Despite Headwinds, Nigeria Leads as Africa Raises $3.6bn in Venture Capital

Emmanuel Addeh in Abuja

Despite a 22 per cent year-on-year decline in deals value and 28 per cent drop in volume, Nigeria led the African continent with 16 per cent of the total $3.6 billion Venture Capital (VC) deals in 2024, a new report by the African Private Capital Association (AVCA), revealed yesterday.

Essentially, venture capital is a form of private equity financing provided to startup companies and small businesses with the potential for long-term growth. It’s money invested in exchange for partial ownership of a company.

The 2024 Venture Capital in Africa report is a comprehensive analysis which provides in-depth insights on market trends, fundraising, exits and investor dynamics, backed by AVCA’s  decade-long data sets.

The geographic distribution revealed that West Africa maintained its lead as the most active region for the fourth consecutive year, accounting for 23 per cent of total deal volume, with Nigeria leading the pack at 16 per cent.

“Africa’s entrepreneurial ecosystem collectively secured 487 deals in 2024. This was distributed as 427 venture capital deals with a value of $2.6 billion and 60 venture debt deals worth $1 billion,” the document stated.

According to the report, the ‘Big Four’ markets on the continent: Nigeria, Egypt, Kenya, South Africa, represented 55 per cent of volume and 64 per cent of value during the 12 months under consideration.

FinTech remained dominant with 116 deals raising $1.4 billion (34 per cent of all tech-enabled rounds), while Clean & ClimateTech rose to 13 per cent of tech-enabled deal volume, up from a 7 per cent five-year average.

In addition, Artificial Intelligence (AI) made its first appearance among the top four most funded verticals with 42 deals raising $108 million.

In a significant milestone, African investors emerged as the single largest group of active participants in VC, representing 31 per cent of the total investor pool compared to 19 per cent a decade ago.

“This underscores the momentum in domestic capital formation despite overall investor participation declining 21 per cent from 2023 to 614 active investors.

“The fundraising environment showed remarkable resilience, with eight funds closing at $736 million in 2024 alone, a 41 per cent YoY increase that underscores the positive, long-term growth of Africa’s VC ecosystem despite global headwinds. Since 2015, 35 fund managers across 41 funds have raised $2.7 billion in final closes, reflecting a 25 per cent Compounded Annual Growth (CAGR),” it added.

The exit landscape, the report said, is gaining momentum, with 138 exits recorded between 2019 and 2024—reflecting a clear upward trend over time, despite remaining flat in 2024 with 26 exits recorded.

Trade sales continued to dominate that year, accounting for 84 per cent of all exits with an average holding period of three years, eight months.

Chief Executive of AVCA, Abi Mustapha-Maduakor, CEO said: “The data demonstrates how Africa’s venture ecosystem is responding to global challenges with notable resilience. 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.

“These responses reflect a maturing market that continues to present compelling opportunities. 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.”

AVCA is the nexus of private capital in Africa, championing and enabling private capital investment in Africa. As the pan-African industry body,  AVCA said it plays a significant role as an effective change agent for the industry and acts as the trusted independent source of information, insight, and intelligence, inspiring investor confidence and making the case for both commercial returns and the impact of private capital in Africa.

The sixth edition of AVCA’s annual report revealed that Africa experienced a market correction a year after global markets, with the continent reaching its funding low in H1 2024—highlighting the delayed but pronounced impact on dealmaking during a period of inflation, supply chain disruptions and geopolitical shocks.

The report found that 2024 was a challenging year for African startups, noting a 22 per cent year-over-year (YoY) decline in deal value and 28 per cent drop in deal volume. While global venture capital value rose 6 per cent and volume fell 24 per cent, Africa’s sharper contractions reflect the continent’s delayed downturn cycle.

According to the document, venture debt lenders comprised only 12 per cent of deal volume yet generated 37 per cent of VC deal value in 2024. The 3 per cent YoY increase in deal value and volume signals continued investor appetite for the asset class.