African VC rounds: emerging opportunities and legal considerations

Loye Oyedotun

Senior Associate

Africa’s venture capital ecosystem has entered a new phase. After two difficult years marked by global capital tightening, 2024 showed stabilisation and resilience; and 2025 is seemingly showing green shoots. Startups on the continent raised USD2.2 billion in equity across 457 deals, with total equity and debt investment reaching USD3.2 billion. These numbers represent a market that has absorbed shocks, found its footing, and is positioning for renewed growth.

Three hubs dominate the landscape. Nigeria maintained its leadership with USD520 million raised across 103 deals, powered by megadeals in fintech and mobility. Egypt staged a remarkable recovery in deal activity, up 48% year on year, despite macroeconomic headwinds. South Africa consolidated its role as the continent’s most mature ecosystem, home to Africa’s largest single round of 2024 – Tyme Group’s USD250 million Series D, which secured it unicorn status.

Sector trends are equally telling. Fintech continued its dominance, attracting nearly 60% of all funding. Cleantech and climate solutions emerged as the second-largest vertical, reflecting global sustainability priorities and Africa’s urgent infrastructure needs. Artificial intelligence rose sharply, not only as a vertical but as a cross-sector enabler. Healthcare technology contracted, yet new opportunities in wellness, lifestyle, and beauty are surfacing.

For investors in the Middle East, Africa offers both strategic diversification and sectoral alignment with regional strengths in finance, energy, and infrastructure. But success requires more than capital.

It depends on local partnerships, regulatory navigation, sophisticated legal structuring, and patient investment horizons. Firms that act now, thoughtfully and strategically, can establish themselves as long-term partners in one of the world’s most promising growth corridors.

The market overview: stabilisation after contraction

The African venture market has weathered significant turbulence in recent years. In 2022 and 2023, global risk-off sentiment and rising interest rates hit emerging markets hard, leading to steep declines in both deal count and capital deployed.

By 2024 however, signs of stabilisation emerged. Startups raised USD2.2 billion in equity across 457 deals, a modest decline of just 2% in value and 3% in volume compared to 2023. Including debt, total startup funding reached USD3.2 billion, with debt accounting for nearly one-third of the total.

Two dynamics made 2024 noteworthy.

Later-stage resilience

Despite thinner pipelines at the seed level, companies that reached Series B and C rounds demonstrated strong global competitiveness. Median round sizes were USD29 million (Series B) and USD38 million (Series C), both higher than global averages. This underlines the scalability of African companies that progress beyond early-stage hurdles.

Back-loaded recovery

Much of 2024’s momentum came in the second half of the year, anchored by megadeals such as Tyme Group’s USD250 million Series D, Moniepoint’s USD110 million Series C, and Moove’s USD100 million Series B. These deals did more than boost totals – they restored investor confidence in Africa’s ability to generate globally relevant winners.

Another important trend is exits. Between 2019 and 2024, the continent recorded 138 venture-backed exits, dominated by trade sales (84%). The median holding period was 3.8 years, shorter than global norms. While the exit market remains shallow compared to mature ecosystems, it is deepening – providing greater confidence to investors on potential liquidity pathways.

The big three hubs: Nigeria, Egypt, and South Africa

Sector trends: where capital is flowing

Fintech: still the flywheel

Fintech retained its crown in 2024, attracting around USD1.4 billion (60% of all equity funding) across 131 deals. Deal count grew 16%, while funding surged 59%.

African fintechs are no longer just regional stories – they are globally competitive:

Tyme Group’s USD250 million Series D ranked as the third-largest digital banking round worldwide in 2024.
Moniepoint’s USD110 million Series C was the sixth-largest globally in the same year.

These successes reinforce Africa’s ability to build scaled financial platforms that address massive unmet needs across payments, banking, and credit.

Cleantech and climate solutions: the next frontier

Cleantech was the second-largest vertical by equity funding in 2024, with USD192 million across 37 deals. The sector grew in deal activity (+6% YoY) and now accounts for 13% of all tech-enabled deals, up from an average of 7% between 2019 and 2023.

Notable examples include:

SunCulture (USD27.5 million Series B): A Kenyan company providing solar-powered irrigation systems.
Downforce Technologies (USD4.2 million): Focused on soil health diagnostics and carbon measurement.

Africa’s acute energy, water, and agricultural challenges make it a natural testbed for scalable climatetech solutions. With global investors prioritising ESG and impact, this sector will likely see sustained momentum.

Artificial intelligence: a rising force

AI moved into the top four verticals in 2024, raising USD108 million across 42 deals. African startups are increasingly leveraging AI not as a standalone product but as an enabler across industries:

BFREE (Nigeria, USD2.95 million): Uses AI for credit management and collections.
Sprints.ai (Egypt, USD3 million bridge round): An AI-powered platform for digital skills and education.

Expect AI to continue being embedded in fintech, logistics, agritech, and customer engagement platforms.

Healthcare: a sector in transition

Healthcare funding declined sharply in 2024, down 78% in value and 46% in deal count. However, this contraction reveals new opportunities. Investors are showing interest in 'soft healthcare' models, which focus on consumer-facing wellness, beauty, and lifestyle products.

Examples include:

Uncover (Kenya, USD1.4 million seed): A beauty and wellness brand.
Glamera (Egypt/Saudi, USD350,000 seed): A beauty and lifestyle services booking platform.

These segments require lighter regulatory frameworks, faster go-to-market strategies, and offer attractive consumer-driven growth dynamics.

The Africa-Middle East corridor: why it matters

The GCC’s growing footprint

Middle Eastern capital is increasingly active in African venture markets. Investors from the UAE and Saudi Arabia are particularly prominent, bringing both capital and sector expertise. This is not just opportunistic – it reflects a strategic recognition that Africa is critical to regional diversification strategies.

Strategic drivers

Economic diversification: As GCC economies pivot from oil dependence, Africa offers high-growth opportunities.
Demographics: Africa’s 1.4 billion people with a median age of 19 represent the youngest consumer base in the world.
Infrastructure alignment: GCC sovereign funds have expertise in energy, logistics, and telecoms – precisely what Africa needs.
Islamic finance synergies: North and West Africa’s large Muslim populations provide opportunities for Sharia-compliant products.
Geopolitical positioning: Africa anchors critical trade corridors linking Asia, the Middle East, and Europe.

How Middle Eastern investors enter

Direct investments: Participating in Series A-B rounds (USD5-25 million).
Co-investments: Partnering with local funds such as TLcom Capital and Partech Africa.
LP commitments: Building exposure and knowledge through fund investments.
Corporate venture arms: Particularly in telecoms, banking, and energy.
On-the-ground presence: Lagos, Cairo, Cape Town, and Nairobi remain the strategic hubs.

Legal and operational considerations

Investing in Africa-Middle East transactions requires careful legal structuring. Four issues stand out.

Regulatory complexity

African markets are evolving rapidly. For example, Nigeria’s fintechs must comply with detailed Central Bank of Nigeria (CBN) regulations covering licensing, payments, and data. Egypt’s data protection regime and South Africa’s POPIA law add additional layers. Navigating these frameworks requires specialised local knowledge.

Cross-border compliance

Middle Eastern investors face a dual challenge: compliance with home-country rules (beneficial ownership reporting, sanctions, and AML) and local African requirements. Structuring vehicles that satisfy both sets of regulations is critical.

Currency and treasury management

FX volatility is a defining feature of African markets. Sophisticated treasury operations – hedging strategies, multicurrency management, and revenue-currency alignment – are essential to safeguard returns.

Exit pathways

Trade sales dominate (84% of exits since 2019). IPOs remain rare. Legal structuring should include exit-enabling provisions such as drag-along rights, rights of first refusal, and liquidation preferences. Building exit optionality from day one is key.

The role of experienced legal counsel

Law firms with dual Africa-Middle East expertise are invaluable. They:

structure transactions to accommodate Sharia-compliant options
align holding structures with favourable tax treaties and bilateral investment agreements
co-ordinate with local counsel to manage regulatory approvals
provide continuity from due diligence through to exit.

Outlook: why timing matters

2025 could mark the beginning of Africa’s next growth cycle. Valuations remain reasonable, quality companies are raising, and local capital formation is accelerating. Importantly, African investors now account for 31% of active VC participants – a sign of greater ecosystem depth and sustainability.

For Middle Eastern investors, this is a window of opportunity.

First-mover advantage: Western capital remains cautious, leaving space for GCC investors to establish themselves.
Patient capital edge: With holding periods still shorter than global averages, longer-horizon investors can create lasting value.
Strategic alignment: Africa’s fintech, climatetech, and infrastructure needs map directly onto GCC strengths.

The critical factor will be execution. Investors who combine local partnerships, sophisticated legal structuring, and a long-term mindset will be best positioned to capture Africa’s outsized potential.

Conclusion

Africa’s venture capital market is no longer an experiment – it is a proven ecosystem entering its next phase. The stabilisation of 2024, anchored by strong late-stage rounds and sector-specific growth, provides a solid platform for 2025 and beyond.

For Middle Eastern investors, Africa offers both financial returns and strategic alignment. But success will not come through capital alone. It requires trust-based local partnerships, regulatory navigation, and robust legal frameworks that anticipate risks and enable exits.

The question is not whether Africa presents opportunity – the data confirms that it does. The real question is: who will move decisively, thoughtfully, and strategically to capture it?

Those who do will help define the next decade of Africa-Middle East economic integration and position themselves at the forefront of one of the most important investment corridors of the 21st century.