Venture Capital - South Africa

South Africa

Highlights

South Africa is projected to see the Total Capital Raised in the Venture Capital market market reach US$451.80m in 2024.
In the country, Later Stage dominates the market with a projected market volume of US$445.50m in 2024.
In global comparison, most Capital Raised will be generated the United States (US$136.6bn in 2024).
South Africa's Venture Capital market is gaining momentum, attracting diverse investors seeking opportunities in innovative tech startups.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in South Africa is experiencing significant growth and development in recent years.

Customer preferences: Investors in South Africa are increasingly turning to venture capital as a means of diversifying their investment portfolios and seeking higher returns. This shift in customer preferences can be attributed to several factors. Firstly, the low interest rate environment has made traditional investment options less attractive, prompting investors to explore alternative investment opportunities. Additionally, the success stories of South African startups, particularly in the technology sector, have captured the attention of investors and highlighted the potential for high returns in the venture capital space.

Trends in the market: One key trend in the South African venture capital market is the increasing focus on early-stage investments. With a growing number of entrepreneurs and startups seeking funding, venture capital firms are recognizing the potential for significant returns by investing in promising early-stage companies. This trend is supported by the emergence of startup incubators and accelerators, which provide mentorship and support to early-stage companies, making them more attractive to venture capital investors. Another trend in the market is the rise of impact investing. South Africa, as a country with significant social and economic challenges, has seen a surge in impact-focused startups that aim to address these issues while generating financial returns. Venture capital firms are recognizing the potential for both social impact and financial returns in these ventures and are actively seeking out investment opportunities in this space.

Local special circumstances: South Africa's venture capital market is also influenced by local special circumstances. The country has a well-established entrepreneurial ecosystem, with a strong pool of talent and a supportive regulatory environment. The government has implemented various initiatives to promote entrepreneurship and innovation, such as tax incentives for venture capital investors and funding programs for startups. These factors have contributed to the growth of the venture capital market in South Africa.

Underlying macroeconomic factors: The growth of the venture capital market in South Africa is also influenced by underlying macroeconomic factors. The country has a relatively stable economy and a well-developed financial sector, which provides a favorable environment for venture capital investment. Additionally, South Africa is strategically located as a gateway to other African markets, presenting opportunities for venture capital investors to expand their reach beyond the domestic market. In conclusion, the Venture Capital market in South Africa is experiencing significant growth and development, driven by changing customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors. As investors seek higher returns and diversification, venture capital has emerged as an attractive investment option. With a supportive entrepreneurial ecosystem and a stable economy, South Africa is well-positioned to continue attracting venture capital investment in the coming years.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.