Africa: Venture capital investments reached $3.5 billion in the first half of 2022, an increase of 133% compared to 2021

Venture capital investments in Africa reached 3.5 billion dollars in Africa during the first half of 2022. This represents an increase of 133% compared to the same period of 2021, according to a report published on September 29. , by the African Private Equity and Venture Capital Association (AVCA).

“The African venture capital ecosystem has shown bullish trends despite runaway inflation and an unfavorable macroeconomic climate. While the global venture capital market has experienced significant contractions to varying degrees depending on the region, the African ecosystem has achieved its best performance ever. 

And to add: “This impressive growth in start-up funding, which goes against global trends this year, demonstrates the depth of opportunity as well as the potential that the continent has to offer”.

Over the first six months of the current year, venture capital investments fell by -3% worldwide. North America experienced a decline of -10.5%, compared to -10% for Latin America. A slight increase of 4% was recorded in Europe and Asia.

The report also points out that 445 venture capital investments in 300 different start-ups were identified in Africa during the first half of 2022.

The financial services sector holds the upper hand

West Africa leads the continent’s sub-regions in terms of number of transactions (33% of total deals recorded), thanks in particular to the good performance of Nigeria (101 deals), ahead of East Africa. East (22% of total deals), North Africa (20%), Southern Africa (14%) and Central Africa (1%). Multi-region investments, for their part, represented 10% of the total transactions carried out on the continent.

Between January 1 and June 30, 2022, nine large deals (mega rounds) were recorded in Africa for a cumulative amount of $1.3 billion, compared to 4 deals with a cumulative amount of $0.6 billion during the same period of 2021.

In the first half of the current year, the average deal size was $11 million, compared to $6.7 million in the first half of 2021.

As in previous years, the financial services sector attracted the bulk of investment in terms of number of transactions (32%) and value (44%). The AVCA expects the upward trend in venture capital investments on the continent to continue, by the end of the current year. 

“16 Africa-focused venture capital funds announced their final or interim closing in the first half of 2022, with cumulative fundraising of nearly half a billion dollars (495 million). These funds will be injected into African start-ups over the coming months, which should maintain the good health of the sector in the short term,” she said.

According to the association, venture capital investments in African start-ups are expected to reach $7 billion this year, which would represent a 35% increase from the $5.2 billion raised in 2021.