African venture capital activity reached its highest dollar total on record last year thanks to a surge in dollars being invested in the continent’s startups.
About $1.4bn was invested in VC deals in Africa last year across 139 deals – double the value of 2018, according to new data from the African Private Equity and Venture Capital Association.
The annual number of deals done has more than doubled since 2014, AVCA said, with fintech and IT deal dominating the African startup scene.
AVCA’s inaugural VC report – Venture Capital in Africa: Mapping Africa’s Start-up Investment Landscape – said both sectors accounted for 19% of the total volume of VC deals done between 2014 and 2019.
They were followed by consumer discretionary (18%) and industrials (12%), while communications services, healthcare and consumer staples collectively account for just 19% of the volume of VC deals over the same period.
In terms of geographies, Southern Africa attracted the highest volume of VC deals at 25%, followed by East Africa (23%) and West Africa (21%), while multi-region deals attracted the largest share by value.
South Africa’s well-developed VC ecosystem accounted for 21% of deals between 2014 and 2019, closely followed by Kenya (18%) and Nigeria (14%).
AVCA said that more than one fifth of the total number of VC deals over this period were in companies headquartered outside of Africa raising capital to expand or strengthen their presence on the continent.
While seed funding accounted for nearly a third of the total number of deals reported in Africa between 2014 and 2019, these transactions accounted for only 5% of the total deal value.
Series A and Series B deals together accounted for 29% of the total deal volume and 38% of the total value of early stage deals.
Tokunboh Ishmael, chair of the AVCA board, said, “Africa’s VC industry continues to grow from strength to strength and we expect 2020 to be another strong year despite global macroeconomic headwinds.
“The continent’s VC ecosystem showcases the best of African innovation and entrepreneurship, which has the potential to be a key source of solutions to Africa’s intractable problems and a gamechanger for the continent’s development trajectory.
“AVCA remains committed to supporting the VC industry by charting its growth and providing authoritative research on the asset’s fundraising, deal, and exit activities.”
The full report can be accessed free for AltAssets Premium subscribers by clicking here.
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