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Tag: African Private Capital Association (AVCA)

  • AVCA’S Fifth VC Summit Spotlights Resilience, Scale, and Bankability as Critical Levers to Propel Africa’s VC Ecosystem

    AVCA’S Fifth VC Summit Spotlights Resilience, Scale, and Bankability as Critical Levers to Propel Africa’s VC Ecosystem

    The African Private Capital Association (AVCA) hosted its fifth Venture Capital (VC) Summit yesterday. The summit forms part of the industry association’s 21st Annual AVCA Conference week, held in Lagos until 2 May. The global gathering brings early-stage and venture capital investors, corporate venture arms, founders, entrepreneurs, and accelerators together to discuss new trends and plot the rise of Africa’s venture capital landscape.

    Abi Mustapha-Maduakor, CEO of AVCA, opened the Summit by acknowledging the strategic importance of Nigeria’s entrepreneurial landscape: “Hosting the Summit in Nigeria is significant because this country has long been at the heart of Africa’s entrepreneurial evolution. Despite economic headwinds, we’ve witnessed innovation and resilience in the early-stage ecosystem. It is no coincidence that in 2024, Nigeria produced one of the continent’s newest unicorns.”

    Tope Awotona, Founder and CEO of Calendly, the US$3bn tech unicorn, and Abi Mustapha-Maduakor, CEO of AVCA, kicked off the summit with a keynote fireside chat. Describing his remarkable entrepreneurial journey, Awotona said: “I knew scheduling wasn’t just a productivity tax—it was a tax on important business outcomes like revenue. We didn’t invent online scheduling but made it accessible to more people through three key innovations: our freemium pricing model, our viral distribution method, and our data-driven product improvements.”

    The conversation affirmed the power of innovation, enabling expansion to international markets and the benefits of experimentation with price, distribution, and product. Awotona said: “When scheduling went virtual, more users meant more data could help to improve the product and help to become the best on the market.” 

    Following the sentiments of Calendly’s Founder and CEO, a panel titled Unlocking Scale: The Growth-Stage Challenge with Leo Batalov, Partner, Global Co-Head of Emerging Growth Companies and Venture Capital, DLA Piper, and Brian Waswani Odhiambo, Partner, Novastar Ventures, examined how to bridge the gap for businesses moving from early stage development to accessing capital in their growth stage, and highlighted the urgency of building strong local investor ecosystems.

    Outlining the roles of founders and venture capital investors in supporting the long-term sustainability of Africa’s burgeoning tech ecosystem, Dr Omobola Johnson, Senior Partner, TLcom Capital, said: “We need to help founders understand that at the growth stage, they’re competing for global capital, not just local. Founders must recognise the competition and make their businesses appealing to international investors…This makes the African market more scalable, bankable, and investable.”

    The summit proceeded with a headline session, entitled Titans of Industry: Bold Moves, featuring Tosin Eniolorunda, Group CEO of Moniepoint, who underscored the merits of building a valuable company and building a robust team. He said, “If you have an organisation that is growing, investors will be interested; so we focused early on establishing good fundamentals—topline growth, profitability, EBITDA margins, return on equity. The more important goal is building a valuable company with healthy bottom lines. This opens up multiple opportunities, whether through Nigeria’s evolving stock exchange or large buyouts from sovereign wealth funds.”

    Other panels convened capital allocators – representing corporate, commercial, and development-focused interests – to share their perspectives on a maturing venture capital ecosystem in Africa. The competitive fundraising environment provided a backdrop to outline how Limited Partners (LPs) select where to invest, assess risk, evaluate opportunity, and determine priorities.

    In a panel entitled Venture Debt – Africa’s Missing Piece? speakers including Rosanne Whalley, Chief Executive Officer, AHL Ventures Partners, Roeland Donckers, Managing Partner, iungo capital, and moderator Tage Kene-Okafor, Africa reporter at TechCrunch, discussed the role of venture debt products as a complement to equity funding, providing bridge capital to accelerate company growth. 

    According to AVCA’s latest report, venture debt showed impressive resilience in 2024, with 60 deals totalling US$1.0bn—a 3% increase year-on-year. While representing just 12% of total deal volume, venture debt accounted for 37% of total capital deployed, with median deal sizes reaching US$7.5mn, nearly three times larger than equity-based transactions.

    The session underscored the need for African investors to know when to deploy these tools and the importance of raising awareness amongst founders of these financing alternatives. Biola Alabi, Venture Partner, Delta40, noted that “there is a critical gap in financial literacy around debt financing in our ecosystem. Many founders and even some GPs don’t fully understand what debt investors require in terms of traction and stability. We need to help restructure existing debt and educate founders on how venture debt can complement equity to extend runway and avoid dilution, particularly for businesses with predictable revenue streams.”

  • AVCA and PEVCA join Forces to Strengthen Nigeria’s Private Capital Ecosystem

    AVCA and PEVCA join Forces to Strengthen Nigeria’s Private Capital Ecosystem

    …Anna Evi-Parker, Executive Secretary of PEVCA, to join AVCA’s senior leadership team as Regional Head, West Africa

    AVCA – the African Private Capital Association – and the Private Equity and Venture Capital Association, Nigeria (PEVCA), have announced a strategic merger to strengthen Nigeria’s private capital ecosystem. The merger reflects a joint ambition to catalyse new investment opportunities and boost sub-regional and continent-wide growth.

    The merger combines AVCA’s 20-year track record of industry advocacy, market intelligence, research, and convening power with PEVCA’s extensive networks and local expertise. The partnership demonstrates a shared commitment to promote private sector growth, the position of Nigeria’s venture capital (VC) ecosystem, and the potential for domestic capital to crowd in strategic areas such as technology, infrastructure, agriculture, and more. 

    The announcement comes ahead of the 21st Annual AVCA Conference in Lagos (28 April – 2 May), themed Bold Moves: Powering 10x in Africa. The conference returns to Nigeria for the first time in 11 years, accompanied by AVCA’s newly released Nigeria Factsheet which reveals the country’s leading position in West Africa––securing 66% of regional deal volume and 52% of deal value between 2020 and 2024. As Africa’s most active venture capital market – accounting for 19% of the continent’s VC deals and home to five unicorns – Nigeria presents a dynamic backdrop for conversations and collaboration to drive innovation and investment in Africa. 

    This partnership will provide more tailored support for fund managers, increase engagement with policymakers and institutional investors, and enhance cooperation between local and international finance in Africa. In Nigeria alone, the country’s pension fund assets have surpassed ₦18 trillion ($20bn), highlighting the untapped potential of domestic capital. By combining AVCA’s robust data, research, and investor engagement with PEVCA’s strong network and proximity to government, the merger strengthens efforts to prepare the ground to advance Nigeria and the broader sub-regions private capital ecosystem.

    As part of the merger, Anna Evi-Parker will assume a combined role, maintaining her position as Executive Secretary of PEVCA while also serving as Regional Head of West Africa within AVCA’s senior leadership team.

    Paul Botha (Metier), Chair of the AVCA Board, said: “This strategic merger signifies an important leap forward as we combine AVCA’s established industry position with PEVCA’s invaluable local insights to promote the interests of private capital stakeholders in Nigeria and beyond. We look forward to working with the PEVCA leadership to support Nigeria’s growth as a leading investment destination on the continent.”

    Dr Yemi Osindero, Managing Partner, Uhuru Investment Partners, said: “We are optimistic about the opportunities presented by this strategic partnership, and I am delighted to witness this pivotal moment for Nigeria’s private capital ecosystem. This merger allows us to build on the unique strengths of AVCA and PEVCA to deliver better value for investors, fund managers and the wider industry.”

    Abi Mustapha-Maduakor, CEO of AVCA, added: “Nigeria plays a central role in Africa’s investment story, and this merger allows us to work more systematically with local actors to deepen engagement and deliver targeted support. By combining AVCA’s insights, research and convening power with PEVCA’s on-the-ground presence and network, we are better positioned to catalyse private capital that meets the region’s needs—from infrastructure to industrial development and innovation. It’s a decisive step towards aligning local and continental efforts to deliver sustainable, long-term growth.”

  • CBN, NGX Group Showcase Nigeria’s Reform-Driven Growth Story at Nasdaq, New York

    CBN, NGX Group Showcase Nigeria’s Reform-Driven Growth Story at Nasdaq, New York

    In a bold move to woo global capital and enhance investor’s confidence, Nigeria’s top financial leaders presented a unified front at a strategic investment forum hosted at the Nasdaq MarketSite in New York. The event, held on Thursday, April 17, 2025, was organized by the Central Bank of Nigeria (CBN) in collaboration with Nigerian Exchange Group (NGX Group), JPMorgan, and the African Private Capital Association (AVCA).

    The exclusive gathering brought together leaders from the Nigerian diaspora, global investment institutions, and corporate executives for insightful dialogue on the country’s evolving financial landscape and its readiness to attract global capital for sustainable growth.

    Olayemi Cardoso, Governor of the Central Bank of Nigeria, in a fireside chat with Nobel Prize-winning economist, Dr. James Robinson, outlined Nigeria’s monetary policy direction, growth prospects, and efforts to deepen its financial markets. He reaffirmed the CBN’s commitment to disciplined policy management, market-friendly reforms, and enhanced transparency to foster a stable, investor-friendly environment. Cardoso also stressed the importance of strong collaboration between regulators like the CBN and market operators such as NGX Group, describing it as critical to building a resilient financial system and mobilizing long-term investments.

    The forum featured a comprehensive overview of Nigeria’s financial transformation and FX reforms delivered by Muhammad Sani Abdullahi, Deputy Governor of Economic Policy at the CBN. It also hosted a dynamic panel discussion, “Repricing Nigeria: Assessing the Scope for Sustained Change,” with senior executives from JPMorgan Chase, Standard Chartered, Citi, and Jadara Capital Partners.

    Temi Popoola, Group Managing Director/CEO of NGX Group, moderated an engaging discussion on how Nigeria’s reforms are repositioning the country as an increasingly attractive destination for global capital. “Today’s dialogue marks a pivotal step in reshaping global perceptions of Nigeria’s investment story,” said Popoola. “The candid engagement between policymakers, market operators, and investors reflects the real progress Nigeria is making. NGX Group remains committed to supporting reforms that strengthen market structures, drive innovation, and accelerate economic growth.”

    While investors welcomed Nigeria’s reform agenda, they emphasized that sustained confidence will require consistent FX policies, lower transaction costs, reduced regulatory friction, clearer direction on non-oil revenue reforms, an improved ease of doing business, and continued transparency in monetary and fiscal communication.

    The forum ended on an optimistic note, with participants expressing strong confidence in Nigeria’s economic prospects and its potential for deeper integration into global financial markets, provided reform momentum continues.

  • AVCA’s Sustainable Investing in Africa Summit: Mobilising private capital to drive sustainable growth

    AVCA’s Sustainable Investing in Africa Summit: Mobilising private capital to drive sustainable growth

    The African Private Capital Association’s (AVCA) third Sustainable Investing in Africa Summit (SIAS) convened more than 150 global leaders, investors, changemakers, and ecosystem builders to catalyse sustainable investment in Africa. The one-day summit delved into innovative strategies to mobilise local and global capital, advocating for urgent action on climate change and setting the agenda for inclusive growth across the continent. 

    In her opening remarks, Abi Mustapha-Maduakor, CEO, AVCA, addressed Africa’s capacity to originate innovative solutions despite facing challenges. She said: “Africa is rich in creativity, resilience, and potential. However, we face legacy issues such as infrastructure deficits and low financial inclusion. We are witnessing a seismic shift that brings together capital, knowledge, and the brightest minds to align on sustainable pathways to development. Together, we have the opportunity to be  catalysts for transformative change.”

    A critical theme across all panels was the importance of mobilising domestic capital to complement foreign direct investment (FDI) flows to Africa. Zee de Gersigny, Head, Venture and Early Stage Financing Vehicles, FSD Africa Investments, noted that African domestic investors, particularly pension funds and financial institutions, held around $2 trillion in collective assets which could be mobilised to invest in renewable energy, education, broadband connectivity and water sanitisation among others. Panellists pointed to key markets including Kenya and South Africa where regulatory reforms have enabled pension funds to invest in non-traditional asset classes such as infrastructure.

    Speakers noted that Africa is a key region where impact investments can yield healthy returns. However, to stimulate investment at the pace and scale needed for Africa to meet the sustainable development goals (SDGs), investors need to re-imagine what successful investment in Africa looks like. Tom Hall, Head, Social Impact and Philanthropy, UBS, said: “The power of partnerships is crucial in mobilising capital efficiently, and we need innovative blended finance solutions that we can scale. By aligning financial returns with transformative impact, we can channel significant resources to tackle Africa’s most pressing challenges.”

    ‘Tokunboh Ishmael, Co-founder and Managing Director, Alitheia Capital, said: “It’s important to redefine “returns” to value impact alongside financial gains, rather than comparing African investments to those in Silicon Valley”. Runa Alam, Co-founder and Chief Executive Officer, Development Partners International, added: “Impact for us is defined by job creation, gender equity and financial inclusion. We hold financial returns and impact as equally important because we need to do both in Africa.”

    Speakers also noted that concerns over liquidity and exit options were key barriers to private investment in Africa. Albert Alsina, Founder and Chief Executive Officer, Mediterrania Capital Partners, said: “Barriers to exits stem from opaque markets, even for strong-performing companies in Africa”. Panellists agreed that strengthening public markets and secondary markets would help overcome the perception that there is a lack of exit options in Africa. 

    Ross Ferguson, Senior Private Sector Adviser, UK Foreign, Commonwealth, and Development Office, proposed that public entities could play a much more active role derisking public markets in Africa. He pointed to Mobilist, a UK government programme, that invests equity capital in emerging and frontier market companies to help them list on public markets and stock exchanges. 

    The event concluded with a call for partnerships, collaboration, and innovation to ensure Africa meets the SDGs and drives lasting impact beyond 2030. 

  • AVCA and Tony Blair Institute Release Climate Financing in Africa Report

    AVCA and Tony Blair Institute Release Climate Financing in Africa Report

    … US$17.4 billion climate-related private capital inflows into Africa between 2012-2022

    Today the African Private Capital Association (AVCA) and the Tony Blair Institute for Global Change (TBI) have announced the release of the Climate Financing in Africa: Strategies for the Future report, a new study outlining the current landscape of investment in building Africa’s climate resilience. The comprehensive report examines the categories of, investors in, and capital deployment strategies present in Africa’s climate finance ecosystem. It shines a light on priorities and long-term opportunities for climate-smart investing on the continent, contextualised by best-in-class initiatives.

    The report identifies the gaps in existing policy frameworks to enhance private sector participation in climate finance, emphasising how strengthening of institutional capacity, availability of data and climate target alignment with international donors can facilitate greater inflows of climate finance to the continent. Within the report, private investors share recommendations for how the industry can advance efforts in building climate resilience, from better management of climate risks and opportunities, to developing robust frameworks to monitor investment progress.

    Contextualising Climate Financing In Africa

    As the report underscores, Africa’s climate financing is primarily comprised of public funds, which contrasts the configuration in developed markets. Inflows into Africa in 2019/2020 highlights this. Governments, development aid agencies and development finance institutions (DFIs), and the private sector contributed US$6.7 billion, US$16.9 billion and US$3.4 billion respectively.

    While African countries are currently amongst the most vulnerable to the climate crisis, their response prioritises emissions reductions over defence mechanisms to extreme weather events.  The report finds, going forward, 66% of Africa’s climate funding will need to be channelled into climate mitigation, 24% into adaptation and 10% into solutions that address both.

    Systematic Challenges Are Holding Back Progress

    The three main areas restricting green investments across Africa, as outlined by the report, are:

    –       Institutional governance gaps: conflicting mandates between national institutions and climate agencies, combined with weak regulatory framework have led to a limited capacity to design bankable projects and monitor climate change dynamics, and a lack of mechanisms to coordinate climate change action plans.

    –       Insufficient modelling data: Africa is significantly underrepresented in climate change research, with only 3.8% covering African issues and 0.55% channelled into African institutions. This disparity has led to a significant lack of data which limits policy formation and private sector participation.

    –       A weak financial sector: underdeveloped financial markets across the continent have led to a lack of instruments and architecture, such as green banks and national climate funds, needed to support green finance and leverage Africa’s resources.

    Africa’s Private Climate Funding Landscape

    Private capital investment into Africa’s climate adaptation and mitigation efforts have witnessed a near four-fold increase in the preceding decade. The report notes 822 private climate-related deals valued at US$17.4 billion were made between 2012 and 2022.

    –       Venture capital is the dominant asset class, representing 63% of deal volume in 2022, followed by private equity (16.5%), private debt (13.5%) and infrastructure (7%) deals.

    –       Despite 49% of climate-related private capital investments that took place in Africa between 2012 and 2022 being in technology or tech-enabled companies or projects, Africa attracts just 0.2% of climate-tech investments globally.

    –       Significant investor interest in Clean Energy and Tech culminated in 333 deals worth US$14 billion (81% of private capital deal value) in the decade to 2022; Climate Solutions witnessed 251 deals completed worth US$2.3 billion; and Low Carbon accounted for 96 deals worth US$0.3 billion – the lowest but growing at a CAGR of 23%, between 2002 and 2022.

    –       Utilities was the leading sector by deal value, attracting 84% (US$14.6 billion) of capital. It was also the most active sector by deal volume (42%), followed by Information Technology (18%), and Consumer Discretionary (13%).

    –       Investments in Utilities are dominated by renewable energy deals with solar as the major player, attracting 49% of deal activity by virtue of interest in its utility scale projects to decentralised mini-grids.

    –       This ultimately drives investment in the Information Technology sector in which manufacturing of semiconductors – a critical component in renewable energy technology – accounts for 55% of deal activity, capitalised by venture funding.

    –       Geographically, East Africa has experienced the largest deal volume, with 32% of deals struck in the region, spearheaded by Kenya. West Africa witnessed the highest inflows with 25% of all green capital channelled into the region, spurred by a series of investments totalling US$2.7 billion in Ghana. Strong performance in South Africa contributed to Southern Africa attracting 18% and 19% of deal volume and value respectively.

    Opportunities and Barriers to Climate Financing in Africa

    The AVCA and TBI survey of private sector climate investors revealed:

    –       82% of investors see a strong business case and sufficient financial incentive for climate investments.

    –       The most attractive sectors for climate investment are renewable energy (71%); agriculture (47%); transport (35%).    

    –       Only 6% consider Africa to have high investment readiness to leverage climate resilient investment.

    –       A lack of large bankable investment opportunities (71%), a high risk to return profile (53%), and unclear climate policy objectives at a national level (41%) are the three largest barriers to private investment.    

    –       Climate risk assessment is an increasingly prevalent part of fund and investor considerations.

    Strategies Striving For Greater Green Investment

    The report also compiles insights from private investors at the forefront of Africa’s transition to a more sustainable economy, who share recommendations across three main categories:

    –       Understanding climate risks and opportunities: practical actions fund managers can take to better understand and address climate related risks at the firm level, at the portfolio level, and across target sectors.

    –       Climate risk assessment and portfolio management: recommendations on how fund managers can integrate climate assessments in their portfolio management processes.

    –       Climate, policy, internal alignment and goal setting: leading practice for the cross functional integration of climate considerations into investment processes as well as the organization’s structure, values and human resources

    In addition to ensuring rigorous climate risk and opportunity assessments are embedded in private capital investment frameworks, recommendations for public sector included:

    –       Closing gaps relating to institutional capacity and knowledge within the government, which will build a stronger technical foundation for decision making and encourage cross-ministerial collaboration

    –       Outlining clear pathways to a just transition will deepen government capacity to employ green budgeting, an understanding of how much public finances are dedicated to what green initiatives

    –       Considering it is such a significant source of climate-related funding, governments should aim to align official development assistance (ODA) with innovative and inclusive green growth opportunities

    Commenting on the findings of the report, Nadia Kouassi Coulibaly, Head of Research at AVCA said, “The climate financing trajectory is certainly on the right path but the urgency of the crisis across Africa demands it is accelerated. The areas in need of support are evident and stakeholders require a clear development path. A clear plan will help realise their bold but necessary commitments to strengthening Africa’s climate resilience and mobilise greater private capital participation.”

  • African private capital activity remains remarkably resilient despite global uncertainty and volatility

    African private capital activity remains remarkably resilient despite global uncertainty and volatility

    … Private and venture debt emerge as an important source of inflows

    Today, the African Private Capital Association (AVCA) announced the release of its 2022 African Private Capital Activity Report. The authoritative annual report offers deep insights into private capital fundraising, investments and exits in Africa, sharing extensive data and analysis across investment strategies covering private equity, private debt, venture capital, infrastructure, and real estate activity – across all subregions.

    African private capital markets experienced a record-high volume of deals in 2022. As a result, deal volumes in the region recorded a remarkable 46% year-over-year (YoY) growth. In 2022, 626 deals took place, a favourable increase amidst broader global trends, where deal volumes and value retreated in line with growing economic uncertainty into H2 2022, declining by 15% and 26%, respectively.

    The report reaffirms Africa’s position as a bankable investment destination and is the only market worldwide to have experienced growth in both the number of deals closed and capital invested. US$7.6bn of private capital was invested in 2022, marking a 3% year-on-year growth in deal values across the continent throughout 2022. This activity was driven by record growth in mid-market (US$10mn – 49mn) and larger-sized (US$50mn – 100mn) deals. Catalysed by venture capital deal flows, 2022 attracted the second-highest private capital investment over the last decade.

    On the other hand, while the fundraising value in 2022 experienced a 54% YoY decrease, more funds raised capital in 2022 than the year before. Much of this activity was led by capital raises between US$100mn and US$250mn.

    Venture capital continues to dominate private financing

    Reflecting Africa’s changing demography, VC was the most active asset class, accounting for 74% of the total private capital deal volume and over half of private capital deal value. As a younger, more tech-oriented population drives interest in disruptive sectors – investments in tech secured the largest part of all investments recorded last year on the continent.

    According to the new report, regulatory reforms involving greater protection of intellectual property rights and removing barriers to accessing funding sparked innovation in the start-up ecosystem, boosting investor confidence. This has encouraged more investment into industries integrating technology into their services, such as healthtech, which is moving upwardly.

    Private equity activity in Africa experienced a resurgence, with a 24% YoY increase in the number of deals, and a 31% YoY increase in the value of those deals. Private debt, an asset class offering diversification and investment protection during periods of economic volatility, attracted significant interest in 2022 with activity in the asset class across Africa growing 7.2x YoY.

    Investors continue commitments to familiar regions and sectors

    West Africa witnessed the most private capital deals on the continent, spearheaded by Nigeria, with over half of the deals in the region concluded in Africa’s largest economy.

    The growth of private equity in South Africa, the continent’s most industrialised economy, reversed years of decline in investments in the wider Southern African region. Last year saw a surge of activity in the region boosted by growth in deal values increasing across Private Equity and Infrastructure.

    Investment activity in North Africa continued to gain traction and noted a 52% YoY increase in deal volume in 2022, while the deal value in 2022 near-doubled the investment value recorded in the previous year. East Africa also experienced a rise, with a 71% increase in deal volume and a 4x increase in deal value, marking its highest-grossing year in a decade.

    Multi-region investments accounted for the largest deal volume, with investors channelling 37% of the total value of investments into portfolio companies with operations in more than one African economy. The Financials sector has benefited from this borderless approach. The sector’s prominence across private capital deal volume (29%) and value (32%) made it the most attractive sector again, a trend expected to continue. Consumer discretionary services, holding the second position, have been lifted by growing interest in the education, hospitality, and retail sectors.

    Companies exit record number of investments

    Last year marked a record number of successful exits, with 82 exits spread across all sub-regions. The 2.3x YoY increase in exits across Africa, dominated by the financial sector, follows a bottleneck of delayed exits post-Covid. Last year, private capital fund managers prioritised asset disposal, the majority of which occurred in North Africa. Trade sales comprised nearly half of all exits, with PE and financial buyers accounting for nearly a quarter. Exits through IPOs and capital markets marked a record high.

    Abi Mustapha-Maduakor, Chief Executive Officer at AVCA, commented: “In the face of highly challenging global economic conditions, our industry saw an impressive number of exits – the most in history. The growing diversity of asset classes in the private capital ecosystem unlocks broader investment opportunities across exciting geographies and represents a marketplace finding more solutions in response to our transforming economy. We are delighted to see strong performance in venture capital and growth in private equity and private debt. As our industry matures, AVCA’s metrics mark the evolution. We look forward to building on our organisation’s role as an enabler of growth and investment.”

    Download the new report here or see the attached

  • Investor confidence in Venture capital in Africa stays strong at a time of global uncertainty

    Investor confidence in Venture capital in Africa stays strong at a time of global uncertainty

    …AVCA announces the release of the Venture Capital in Africa report

    Today, the African Private Capital Association (AVCA) announced the release of its 2022 Venture Capital in Africa Report. The anticipated report – which captures VC performance in Africa by deal volume, value, and investment stage – indicates the industry’s resilience during global uncertainty.

    Emerging from a year of robust VC activity, private capital inflows continue to propel economic growth and inclusion across the continent. The new report is a comprehensive overview of Africa’s innovation ecosystem, providing critical insights into the sub-regions, countries, and sectors that have cemented Africa’s rising position as a region for VC activity globally and the increasing importance of early-stage investment on the continent.

    In the wake of the Covid pandemic and the resulting capital injection, central banks responded to looser monetary policy. Interest rates climbed through the year, seeking to rein in rampant inflation against wider economic and geopolitical instability. The preceding shook the global venture funding landscape which shrunk by 32% from the US$681 million invested in 2021.

    The slowdown in the tech sector, historically the largest driver of venture capital activity, contributed to a wider decline. North America and Asia are two key markets for investment in tech, which despite attracting the most capital, also accounted for 73% of the global VC industry’s funding deficit. Africa’s closest socio-economic comparator, Latin America, saw funding reduced by more than half.

    Despite more cautious capital deployment around the globe, capital commitments in Africa remained strong. By comparison, Africa’s 21% year-on-year growth in deal volume was 3 times that recorded in Asia (7%), the only other region to record positive year-on-year growth in deal volume. Looking more broadly, Africa’s single percent drop in deal value from the previous year illustrates how the region was largely unaffected by heightened risk-off investor sentiment experienced in other markets across the globe, which resulted in contractions in start-up funding.

    Africa’s venture funding market was valued at US$6.5 billion across 853 deals, including US$1.3 billion of venture debt. Deal volume in Africa last year experienced an industry record, highlighting a near-decade of continuous growth and a compound annual growth rate (CAGR) of 31% between 2014 and 2022. Contributing to this growth is the increased participation of start-ups raising capital for the first time, accounting for 37% of deal volume. 

    A reduction in big-ticket investments aligns with the global trend of fewer late-stage deals influenced by challenging macroeconomic conditions. However, younger companies in Africa attracted the majority of venture funding across the continent, a testament to accelerated levels of ambition, entrepreneurship, and pioneering enterprise.

    Innovation was rewarded with venture funding, as seed-stage funding accounted for the majority of the continent’s VC deal activity while also demonstrating the highest year-on-year growth. The volume of early-stage (Series A and B) investment deals grew by 25% between 2021 and 2022, increasing median deal value to US$10 million, the highest globally – surpassing North America and Asia and closing the gap with Europe, and signifies Africa’s rapid growth trajectory. With over three-quarters of Africa’s funding originating from foreign investors, primarily composed of fund managers and investment firms based overseas, AVCA’s research indicates sustained investor confidence in the region.

    The repeated investment in businesses was equally encouraging, highlighting investors’ long-term commitment to companies and their onward growth. The report details how 8% of early-stage investments were made in the same company more than once in 2022, while 409 unique companies received additional venture capital following investments in previous years. Continued investments contribute to the sustainability of these companies, the employment they generate, and the increasing impact they deliver, catalysing more robust commercial and social ecosystems.

    A combination of early-stage investment and 15 super-sized deals valued at US$100 million or more represents a growing maturity across the African VC industry. Maintenance of value amidst tighter global VC activity is another indicator of this evolution, supporting positive investor sentiment across the continent. This has also translated into an impetus to break barriers. Despite room for more growth, over a quarter of start-ups that received venture financing were either female-founded or included at least one female in the founding cohort.

    North, West and East Africa dominate deal volume and value

    Of the 786 VC deals, 235 were in West Africa, again recording the highest volume of deals across the continent, followed by North Africa (178) and East Africa (168). With US$1.1 billion, North Africa led deal values across the continent, as East Africa attracted US$899 million and West Africa secured inflows of US$843 million. Powerhouse economies Nigeria, Egypt, South Africa, and Kenya remain the most attractive locations for venture capital investment, accounting for 64% of deal volume and 51% of deal value combined.

    North Africa’s prominence in the venture ecosystem is best highlighted by a CAGR of 57% in investment volume and 120% in investment value between 2017 and 2022. Spearheaded by Egypt, economies including Morocco and Tunisia drove further growth. The three countries saw 170 deals with a reported value of US$798.5 million, dominated by the Information Technology, Consumer Discretionary and Industrials sectors.

    Further, the continued interest in investments across multiple sub-regions is illustrated in the US$1.84 billion of inflows directed to start-ups with a multi-regional geographic footprint. Accounting for 10% of deal volume but a significant 35% of deal value speaks to the size of each investment and more companies’ ability to drive geographic expansion.

    Business as usual for sector focus

    Financials (31%), Information Technology (15%) and Consumer Discretionary (15%) were the three most active sectors by volume for the third year running in 2022, highlighting the prevailing areas of growth. The dominance reflects Africa’s evolving demography, improved connectivity and the changing nature of African consumerism. Driven by technology-enabled services, new products and merchants are reaching new demographics, notably a young, digitally savvy, urban workforce.

    A market opportunity of 300 million Africans within digital banking encapsulates the dominance of the Financials sector. More bespoke solutions and improved accessibility are also catalysing VC activity in this sector, valued at US$2.2 billion in 2022. Industrials, valued at US$819 million, is being driven by mobility technology and commercial and professional services such as software improving human resource management. Investment in these areas exemplifies Africa’s place as a region of interest, innovation and world-class service delivery.

    Sector focus within venture debt shows some similarities, with financials (30%), utilities (28%) and industrials (15%) responsible for the majority of activity. Venture debt also accounted for four super-sized deals, in excess of US$100 million, while venture capital saw 11 deals of this size. 

    Abi Mustapha-Maduakor, Chief Executive Officer, AVCA, commented: “Resistance against rippling effects of Covid-19 and global economic headwinds is a reminder of the high-quality investment opportunities on the continent. Despite lower participation by impact investors last year, as experienced globally, the impact continues to be achieved in Africa through a more connected marketplace that drives tech-enabled solutions from healthcare to education. Intuitive entrepreneurs and efficient capital allocation are transforming lives as a maturing VC industry continues to create longevity and opportunities for African industries and societies to reshape the future.”