Venture capital investment in Africa has surged over the last six years, according to a report by the African Private Equity and Venture Capital Association (AVCA).

Venture capital (VC) firms invested a record $1.4bn into African start-ups last year (compared with $0.4bn in 2014), while the number of deals reached a six-year high of 139.


The AVCA report on African VC deal activity between 2014 and 2019 was published on June 24. 

Fintech and information technology were the leading start-up segments, both attracting 19% of the 613 VC deals recorded in the six-year period, followed by consumer discretionary (18%) and industrials (12%).

Financial services was the leading sector for greenfield foreign investors during the period, with 668 projects announced across the continent, according to greenfield investment monitor fDi Markets

Utilities and energy

African entrepreneurs have had success raising early stage funding in other sectors, such as utilities, driven by investor interest in start-ups developing green energy solutions.

While VC firms globally have begun to show interest in African start-ups, the AVCA report found the majority of investors involved in the VC deals were US-based, accounting for 40% of total investments. 

The next most active VC investors between 2014 and 2019 were based in South Africa (9%), the UK (8%) and Nigeria (4%).


Despite growth in the last few years, Africa lags other regions of the world. The continent accounted for a fraction of the $270bn of global VC funding in 2019, according to PitchBook data.

Southern Africa was the leading sub-region for VC investment – attracting a quarter of the 613 deals recorded between 2014 and 2019 – followed by East Africa (23%) and West Africa (21%). 

However, the AVCA report found that multi-regional VC deals accounted for half of the total value of VC investment in the period. One notable example is New York-based Andela, which raised $100m in 2019 to help build remote engineering teams across its campuses in East, West and North Africa. 

The sub-regions’ largest economies – South Africa (21%), Kenya (18%) and Nigeria (14%) – accounted for the lion’s share of VC deals across the continent, while Egypt (9%) and Ghana (3%) also performed well.

Supportive legislation

Despite VC investment being concentrated in a handful of economies, technology hubs have emerged in a number of African countries, as governments implement supportive policies to boost entrepreneurial ecosystems.

Senegal became the second African country to pass start-up focused legislation in December 2019, following Tunisia, which passed a pioneering supportive legal framework for start-ups and small businesses in 2018.

Both countries aim to create a better environment for innovation and entrepreneurship by providing tax breaks and reducing complexity of business regulations, said Alexia Alexandropoulou, a research manager at AVCA.

“Adopting such public policies dedicated to start-ups across Africa would create a robust and dynamic ecosystem for Afro-entrepreneurship to thrive, which in turn would stimulate increased and diversified VC investment in Africa,” she added.

Mali, Rwanda and Ghana were also developing supportive start-up legislation prior to the coronavirus crisis.

While the pandemic has posed serious socio-economic challenges to African start-up ecosystems, AVCA is sanguine about VC investment this year.

Several VC firms have managed to raise funds despite the tough market conditions, such as pan-African TLcom Capital which raised a $71m fund in February and invested $1m in Nigerian fintech Okra.

“We anticipate VC deal activity in Africa will remain stable as VC firms continue to deploy capital and support early stage businesses in Africa,” Ms Alexandropoulou said.