Africa’s venture capital (VC) sector experienced a notable downturn in the first half of 2024, with a sharp decline in exit activities. The latest Africa Venture Investment Report reveals that only nine exits were recorded during this period, representing a 40% drop compared to the first half of 2023. This slowdown mirrors global VC trends but stands in stark contrast to the surge in exits seen during the post-COVID-19 funding boom of recent years.
The median time to exit has also increased, reverting to seven years—similar to pre-2020 levels—after a brief period where exits occurred in as little as five years. This change reflects the impact of global economic challenges and a more cautious investment climate, particularly in riskier markets.
South Africa emerged as the leading country in terms of exits, accounting for nearly half of the region’s total with four exits, a 34% increase from 2023. Kenya followed with two exits, while Nigeria and Egypt saw one exit each. South Africa’s dominance signals a degree of resilience in its VC ecosystem, which appears better equipped to handle economic downturns than some other African nations.
Interestingly, the report noted a significant shift in the sectors driving exits. For the first time since 2017, the E-commerce and Retail sector reported no exits, ending a six-year streak. On the other hand, FinTech and Enterprise Software each contributed 22% of the total exits, demonstrating sustained investor confidence in these sectors as drivers of Africa’s digital and financial evolution.
The findings suggest that while overall exit numbers have declined, investor focus has sharpened on sectors critical to Africa’s technological and financial transformation. This trend points to a more selective investment strategy as investors navigate economic uncertainties, with many opting to hold onto their investments longer in hopes of capitalizing on more favorable market conditions in the future.
In summary, the first half of 2024 has been a challenging period for VC exits in Africa. However, the concentration of exits in high-potential sectors like FinTech and Enterprise Software indicates that Africa’s long-term prospects in technology and innovation remain bright. As global markets stabilize and investor confidence rebuilds, Africa’s VC landscape is poised for a potential rebound, supported by the continent’s ongoing digital transformation and economic diversification efforts.