Grace Ashiru
In H1 2024, Africa saw a significant reduction in the number of unique investors, with a 29% year-on-year (YoY) decline compared to H1 2023. This decrease is largely attributed to a marked pullback from investors based in key African markets, such as South Africa, Kenya, and Nigeria, which collectively experienced a 46% YoY drop in investor participation. In contrast, unique investors from Egypt showed resilience, nearly doubling their number from 11 in H1 2023 to 20 in H1 2024.
Despite this increase in Egyptian investors, the overall trend reflects a broader hesitancy among local and international investors to engage with the African market during this period.
Shifts in Capital Deployment
A noteworthy trend is the rise in the share of capital deployed by local investors. Since 2021, there has been a steady increase in the participation of local investors in Africa’s venture capital scene, reaching 39% in H1 2024. This figure represents a 15 percentage point increase from H1 2023 and signifies a 2.6x rise from the levels seen in 2021.
This shift suggests that while international investors continue to play a dominant role, local investors are becoming increasingly significant, particularly in early and mid-stage financing rounds. Notably, when excluding MEGA deals, the share of capital deployed by local investors would have been even higher, at 52%, indicating that smaller and non-MEGA deals are largely supported by local capital.
Investor Types and Trends
The composition of investor types remained relatively stable, with venture capital firms (VCs) continuing to dominate the scene, accounting for 55% of all investors in H1 2024. This proportion aligns with the trends observed in other emerging venture markets (EVMs) like MENA and Southeast Asia (SEA).
The share of accelerators, however, decreased slightly, while investment companies showed a gradual increase in their presence, rising from 11% in 2020 to 16% in H1 2024. This diversification in the types of investors reflects a broader shift towards more varied and potentially more stable sources of capital within the venture ecosystem.
Implications and Outlook
The decline in investor numbers, especially among traditional powerhouses like South Africa, Kenya, and Nigeria, underscores a cautious sentiment in the African venture capital market. Factors such as economic instability, inflation, and political uncertainties may be driving this conservative approach. However, the increase in local investor participation is a positive indicator, suggesting growing confidence in the region’s entrepreneurial ecosystem from within. This internal support could play a crucial role in stabilizing and potentially revitalizing the market, especially if international interest continues to wane.
Overall, while the transaction analysis for H1 2024 paints a picture of a challenging environment for venture investments in Africa, the trends also highlight opportunities for local investors to take on a more prominent role. The resilience of investors in Egypt and the increasing share of local capital suggest that there are pockets of strength within the continent’s venture landscape that could drive future growth and investment.
Source ( MAGNiTT H1 Report )
