Private capital investment in Africa in first half (H1) 2022 received a total deal volume of 338 deals with a cumulative deal value of $4.7 billion.
Three main factors contributed to strong deal activity and they include; 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.
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 $3.5 billion, raised by 300 unique companies.
This equates to a 133 per cent year-on-year increase from 2021 H1. The 2022 H1 African Private Equity and Venture Capital Association(AVCA) report predicts that the total value of VC deals will reach $7 billion by the close of 2022, a 35 per cent year-on-year (YoY) increase from the $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 per cent) leading. Interestingly, East Africa has now surpassed North and Southern Africa, attributable to Kenya achieving the second largest share of deals by value ($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 per cent) and value (44 per cent). Three sectors emerged from the margins to the mainstream in 2022 H1: Health Care (50 per cent YoY growth); Education (64 per cent YoY growth) and Utilities (23 per cent YoY growth).
Head of Research at AVCA, Nadia Kouassi Coulibaly, said: “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.”
The African Private Equity and Venture Capital Association is the pan-African industry body, which promotes and enables private investment in Africa.
