Over 613 venture capital (VC) deals reported since 2014-19 indicates a positive trend for the African innovation and start-up ecosystem. The African private equity landscape is changing, as we witness growth in PE and VC investments. There has been a dramatic shift in external capital inflows, which are now dominated by Foreign Direct Investment (FDI) instead of Official Development Assistance (ODA).
In 2017, more than 27 countries receive more FDA than ODA, as opposed to 17 countries in 2012. Macroeconomic growth in the continent averaged at 4.6% from 2000 to 2016, driving significant VC attention.
In 2019, Africa’s GDP was slightly above the world average and was the second-fastest-growing region internationally. Powered by a youthful population, growing middle class, and the world’s largest FTA, we can expect stronger PE and VC funding.
VC activity is one the rise, recording 6-year record highs in 2019. Fintech has dominated the investment arena for a while now, but advances in utilities, e-commerce, logistics & transportation, and agribusiness and healthcare are equally at par.
Startup ventures in South Africa, Kenya, and Nigeria have attracted the most funding since 2014. According to the AVCA report, South Africa led at 21%, Kenya 18%, followed by Nigeria at 14%.
A fifth of the companies that attracted VC investment deals were headquartered outside the continent. They accounted for 21%. Of this figure, 53% of the startups are based in the United States.
In that 2014-2019 period, 65% of VC deals reported were below $5 million. Only 3% made it over the $50 million mark.
You can get the African Private Equity and Venture Capital Association “Mapping Africa’s start-up investment landscape” report, here