2023 Venture Capital Activity in Africa

This report offers a collection of exclusive insights spotlighting the development of and global comparison for venture capital in Africa; exploring the regions and sectors leading venture capital deals across the continent in 2023.

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Key findings:

  • Market Size: Africa attracted a combined US$4.5bn in venture capital and venture debt investment in 2023, across 603 deals. 

  • Regional Focus: West Africa maintained the top spot for the third consecutive year, with Nigeria as the most active country both in the region and on the continent by deal volume.  

  • Southern Africa was the only region to register positive year-on-year growth in 2023 at 20%. 
  • Super-Sized Deals: 10 super-sized deals took place in 2023 accounting for almost half of the total deal value at US$1.9bn.

  • Sector Focus: The Financials sector maintained its position as the best-funded vertical with 23% of deal volume and 48% of deal value.  
  • The Information Technology sector was the second-most active sector in terms of volume with 107 deals concluded in 2023.

  • Climate-related investments gained momentum in 2023, rising to close to US$790mn

  • African startups employing AI-related technologies raised US$641mn across 103 deals between 2022 and 2023 

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🌍 Venture capital in Africa is maturing.     
The fifth edition of AVCA’s Venture Capital in Africa report by #AVCAResearch deep dives into developments shaping Africa’s #startuplandscape and chronicles the maturation of Africa’s entrepreneurial space between 2014 and 2023. 

Download the full report for more insights: https://bit.ly/3TA47ot 

#AfricanVC #Entrepreneurship #GlobalInvestments #AfricaRising #InnovationInAfrica #AVCAResearch 

🌍 African #VentureCapital in a Global Context 
In 2023, venture capital deal values across the globe shrunk by more than a third compared to levels attained in 2022, including in North America and Asia where funding declines were responsible for a significant proportion of the global funding drop in 2023.  

No continent was exempt from the downturn in venture capital investment, ranging from Asia's 28% contraction in deal volume at the lowest end of the spectrum to the far more significant 64% contraction registered in Latin America. In Africa, the US$4.5 billion raised across 603 deals in 2023 corresponded to a 31% decrease by volume and a 30% decrease by value when compared to 2022.
The 2023 Venture Capital Activity in Africa report by #AVCAResearch breaks down the distribution of this venture capital on the continent: https://bit.ly/3TA47ot 

By Investment Stage

🤝 Smaller Deals Continue to Drive African VC Activity in 2023 
🔸 Nearly half (45%) of VC deals were US$5mn or less. Two in five deals in this group were under US$1mn, showcasing the prevalence of smaller ticket sizes. 
🔸 The seed stage, with a median deal value of U$1.2 million, was responsible for over a third (37%) of venture deal flow to startups on the continent last year.
This trend suggests a cautious investment climate that favoured smaller and less capital-intensive investments, but could it also present new opportunities for early-stage investors? 
Download the full report for more insights: https://bit.ly/3TA47ot 
#VentureCapital #Africa #Startups 

By Sector

💡 Latest report by AVCA reveals headline sectors in Africa’s 2023 VC landscape 

📲 #Fintech in Africa:  

AVCA’s 2023 African #VentureCapital Activity report reveals that Financials continued to rule the roost as the most active sector for investment on the continent, accounting for:  
▶️ 23% of all deals by volume  
▶️ Nearly half (48%) of the total deal value  
This highlights the growing importance of #financialinclusion and innovation in Africa. From fintech #startups disrupting traditional banking to neo-banks offering new financial services, African entrepreneurs are redefining the financial landscape.  

💻 #InformationTechnology 
I.T followed closely with: 
▶️ 107 deals concluded in 2023 
This pace of dealmaking brought I.T into the top 3 sectors by deal volume, highlighting the ongoing innovation and digital transformation within African economies. Companies providing SaaS, affordable internet, and cyber security services drove considerable attention from investors.   

🌱 #CleanTech and #ClimateTech 
Growing momentum on sustainable solutions attracted increasing capital: 
▶️ 87 deals in 2023 with a total value of US$471mn, up from 80 such deals in 2022 
▶️ Clean and ClimateTech emerged as the second most active vertical amongst technology or tech-enabled startups that successfully raised venture capital in 2023 

🤖 #ArtificialIntelligence   
The report shows early signs of investor confidence in Africa’s AI capabilities: 
▶️103 VC deals with a total value of US$641mn between 2022-2023. 
▶️a focus on the application of AI to leapfrog legacy infrastructure and revolutionise traditional sectors such as finance and healthcare.

Download the full report for more insights: https://bit.ly/3TA47ot 

By Region

🌍 Mapping Africa's 2023 VC Landscape by Region

⚡ West Africa: a VC Powerhouse  
#WestAfrica maintained the top spot for the third consecutive year, attracting 26% of all deals across the continent, driven by:  
🔸 Nigeria leading the pack with 19% of total deal volume.  
🔸The region’s private capital landscape fostering innovation and attracting investment.  

⭐ Southern Africa Signals Return to the Forefront of African VC 
#SouthernAfrica emerged as joint runners-up concluding the year with 114 venture capital transactions and total reported value of US$577mn, up from US$481 million in 2022. 
🔸 This marks a significant rebound for the region after a few years (2020-2022) of steady declines in deal activity. Southern Africa was the only region to register positive year-on-year growth in 2023 at 20%, signalling a return to the forefront of venture capital on the continent. 

Download the full report for more insights: https://bit.ly/3TA47ot 
#AfricaVC #Startups #Nigeria #AfricanPrivateCapitalAssociation  

By Gender

✨ Diversity in African #VentureCapital! 
AVCA’s 2023 #VentureCapital report reveals 27% of funding recipients were led by female founders or diverse teams, maintaining the steady stream we saw in 2022. 

The year welcomed a few more names into these influential roles. South African fund manager Edge Growth Ventures named Janice Johnston as their new CEO in July 2023; Christine Namara joined Flat6Labs as Partner overseeing the firm’s US$95 million Africa Seed Fund; and Aduna Capital, led by General Partner Surayyah Ahmad, announced the firm’s US$20 million maiden fund, with a goal of having 50% female participation in the firms it supports. 

While there’s still a way to go, this positive step underscores the growing importance of inclusivity in Africa’s startup ecosystem. Together we can advocate for a future where diverse voices and perspectives are empowered to drive innovation and success.

Download the full report for more insights: https://bit.ly/3TA47ot 
#AfricaVC #Startups #GenderEquality #Inclusion #femalefounders 

By Investor Location

🌍 International Investors Pull Back From Africa: A Shift in Sentiment?

🔸Dramatic drop in active investors: Compared to a record-breaking 2022, the number of investors active on the continent decreased by 33% in 2023. 
🔸 North American Exodus: This decline was primarily driven by North American investors, who accounted for 50% of the withdrawal. 
🔸Shifting Priorities: This retreat reflects a broader cachange in investor sentiment due to worsening global market conditions. 

💡 What does this mean for #VentureCapital in Africa? 
🔸 It highlights the cyclical nature of international investor engagement with Africa; with foreign investment often influenced by global economic trends; 
🔸 and underscores the importance of indigenous capital with a long-term view for Africa’s growth. 

Download the full report for more insights: https://bit.ly/3TA47ot 
#AfricaVC #InvestmentTrends #GlobalMarkets 

We look forward to hearing your thoughts