Africa's VC ecosystem grew 133% IN H1'2022

Africa's private equity and venture capital (VC) landscape has witnessed one of the strongest half-year performances to date, with the private capital investment totaling a cumulative deal value of $4.7 billion. The VC deals, in particular, grew by an impressive 133%, reaching $3.5 billion, and are on track to hit $7 billion by the end of the year. These robust figures highlight a thriving ecosystem that is attracting both local and international investors. To delve deeper into the key drivers behind this remarkable growth, Nadia Coulibaly, Head of Research at the African Private Equity & Venture Capital Association, shared her insights in an exclusive interview with CNBC Africa. Coulibaly shed light on the significant factors fueling the surge in deal-making activity amidst a challenging economic climate. She attributed the uptick in investments to three main factors: significant capital inflows from previous years being deployed, a growing interest in Africa's venture ecosystem attracting global and local investors, and an increase in larger transactions, particularly mega deals in the VC landscape. Looking ahead, Coulibaly expressed optimism for another groundbreaking year in 2022, with the current metrics already nearing the levels seen in the previous year. The continued growth of venture capital activity is also expected to drive further investment in the region. From a regional perspective, West Africa has emerged as a dominant player in private capital deals, accounting for 35% of the volume, with Kenya experiencing the strongest growth in East Africa. Notably, Kenya's financial and consumer discretionary sectors have seen a flurry of venture deals, contributing significantly to the region's growth. Coulibaly underscored the importance of sectoral diversification, highlighting the financial and industrial sectors as key areas attracting investor attention across both private equity and venture capital. The financial sector, in particular, has been a focal point for investors, with fintech companies leading the growth trajectory. Additionally, the industrial sector, driven by commercial and professional services along with transportation, has also witnessed remarkable growth. Coulibaly also touched on emerging sectors such as healthcare and education, noting an increased interest in early-stage companies offering traditional healthcare services and digital health solutions. Despite Africa's VC deals currently representing a smaller percentage compared to global markets, Coulibaly emphasized a trend towards larger ticket sizes in the VC landscape, signaling a 'catch up effect' as the industry matures. She expressed confidence that Africa's VC landscape will continue to evolve, eventually matching the volume and value of deals seen in developed and emerging markets. Overall, the resilience and growth of Africa's private equity and venture capital ecosystem underscore its potential as an attractive investment destination.