Africa’s private capital market is entering a more pragmatic phase, investors said at the AVCA Annual Conference, as venture-backed exits hit record levels in 2025 despite continued fundraising challenges.
Speaking at the opening of the 22nd Venture Capital Summit in Nairobi, Abi Mustapha-Maduakor, CEO of the African Private Capital Association, acknowledged the tough environment but pointed to a shift in how the ecosystem is evolving.
“The centre of gravity is moving toward local capital, local expertise, and local conviction,” she said.
While venture funding across Africa has cooled from its peak reflecting a broader global slowdown 2025 still saw a 25% year-on-year rebound to $3.4 billion. Investors say the downturn is forcing a necessary reset in how capital is deployed across the continent.
“There’s a tendency to think something is broken when it doesn’t behave like the US,” said Tidjane Dème of Partech Partners. “African venture capital isn’t broken, it’s just young.”
Deal activity has expanded significantly over the past decade. Annual venture deals have grown from around 30 to more than 500 in 2025, with total investment rising from roughly $400 million to about $4 billion, according to Mohamed Eissa of the International Finance Corporation.
Still, investors admit earlier expectations around valuations and exit timelines have often proved unrealistic, given regulatory complexities and fragmented markets across the continent.
Exits remain a key concern. With initial public offerings still rare, mergers and acquisitions are emerging as the dominant route to liquidity, rising by 72% in 2025.
Industry leaders including Patricia Rinke of AfricInvest and Andreata Muforo of TLcom Capital argued that acquisitions should be treated as the primary exit strategy, not a fallback requiring closer coordination among investors across markets.
There is also growing pressure for more local capital to enter the ecosystem. Alex Rumanyika of the National Social Security Fund Uganda urged African pension funds to reduce their reliance on government securities and channel more funds into private companies.
“If we don’t get into this space, it is going to be an existential threat,” he warned.
Beyond venture capital, private credit is gaining traction as an alternative funding source, particularly for more mature businesses. Investors say it offers more predictable returns in markets where exits remain uncertain.
“What works in Africa is deploying into stronger, more resilient businesses,” said Nathaniel Micklem of Ninety One, cautioning against applying traditional private equity models too broadly.
Walid Cherif of BluePeak Private Capital added that while companies across Africa continue to perform, fund managers must show consistent returns to build long-term investor confidence.