Venture capital funding for African start-ups shrank again last year, though the share of homegrown investors advanced.
Inflows dropped 22% to US$3.6-billion compared with 2023, the London-based African Private Capital Association, also known as Avca, said in a report. That decline followed a 31% drop in 2023.
“While overall funding has contracted, we’re seeing strategic adaptations — higher-quality deals, sector diversification beyond fintech, increased venture debt utilisation and the strengthening role of African investors,” Avca CEO Abi Mustapha-Maduakor said in the report.
VC funds from investors based in the region advanced to 31% compared with 19% a decade ago, becoming the largest group of participants. Avca said the increase reflected the development of Africa’s domestic capital markets.
Fintech remained dominant, attracting 116 deals raising $1.4-billion, followed by clean and climate tech. Artificial intelligence made its first appearance among the top four most funded areas with 42 deals raising $108-million.
West Africa remained the most active VC region for the fourth year, accounting for 23% of total deal volume, topped by Nigeria with 16%, according to the report. Nigeria, Egypt, Kenya and South Africa accounted for 55% of deal volume and 64% of value.
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“We remain optimistic about the venture landscape in Africa, particularly as it offers investors unique exposure to fast-growing markets with demographic advantages and innovation potential compared to more traditional investment destinations,” he said. — Ruth Olurounbi, (c) 2025 Bloomberg LP
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