• A new report by AfricArena has revealed that venture capital funding for African startups will reach a record of $2.25 billion and $2.8 billion this year.
  • While 2020 stunted its growth, VC investment is expected to climb sharply and exceed $10 billion by 2025.
  • Currently, Nigeria and Kenya are the hotspots for African VC investment, with $307 million and $305 million raised in 2020.

AfricArena has released a new report using Partech data which has forecast that venture capital funding for African startups will amount to between $2.25 billion and $2.8 billion this year, a record high for the continent. Africa's VC investments reached an all-time high in 2019 when 234 tech companies raised $2.02 billion in 250 equity rounds, a 74 percent increase on the $1,163 recorded in 2018.

While the pandemic resulted in major setbacks in 2020 with growth declining 29 percent, the good news is that major improvements are expected. In 2022, VC investment is expected to climb sharply to between $3.8 billion and $4.7 billion while the upper range is expected to be $6.8 billion by 2023. By 2025, VC investment in Africa is forecast to exceed $10 billion.

This is thanks to a number of factors such as an increased allocation of capital from corporates to their corporate VC activities, acquisitions of African tech companies, intensified FDIs and major initiatives from Europe such as the Enrich in Africa program. So given that African startups are on the upward trajectory, where is activity most heavily concentrated?

Africa

What is the World Economic Forum on Africa?

With elections taking place in more than 20 African countries in 2019, the world’s youngest continent is facing a new era.

Held under the theme 'Shaping Inclusive Growth and Shared Futures in the Fourth Industrial Revolution' the 28th World Economic Forum on Africa will convene more than 1,000 regional and global leaders from government, business, civil society and academia.

The event (held 4-6 September 2019) will explore new regional partnerships and entrepreneurial and agile leadership to create pathways for shared prosperity and drive a sustainable future.

Participants will discuss ways to accelerate progress on five transformative pan-African agendas in the context of the Fourth Industrial Revolution, addressing the African Union’s Agenda 2063 priorities.

Read more about the Forum's Impact in Africa and our launch of a new Africa Growth Platform to scale the region’s start-ups for success.

Read our guide to how to follow #af19 across our digital channels. We encourage followers to post, share, and retweet by tagging our accounts and by using our official hashtag.

Become a Member or Partner to participate in the Forum's year-round annual and regional events. Contact us now.

Currently, Nigeria and Kenya are the hotspots for African VC investment with $307 million and $305 million raised in 2020, respectively. Egypt is also a major player with $269 million of funding recorded last year while South Africa had $259 million. Rwanda has positioned itself as a hub for East Africa and it enjoyed great success with $126 million raised in 2019. Unfortunately the pandemic halted its impressive progress and that figure tumbled 91 percent to just $11.6 million last year.

a map showing where Africa's startup activity is concentrated
Nigeria and Kenya are currently the hotspots for African VC investment.
Image: Statista