Our fourth edition of the AVCA Venture Capital in Africa report presents an overview of the venture capital ecosystem. 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.
Summary of Key Findings:
Overall, 2022 was undoubtedly a challenging year for VC investment globally, with total global venture capital climaxing at $445 billion for the year. Venture capitalists put US$100 billion more to work last year than they did in 2020, despite tighter investor purse strings and an increasingly unfavourable funding climate in 2022. VC funds were, however, sitting on a record US$586 of dry powder in 20226, on the back of strong fundraising activity the previous year. This, therefore, begs the question – were the low deployment levels and decrease in activity during 2022 only considered so when compared to the stratospheric levels of 2021, but otherwise strong when viewed in isolation? Or does it represent the beginning of a downturn in global venture funding?
Africa raised US$5.2 billion in venture capital across 786 deals in 2022, representing 3% of the total volume and 1.2% of the total value of global venture funding in 2022. While the global venture market experienced significant contractions in
startup funding to varying regional degrees, Africa’s venture ecosystem was relatively
stable and only experienced a funding drop of less than US$50 million compared to 2021. Comparatively, Latin America saw the biggest YoY declines in startup funding to the tune of 59%, followed by Asia which saw contractions of 35%. Consequently, the funding gap between Africa’s closest socio-economic comparator, Latin America, saw a near-fivefold decrease from US$14.8 billion in 2021 to US$3.1 billion in 2022.
Although the volume and value of venture capital in Africa is relatively small compared to other regions such as North America and Asia, it has been growing steadily in recent years and shows potential for further growth in the future.
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