Venture Capital - Tanzania

Tanzania

Highlights

In Tanzania, the Total Capital Raised in the Venture Capital market market is expected to reach US$197.60m by 2024.
The Later Stage market is set to lead the market with a projected market volume of US$176.80m in 2024.
When compared globally, the United States is anticipated to generate the highest amount of Capital Raised, reaching US$136.6bn by 2024.
Tanzania's Venture Capital scene is gaining traction, attracting investors eyeing the country's growing tech and innovation landscape.

Key regions:

Market definitionIn-Scope/Out-of-scopeMarket structureReportsMethodology

The Venture Capital market in Tanzania has been experiencing significant growth in recent years.

Customer preferences: Investors in Tanzania are increasingly turning to venture capital as a means of financing innovative and high-growth potential startups. This shift in customer preferences can be attributed to several factors. Firstly, there is a growing recognition of the potential returns that can be generated from successful investments in startups. Investors are attracted to the possibility of earning substantial profits from early-stage companies that have the potential to disrupt traditional industries or create new markets. Secondly, there is a strong demand for capital among Tanzanian startups. Many entrepreneurs in the country have innovative ideas and ambitious growth plans, but struggle to secure the necessary funding from traditional sources such as banks. Venture capital provides these startups with the financial resources they need to develop their products, expand their operations, and scale their businesses.

Trends in the market: One of the key trends in the Tanzanian Venture Capital market is the increasing number of local and international venture capital firms entering the market. These firms are attracted by the country's growing startup ecosystem and the potential for high returns. As a result, there has been a significant increase in the availability of venture capital funding for Tanzanian startups. Another trend is the emergence of sector-specific venture capital funds. These funds focus on investing in startups operating in specific industries such as technology, healthcare, agriculture, and renewable energy. This specialization allows investors to leverage their industry expertise and provide targeted support to startups in sectors with high growth potential.

Local special circumstances: Tanzania's strong economic growth and stable political environment have created a favorable climate for venture capital investment. The country has experienced consistent GDP growth in recent years, driven by sectors such as telecommunications, construction, and manufacturing. This economic growth has created a growing middle class with disposable income, which in turn has increased demand for innovative products and services. Furthermore, the Tanzanian government has implemented policies to support entrepreneurship and innovation. Initiatives such as the establishment of incubation centers, tax incentives for startups, and the creation of a regulatory framework for venture capital have all contributed to the growth of the venture capital market in the country.

Underlying macroeconomic factors: Several macroeconomic factors have contributed to the development of the venture capital market in Tanzania. Firstly, the country's young and rapidly growing population provides a large pool of potential entrepreneurs and consumers. This demographic advantage has attracted the attention of venture capital firms looking to invest in high-growth markets. Secondly, Tanzania's increasing connectivity and access to technology have created new opportunities for startups. The widespread adoption of mobile phones and the internet has enabled innovative business models to thrive, particularly in sectors such as fintech and e-commerce. Lastly, the availability of skilled human capital has played a crucial role in the growth of the venture capital market. Tanzania has a strong education system and a growing number of graduates in fields such as engineering, computer science, and business administration. This pool of talent has attracted venture capital investors who recognize the importance of human capital in the success of startups. In conclusion, the Venture Capital market in Tanzania has experienced significant growth due to changing customer preferences, the emergence of sector-specific funds, favorable local circumstances, and underlying macroeconomic factors. These trends and developments indicate a positive outlook for the future of venture capital in the country.

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.