Nigeria leads Africa in venture capital investments

Nigeria has emerged as the top country for venture capital investments in 2022, a new report by the Africa Private Equity and Venture Capital Association, has revealed.

In its annual report, titled “2022 AVCA Venture Capital in Africa Report”, the continental body said that Nigeria outperformed other countries that made the list to account for 22 per cent

The report said, “By region, West Africa maintained the top spot for the second consecutive year, with Nigeria as the most active country both in the region and on the continent.

“West Africa attracted the largest proportion of venture capital deal volume in Africa (30 per cent), driven by Nigeria which was the most active country by volume at 22 per cent.”

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On the continent, dealmaking was concentrated in the financials sector, which assumed 31 per cent of deal volume and 42 per cent of deal value.

Also, 77 per cent of investors active in Africa’s venture landscape in 2022 were international investors while 23 per cent were African investors.

During 2022, Africa raised $5.2bn in venture capital across 786 deals, representing three per cent of the total volume and 1.2 per cent of the total value of global venture funding in 2022.

With the inclusion of venture debt, venture inflows to Africa last year rose to $6.5 bn raised across 853 deals.

The report also found that startups raising their first round of venture financing only accounted for 37 per cent of VC deal volume in 2022 and startups with a gender-diverse founding team raised a cumulative total of close to US$950 million.

While the global venture market experienced significant contractions in startup funding to varying regional degrees, Africa’s venture ecosystem was relatively
stable and only experienced a funding drop of less than US$50 million compared to 2021.

Comparatively, Latin America saw the biggest year-on-year declines in startup funding to the tune of 59 per cent followed by Asia which saw contractions of 35 per cent. Consequently, the funding gap between Africa’s closest socio-economic comparator, Latin America, saw a near-fivefold decrease from US$14.8 billion in 2021 to US$3.1 billion in 2022.

The report added that although the volume and value of venture capital in Africa is relatively small compared to other regions such as North America and Asia, it has been growing steadily in recent years and shows potential for further growth in the future.