Venture capital across the African continent is entering a period of “cautious recovery and renewed opportunity” after two years of contraction and recalibration – the much-discussed “funding winter”.
Total investment into the African tech startup ecosystem fell by more than 50 per cent to US$1.1 billion in 2024 as the impacts of the global capital shortage continued to make themselves felt on the continent, according to the 10th edition of the annual African Tech Startups Funding Report.
It wasn’t only the number of funded ventures and the amount of capital raised that declined in 2024. The number of active investors – individual or institutional – also fell, by 34.3 per cent to 346, from 527 in 2023. That itself had been down 46.6 per cent from 987 in 2022. That makes it two years of decline (you can dig deeper into the subject here).
Yet there may now be light at the end of the tunnel, according to Alison Collier, managing director of Endeavor South Africa, who believes African VC is entering a period of “cautious recovery and renewed opportunity”.
“After a turbulent period in 2022 and 2023, 2024 was a year of recalibration. Now in 2025, we’re seeing signs of resilience and reawakening across African venture capital. The key differentiator has been quality, due to founders who are building real businesses with disciplined capital use, strong unit economics, and scalable platforms,” she said.
Collier said the data suggests the market may be bottoming out.
“Q4 2024 was particularly strong, driven by three late-stage megadeals – TymeBank, Zepz, and Moniepoint – which accounted for nearly half of the continent’s total funding,” said Collier. “While the volume of deals was still low, the return of nine-figure rounds was a key indicator that investor confidence is cautiously returning.”
Looking ahead, Endeavor expects the market to slowly but steadily rebound in 2025. Globally, easing inflation and anticipated interest rate cuts are likely to unlock capital previously sidelined. This trend is expected to extend into Africa, though the continent still awaits its AI boom, which was the dominant driver of venture capital globally in 2024.
“2025 won’t be a return to frothy 2021 valuations, but it will be a year where high-quality African startups, especially in fintech, enterprise tech, and healthtech, regain their growth footing,” Collier said. “We’re already seeing founders shift their strategies and extending runway, focusing on breakeven, and selectively raising from aligned capital.”
Endeavor’s Harvest Fund II portfolio exemplifies this trend. Across 17 companies, 2024 saw average revenue growth of 49 per cent, driven by standout performers like Tyme, Onafriq, and Sendmarc. The fund is now fully deployed, and its successor, Harvest Fund III, secured ZAR190 million (US$10.6 million) in its first close in late 2024, surpassing initial targets and drawing in blue-chip investors like Standard Bank, Allan Gray, and the SA SME Fund.
Collier emphasised that in this cautious environment, not all capital is created equal.
“What we’re seeing is a flight to trusted, strategic capital. Endeavor’s rules-based co-investment model, backing only rigorously vetted, founder-led companies with strong inflection points, has given investors greater confidence in a period where diligence is more critical than ever,” she said.
