Why more exits don’t mean more liquidity for Africa’s tech ecosystem

For the first time in years, capital is finding its way back to investors in African ventures, according to a new report from Stears and Ventures Platform that tracked 181 verified VC-backed exits across the continent between 2011 and 2026.

The report shows that Africa’s tech ecosystem is producing more exits than ever, but the improvement is driven as much by a 33% decline in funding as a 36% rise in exits.

If you combine this with less participation from foreign investors and acquirers, the dominance of acquisitions (73%), and the concentration in four countries (81%), the result is a backlog of companies that raised large rounds and now need to provide liquidity in a market that cannot provide it.

For fund managers who have to return money to their investors, the importance of planning for liquidity from the outset can not be overstated, a shift from it being currently treated as an eventual outcome of ecosystem maturity.

International buyers made up 56% of disclosed exits in 2020. By 2025, that share had fallen to 33%, the report said. Acquisitions now account for 73% of all exits, more than four times the next most common route.

Nigeria, South Africa, Egypt, and Kenya together account for 81% of disclosed exits. Financial services alone delivers 30%, more than the next two sectors put together.

“The problem is not too few exits,” Dr Dotun Olowoporoku, the managing partner at Ventures Platform, noted in the report. “It is that exit routes are narrow, buyer pools are shallow, and the broadening that should accompany maturity is not happening fast enough.”

The capital recycling ratio, exits divided by investments in a given year, climbed from 0.032 in 2022 to 0.065 in 2025. While that’s an improvement on paper, in practice, it’s mostly arithmetic.

Funding volumes fell 33% over the window as exit volumes rose 36%, meaning the ratio improved mostly because the denominator shrank.

For the companies that raised money during the 2019-2022 boom, less funding has created a stockpile of companies that will eventually need buyers, but the market has not widened to receive them.

Peer markets offer useful context. Southeast Asia runs at 0.03 to 0.05, but exit activity there has scaled alongside investment. Latin America boomed, corrected, and still settled at meaningfully higher exit levels even as funding fell sharply between 2022 and 2025. Africa has yet to show it can sustain exit activity independently of the funding cycle.

The report also introduces the Stears-Ventures Platform Liquidity Index, the first composite measure of African venture liquidity. It separates liquidity volume (80% of the score) from liquidity quality (20%).

The quality component draws 60% from international buyer share, 20% from fresh liquidity intensity, and 20% from route diversity. The baseline is 2020-2023, with quarterly updates.

West Africa leads with 86 recorded exits, an unadjusted Liquidity Quality Index of 87.03, and a Diversity Score of 85.80 – top of the table on both. North Africa scores well on quality, almost entirely because of Arab and European buyer participation.

Southern Africa, despite South Africa’s deep corporate base, posts a Diversity Score of just 32.81 as 89% of its VC exits run through trade sales. Central Africa, with only 10 recorded exits, sits at the bottom across every metric.

The most encouraging thing in the dataset is venture-backed companies buying other venture-backed companies. Flutterwave’s all-stock acquisition of Mono Technologies, Risevest acquiring Chaka in Nigeria and Hisa in Kenya, and OmniRetail’s 2024 acquisition of Traction Apps.

They all show that parts of the ecosystem, particularly West African fintech, are beginning to generate buyers from within, and this is the closest thing African VC has to structural improvement.

When buyers come from inside the ecosystem, dependence on external capital cycles eases, and the effects compound. Companies that grow through acquisition scale faster, become more attractive targets themselves, and set valuation reference points along the way, which is very useful for investors.

But, just like exits, it’s still concentrated. These acquisitions are most visible in financial services, faint elsewhere, and not yet at the scale needed to shift the overall buyer mix.

The report combines the Stears Transactions Database with direct submissions from 16 participating funds: Ventures Platform, LoftyInc, Future Africa, Acumen, Microtraction, Golden Palm Investments, Launch Africa, Enza Capital, VestedWorld, DOB Equity, HoaQ, Norrsken22, Atlantica Ventures, Consonance Capital Managers, Serena Ventures, and MaC Venture Capital.