African Venture Capital Hits $3.6bn

African Private Capital Association (AVCA), said Africa secured $3.6 billion in venture capital funding, including $1.0 billion from venture debt.

This was released in the AVCA 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 stated that 2024 was a challenging year for African startups, noting a 22 per cent year-over-year (YoY) decline in deal value and 28 per cent drop in deal volume.

While global venture capital value rose six per cent and volume fell 24 per cent, Africa’s sharper contractions reflect the continent’s delayed downturn cycle. Venture debt lenders comprised only 12 per cent of deal volume yet generated 37 per cent of VC deal value in 2024. The three per cent YoY increase in deal value and volume signals continued investor appetite for the asset class.

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The geographic distribution revealed that West Africa maintained its lead as the most active region for the fourth consecutive year, accounting for 23 per cent of total deal volume, with Nigeria leading at 16 per cent. The ‘Big 4’ markets (Nigeria, Egypt, Kenya, South Africa) represented 55 per cent of volume and 64 per cent of value.

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

In a significant milestone, African investors emerged as the single largest group of active participants in VC, representing 31 per cent of the total investor pool compared to 19 per cent a decade ago. This underscores the momentum in domestic capital formation despite overall investor participation declining 21 per cent from 2023 to 614 active investors.

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

The CEO of AVCA, Abi Mustapha-Maduakor said, “the data demonstrates how Africa’s venture ecosystem is responding to global challenges with notable resilience.”

He stated that “while overall funding has contracted, we are 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.”

AVCA, the African Private Capital Association is the nexus of private capital in Africa, championing and enabling private capital investment in Africa.