The recently released Venture Capital in Africa Report by AVCA, the African Private Capital Association, has disclosed that Africa attracted $5.4 billion venture capital and debt in 2023.
The annual report on venture capital performance in Africa is a comprehensive overview of Africa’s innovative ecosystem, offering critical insights into the sub-regions, countries, and sectors that have nailed Africa’s rising position as a region for venture capital (VC) activity.
According to the report, 2023 was a year of major socio-political and economic upheaval, which led to a global funding winter where investors prioritized safer assets rather than VC investments.
The global VC ecosystem has witnessed a steady global decline since 2022, dropping to $285 billion in deal value in 2023, compared to $690 billion in 2021.
The overall effect is a market size which represents 41 percent of capital invested in 2021, implying a contraction of venture funding around the globe in 2023.
In response to the market headwinds, some trends in Africa’s VC environment, which have remained relatively consistent year-on-year (YoY), have been disrupted while other trends have not changed.
For the first time in around a decade of consistently strong growth, the number of venture capital deals in Africa dropped by 31 percent YoY to 545 from the record-setting 787 deals agreed in 2022.
In addition to the global downward trend of venture capital, investors encountered currency volatility and persistently high inflation in Africa which prompted investors to back prospects in portfolio companies with an proven track record rather than new ventures.
