Africa’s next wave of tech growth might not be African-owned.
Corporate Venture Capital in Africa: New Players and Strategic Focus Areas
We have a few corporate investors, and we just had our first biannual sit-down, one of the first-time ones. Beyond fund updates, we explored how they can push their products through our portfolio companies, potential co-investments in promising startups, treasury collaborations on yield instruments we’ve crafted, and the tech insights they can absorb from us and the ecosystem.
The discussion was eye-opening: we’re their first venture capital fund investment, and they’re still getting up to speed. Simultaneously, we uncovered regulatory hurdles they might face in including their fund investment as an asset in capitalization computation—challenges we hadn’t anticipated when they invested, but that impact our fund as well.
The bottom line? With DFIs pulling back, other players—sovereign, pension, corporate, public markets—must pick up the slack, increase their stakes, and speed up investments to keep capital flowing into Africa’s tech scene.
Let’s unpack how this could play out for corporates. (FYI, in Africa, “corporate” can be synonymous with family-owned or controlled entities.)
How Corporate Venture Capital Works Around the World?
Corporate Venture Capital (CVC) is the practice where established corporations invest directly in external startup companies by acquiring equity stakes. Unlike traditional venture capital firms that primarily seek maximum financial returns for their investors, CVCs balance both strategic and financial goals. This dual focus means they often provide more than just capital—they offer startups deep industry expertise, access to specialized networks, corporate customers, and opportunities for strategic partnerships. CVC investors typically have longer investment horizons and are willing to subordinate short-term financial gains for long-term strategic benefits. Globally, CVC has become a powerful innovation driver, representing about 28% of all venture deals worldwide, with strong activity in technology, industrial, financial services, energy, healthcare, and more. Studies show that startups backed by CVCs tend to have higher success and exit valuations compared to those funded solely by traditional VCs, because of the additional value CVCs bring beyond funding.
Does Corporate Venture Capital Exist in Africa? In What Form?
Yes, corporate venture capital is emerging and gaining momentum in Africa, though it currently represents about 10% of all venture capital deals on the continent—less than the global average. African CVC is still in the early stages but growing as multinational corporations and large African corporates recognize the continent’s digital transformation and youthful, innovative population. The leading markets for CVC activity include South Africa, Nigeria, Kenya, and Egypt, which together account for nearly 80% of deals. African CVC tends to focus on collaborating with startups through strategic partnerships, mentorship, and providing access to corporate resources, beyond just capital. Local intermediaries and consortiums are playing a critical role in expanding the reach of CVC to undercapitalized regions while helping startups gain traction through corporate synergies.
What Have the Early Players Done Well?
Early corporate venture capital players in Africa have successfully catalyzed innovative ecosystems by:
Providing startups with dual support—capital alongside access to markets, specialized expertise, and industry networks is critical for scaling.
Leveraging local market knowledge and networks to identify high-potential startups in sectors such as fintech, healthtech, and agritech.
Building partnerships that connect startups with corporate clients and supply chains, accelerating product-market fit.
Increasing deal flow and investment activity in Africa, thereby attracting more attention and funding to the continent’s tech ecosystem.
Supporting ecosystem development by engaging with incubators, accelerators, and entrepreneurial support organizations to nurture innovation for local businesses.
How to Make Them Operate Better?
To enhance the effectiveness of CVCs in Africa, several improvements can be made:
Adopt a clear venture capital investment approach initially, then adapt to local corporate and market dynamics. Balancing the venture capitalist mindset with corporate constraints is critical to avoid the “stuck in the middle” syndrome.
Tailor due diligence to incorporate local market specifics and non-traditional metrics suited to African family-owned and hybrid businesses.
Strengthen collaboration between corporates and startups with sustained mentorship and practical support, not just funding.
Expand geographic reach beyond the main hubs (South Africa, Nigeria, Kenya, Egypt) to tap into emerging innovation pools in Francophone Africa and underrepresented regions.
Build stronger ecosystems by linking CVCs with traditional VC firms, development finance institutions, and government programs to increase overall capital availability and startup success rates.
Enhance talent and governance capacity building in startups to improve scalability and investment readiness.
Encourage long-term strategic alignment and reduce pressure for early exits to allow startups to develop fully.
Sectors to Expect the Strongest Showing of Corporate Venture Capital
The sectors poised for the most significant CVC activity in Africa reflect both the continent’s pressing challenges and growth potential:
Fintech: Continues to attract considerable interest, especially innovations in payments, lending, and digital financial services for consumers and businesses.
Climate Tech and Renewable Energy: Fast-growing sectors due to rising electricity demand and an urgent need to transition to clean energy, making this a top recipient of investment.
HealthTech: Driven by telehealth, mobile health management, and electronic medical records, addressing gaps in healthcare access.
Agritech: Innovations in agriculture value chains improve food security and economic development.
Logistics and Transportation: Critical to supporting trade infrastructure and supply chains enhanced by digital technologies.
Artificial Intelligence and Machine Learning: Emerging as foundational tools across sectors for optimizing processes and creating new business models.
These sectors draw on Africa’s unique needs and offer promising returns aligned with corporate strategic interests, increasing the likelihood of growth in CVC involvement.
Looking Ahead...
There is an urgent need to scale up corporate venture capital across Africa, as this is where much of the continent’s wealth resides. The tech ecosystem has proven its potential by producing at least one new unicorn each year; some backed by skilled fund managers that excel in identifying, nurturing, and governing high-growth enterprises. While the patience of limited partners—required to see these companies grow into their true value over longer horizons—remains a developing strength, the momentum is unquestionably building. What began as cautious participation is rapidly evolving into a confident commitment. As corporations deepen their investment focus on this asset class, they are poised not only to unlock unprecedented returns but to fuel an era of inclusive innovation and wealth creation that will define Africa’s economic future. We continue to welcome them to this adventure and look for more to join.
(If you are exploring corporate venture capital, feel free to reach out.)