Nigeria has emerged as the top country for venture capital investments in 2022, according to a report released by the Africa Private Equity and Venture Capital Association (AVCA).
The report titled “2022 AVCA Venture Capital in Africa Report” states that Nigeria accounted for 22% of the continent’s total deal volume, outperforming other countries on the list.
West Africa maintained its position as the top region for venture capital investments for the second year in a row, with Nigeria being the most active country both in the region and on the continent. The financial sector dominated deal-making, accounting for 31% of deal volume and 42% of deal value.
The report further revealed that Africa raised $5.2 billion in venture capital across 786 deals in 2022, representing three per cent of the total volume and 1.2 per cent of the total value of global venture funding.
Startups raising their first round of venture financing only accounted for 37% of VC deal volume in 2022, while startups with a gender-diverse founding team raised a cumulative total of close to US$950 million.
The AVCA report highlighted that 77% of investors active in Africa’s venture landscape in 2022 were international investors, while only 23% were African investors.
Despite the global economic challenges posed by the COVID-19 pandemic, Africa’s venture ecosystem remained relatively stable and experienced a funding drop of less than US$50 million compared to 2021.
Comparatively, Latin America saw the biggest year-on-year declines in startup funding to the tune of 59%, followed by Asia, which saw contractions of 35%.
Consequently, the funding gap between Africa’s closest socio-economic comparator, Latin America, saw a near-fivefold decrease from US$14.8 billion in 2021 to US$3.1 billion in 2022.
The report concluded that although the volume and value of venture capital in Africa are still relatively small compared to other regions such as North America and Asia, it has been growing steadily in recent years and shows potential for further growth in the future.
This report is a positive indication of the growth of Nigeria’s economy, particularly in the technology and financial sectors. It presents opportunities for both international and African investors looking to invest in Africa’s growing venture capital landscape.
