At AVCA summit, investors push pragmatic approach as Africa’s exits surge

The African private capital market is entering a pragmatic phase, delegates at the African Private Capital Association’s (AVCA) annual conference heard, as venture-backed exits reached record levels in 2025 even as fundraising remained tough.

Opening the association’s 22nd Venture Capital Summit in Nairobi on Wednesday, AVCA chief executive Abi Mustapha-Maduakor acknowledged the headwinds facing the sector but pointed to shifts witnessed in 2025. AVCA’s annual gathering brings founders, venture capital investors, corporate venture arms, philanthropic foundations, and policymakers

“The centre of gravity is moving toward local capital, local expertise, and local conviction,” she said.

Her remarks come as venture funding across Africa has slowed from its peak, mirroring a pullback in global risk capital, even as 2025 recorded a 25% year-on-year rebound to $3.4 billion. But investors at the conference argued that the adjustment is forcing a long-overdue rethink of how capital is deployed on 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.”

Annual venture deal volumes have risen from about 30 a decade ago to more than 500 in 2025, while total investment has grown from roughly $400 million to about $4 billion, according to Mohamed Eissa of the International Finance Corporation (IFC).

Despite that growth, investors said earlier assumptions about valuations and exit timelines have proved unrealistic in African markets, where regulatory hurdles and fragmented demand can slow growth.

The question of exits remains a concern. With initial public offerings still rare, investors are now turning to mergers and acquisitions, which increased by 72% in 2025, as the most viable path to liquidity.

Patricia Rinke of AfricInvest, a pan-African financial services company, and Andreata Muforo of TLcom Capital, an Africa-focused venture fund, said acquisitions should be treated as the primary exit route rather than a fallback, requiring greater coordination among funds across markets.

Pressure is also building for domestic institutional investors to play a larger role. Alex Rumanyika of the National Social Security Fund (NSSF) Uganda urged African pension funds to reduce their heavy exposure to government securities and allocate more capital to private companies.

“If we don’t get into this space, it is going to be an existential threat,” he said, warning that pension funds risk missing out on sectors driving job creation and economic growth.

Alongside venture capital, private credit is emerging as an alternative financing source, particularly for more established businesses. Investors said the asset class 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, a global investment manager, cautioning against applying traditional private equity models too broadly.

Walid Cherif of BluePeak Private Capital, a global asset management firm, said companies across the continent continue to perform even in the absence of clear exit opportunities, but warned that fund managers must demonstrate consistent returns to build credibility with investors.