Rapid growth in venture capitalist investments in Southern African – with early stage tech start-ups taking the lion’s share of the VC pot – is a sign of the region’s growth potential.

This is especially true given the slowdown in venture capital funding commitments globally.

This is according to Nicola Gubb, interim executive director of the Southern African Venture Capital Association (Savca). Savca released its 2025 Venture Capital Industry Survey this week.

“Despite global economic uncertainties and constrained exit environments, our region’s VC ecosystem has demonstrated remarkable tenacity – growing by 24.4% year on year to reach a record R13.35-billion in active investments across 1 325 deals,” Gubb said in the report.

“The technology sector continues to lead the way, accounting for nearly two-thirds of total investment. Yet we’re seeing encouraging signals from other critical areas, like healthtech.”

Savca’s annual VC survey analyses deal activity of venture capital and similar early-stage investments mainly in South African businesses. The report is based on data sourced from various funders, including Savca members, ranging from individuals and angel investors to corporations and governments. The 2025 report covers the 2024 calendar year.

More companies funded

VC fund managers were the primary respondents to Savca’s survey and reported steadily increasing their annual investments, in both capital and number of deals, with co-investment activity playing a significant role in increasing investment activity.

The survey found that investment activity in the 2024 calendar year comprised 222 rounds in contrast to the 184 in 2023. The number of individual companies to which funding flowed also increased 17% year on year from 94 in 2023 to 110 in 2024. However, the total value of equity deals fell 20% from R3.28-billion in 2023 to R2.62-billion in 2024.

Read: VC investments in tech see big growth in South Africa

Savca said the 2025 survey is the first one where fund managers reported debt advanced to investment alongside equity. Of the R3.29-billion allocated to start-ups in 2024, R2.69-billion flowed into equity deals. with R1.22-billion resulting from co-investments and R670-million from debt financing.

Venture debt refers to loans offered to early-stage, high-growth companies with existing venture capital backing to provide liquidity to a business for the period between equity funding rounds. Venture debt includes convertible notes, mezzanine debt, private bonds and direct lending when they occur in isolation. Only pure debt deals are considered as venture debt. A mix of equity and debt is seen as part of VC funding, not as venture debt, said Savca’s report.

“Venture debt is increasingly used to fund early-stage activity around the globe, but it appears that while venture debt is being utilised by some South African VC investors and their portfolio companies, it is not yet a universally adopted financing method.”

According to the report, regional hubs such as the Western Cape and Gauteng “remain vital” to the venture capital industry. However, significant growth also occurred outside of South Africa’s borders.

At 20% of total VC funding share, health – which includes biotechnology, life sciences and medical devices – was the only sector besides ICT to show VC investment growth in 2024. Within the ICT segment, software (20%), fintech (16%) and online markets (7.6%) were the top performers.

Savca said investment rates into categories other than ICT, including consumer and business products, have remained relatively stable over the last three years, even though they have been declining since 2019.

“This may be attributed to start-ups placing greater emphasis on developing foundational technologies for external use, rather than pursuing direct commercialisation. Such deals are categorised by the respondents as ICT rather than consumer or business products & services,” said Savca.

Positive as the growth of South Africa’s VC market may be, Savca believes more capital can be unlocked if international funding channels are created. To do that, however, certain perceptions – like the idea that “South Africa has enough capital” – must be addressed.

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“Local institutional investors remain reluctant to back venture capital. This reality hinders international investors that are used to institutional capital being a major driver of VC investment,” said Savca. – © 2025 NewsCentral Media

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