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$5.4b venture capital enters Africa in 12 months

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The African Private Capital Association (AVCA) Venture Capital in Africa report, has revealed that Africa attracted $5.4 billion venture capital and debt in the past 12 months.

The annual report on venture capital performance in Africa is a comprehensive overview of Africa’s innovative ecosystem, providing critical insights into the sub-regions, countries, and sectors that have cemented Africa’s rising position as a region for venture capital (VC) activity.

It provides an analysis of the latest trends and development of Africa’s start-up investment landscape and the profile of the investors active on the continent.

The report said 2023 was a year of significant socio-political and economic upheaval, which led to a global funding winter that saw investors prioritise safer assets rather than VC investments.

The global VC ecosystem has seen a steady global decline since 2022, falling to $285 billion in deal value last year, compared to $690bn in 2021.

The cumulative effect is a market size that represents 41 per cent of capital invested in 2021, signifying a contraction of venture funding around the globe in 2023.

In response to these market headwinds, some trends in Africa’s VC ecosystems– which have remained relatively consistent year-on-year (YoY), Diaspora Digital Media observes, have been disrupted while other trends remained the same. For the first time in almost a decade of consistently strong growth, the number of venture capital deals in Africa decreased by 31 per cent YoY to 545 last year from the record-setting 787 deals struck in 2022.

Added to the global downward trend of venture capital, investors faced currency volatility and continued high inflation in Africa, prompting investors to back prospects in portfolio companies with an established track record rather than new ventures.

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