Venture capital shrinks by 41% to hit $9.1bn in 2024

The venture capital landscape in emerging markets faced a challenging year in 2024, with a significant downturn in funding and deal activity. According to the latest report from MAGNiTT, Emerging Venture Markets raised a total of $9.1 billion in 2024, marking a 41 per cent decline compared to the previous year. Deal activity also followed suit, with 1,527 deals reflecting a 20 per cent drop year-on-year. This trend of reduced funding was driven by a contraction in late-stage MEGA deals, which fell by 56 per cent. Farah El Nahlawi, Research Lead at MAGNiTT, provided insights into the key findings of the report. Globally, there was a slight pickup in venture capital investment by the end of 2024. However, emerging markets, including Africa, still experienced a decline in funding due to macroeconomic challenges, high interest rates, and inflation. Africa specifically saw a 44 per cent year-on-year decline in funding, totaling around $1.1 billion across 294 deals. Egypt emerged as a standout performer in the region, securing $329 million in funding and leading in the number of deals. The investor makeup in Africa highlighted a higher concentration of international investors, accounting for 72 per cent of the investor base in 2024. The shift towards investing in home portfolios rather than externally impacted the region's venture capital performance. Looking ahead to 2025, there is optimism for the comeback of international investors in the Middle East and Africa, with expectations of increased investments. Despite the challenges posed by upcoming elections and economic fragilities, stability in geopolitical and macroeconomic factors is crucial for boosting investor confidence and stimulating venture capital activity. The outlook for Africa in 2025 hinges on navigating these challenges to foster a conducive environment for investment and growth.