chair and Vice-Chair. Their support as existing Board members, and their extensive knowledge and experience in the industry, will be invaluable as we lead AVCA towards delivering on our ambitious goals for 2022 and beyond. I would also like to thank the outgoing Chair, ‘Tokunboh Ishmael, and Vice-Chair, Ziad Oueslati, for their unwavering commitment, support and leadership of AVCA over the past four years. AVCA is unquestionably stronger for their contributions.

She added: “Additionally, I am delighted to welcome Mark and Jennifer as AVCA’s LRC Co-Chairs. Their collective experience and deep expertise will be instrumental in defining the committee’s deliverables over the coming months. Our appreciation to the outgoing LRC Committee Chair, Geoffrey Burgess, for his outstanding commitment and valuable guidance over the past five years.”