African investors emerged as the largest group of active participants in the continent’s venture capital (VC) space in 2024, accounting for 31 percent of the total investor pool, from just 19 percent a decade ago, according to the African Private Capital Association (AVCA).
This shift highlights the growing momentum in domestic capital formation, even as the verall investor participation declined by 21 percent to 614 active investors in 2024.
According to Davidson Oturu, general partner at Nubia Capital, Africa’s funding landscape is evolving. While foreign investors remain key players, global economic pressures are prompting them to become more cautious and selective.
“The role of local investors is becoming increasingly critical. When African investors back African startups, it fosters a sense of shared responsibility and ensures that more value is retained within the continent. Local investors also bring unique insights into the specific challenges and opportunities within African markets, which can be instrumental in guiding startups toward success,” he said.
He noted that 2025 may see a rise in blended funding models, with startups attracting a mix of local and foreign capital.
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AVCA’s ‘The 2024 Venture Capital in Africa Report’ further disclosed that 2024 was a challenging year for African startups with a 22 percent year-over-year (YoY) drop in deal value and a 28 percent decline in deal volume.
Total funding on the continent stood at $3.6 billion across 487 deals, including $1 billion in venture debt. Africa’s share of global VC funding remained below 1 percent.
Abi Mustapha-Maduakor, chief executive officer of AVCA, said, “While overall funding has contracted, we are seeing strategic adaptations—higher quality deals, sector diversification beyond fintech, increased venture debt utilisation, and the strengthening role of African investors.
“These responses reflect a maturing market that continues to present compelling opportunities.”
One indication of maturity is the competitiveness of African startups at later funding stages. AVCA reported that at Series B and C levels, African startups posted median deal sizes of $29 million and $38 million, respectively, outpacing global averages of $21 million and $35 million.
While this suggests that African startups can compete globally, AVCA noted it may also indicate higher capital requirements at later stages, potentially reflecting the continent’s unique market challenges.
Read also: African startup funding drops 5% amid declining mega deals
Over the past decade, venture capitalists have deployed nearly $50 billion into Africa. Though still small compared to other regions, this signals the ecosystem’s promise and long-term potential, according to AVCA.
West Africa led the continent in terms of deal volume, driven by Nigeria’s $417 million raise. The region recorded 113 deals with a total reported value of $493 million. However, it trailed southern and northern Africa in total deal value.
Southern Africa led the pack with 78 deals worth $754 million, followed by northern Africa (110 deals at $561 million) and eastern Africa (112 deals at $472 million). The continent’s four biggest markets, Nigeria, Egypt, Kenya, and South Africa, accounted for 55 percent of all deal volume and 64 percent of total value.
Sector-wise, fintech remained dominant, attracting $1.4 billion across 116 deals, 34 percent of all tech-enabled rounds. CleanTech and ClimateTech climbed to 13 percent of deal volume, up from a five-year average of 7 percent. Artificial Intelligence also debuted among the top four most-funded sectors, drawing $108 million across 42 deals.
Globally, venture capital activity in 2024 totalled $314 billion across more than 23,000 deals, slightly above 2023’s $305 billion.
It added, “2024 was neither a year of celebration nor collapse. Instead, it was a year of reckoning: marked by cautious steps, tempered expectations, and quiet recalibration.”
According to ‘Africa: The Big Deal,’ startups on the continent raised $2.2 billion in equity, grants and exits in 2024, down 25 percent from $2.9 billion in 2023 and 53 percent below the $4.6 billion raised in 2022.
In the first quarter (Q1) of 2025, African startups raised $460 million, a five percent dip from the $486 million recorded in the same period of 2024, the data insight firm that tracks deals of $100,000 and above noted.
