According to a recent survey by the Africa Private Equity and Venture Capital Association, Nigeria has emerged as the top destination for venture capital investments in 2022.
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.”
The financials sector, which accounted for 42% of transaction value and 31% of deal volume across the continent, was where most deals were made. Additionally, overseas investors made up 77% of active investors in Africa’s venture scene in 2022, while African investors made up 23%.
Africa raised $5.2 billion in venture capital in 786 transactions in 2022, accounting for 3% of the overall volume and 1.2% of the total value of venture funding globally. Venture inflows to Africa last year increased to $6.5 billion funded across 853 projects when venture debt was taken into account.
The study also discovered that businesses receiving their first round of venture capital only made up 37% of the number of VC deals volume in 2022 and startups with a gender-diverse founding team raised a cumulative total of close to US$950 million.
While startup investment significantly decreased globally and to varied degrees regionally, Africa’s venture ecosystem remained largely steady and only had a funding decrease of less than US$50 million from 2021 to 22.
Comparatively, Asia saw reductions of 35% while Latin America experienced the largest yearly decreases in startup investment at 59%. As a result, the financing gap between Africa and Latin America, its closest socioeconomic comparison, shrunk by almost five times, from US$14.8 billion in 2021 to US$3.1 billion in 2022.
According to the research, even while venture capital in Africa is still relatively modest in volume and value when compared to other continents like North America and Asia, it has been gradually increasing in recent years and shows potential for further growth in the future.
