The venture capital landscape across South Africa and the broader African continent is entering a period of cautious recovery and renewed opportunity, following two years of contraction and recalibration.
This optimistic outlook for 2025 comes from Alison Collier, Managing Director of Endeavor South Africa, who recently shared insights into the evolving investment climate for high-growth, founder-led businesses.“After a turbulent period in 2022 and 2023, 2024 was a year of recalibration,” Collier stated. “Now in 2025, we’re seeing signs of resilience and reawakening across African venture capital. The key differentiator has been quality, due to founders who are building real businesses with disciplined capital use, strong unit economics, and scalable platforms.”
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Signs of Stabilisation
Following a significant 46% drop in African VC funding in 2023, 2024 presented early indications of stabilisation. According to internal valuation memos from Endeavor’s Harvest Fund II, African equity funding saw a mere 2% year-on-year decline in 2024, totalling $2 billion. This suggests the market may be bottoming out, Collier indicated.
“Q4 2024 was particularly strong, driven by three late-stage megadeals – TymeBank ($250M), Zepz ($267M), and Moniepoint ($110M) – which accounted for nearly half of the continent’s total funding,” Collier explained. “While the volume of deals was still low, the return of nine-figure rounds was a key indicator that investor confidence is cautiously returning.”
South Africa’s Resilient Stand
South Africa specifically recorded $459 million in funding for 2024, a decrease from prior years, but notably less volatile compared to other regions. TymeBank’s record-setting round played a crucial role in maintaining confidence. The investment narrative was further bolstered by the country’s macro stability, including moderated inflation, improved energy security, and positive post-election momentum, all of which boosted investor sentiment.
Looking Ahead to 2025: Quality Over Quantity
Endeavor anticipates a slow but steady rebound in the market for 2025. Globally, easing inflation and expected interest rate cuts are likely to release sidelined capital, a trend expected to extend into Africa. However, the continent is still awaiting its own “AI boom,” which was a dominant global VC driver in 2024.
“2025 won’t be a return to frothy 2021 valuations, but it will be a year where high-quality African startups, especially in fintech, enterprise tech, and healthtech, regain their growth footing,” Collier noted. She added that founders are already adapting, shifting strategies, extending runway, focusing on breakeven, and selectively raising from aligned capital.
Endeavor’s Harvest Fund II portfolio reflects this trend, with 17 companies showing an average revenue growth of 49% (4-year CAGR) in 2024, led by strong performers like Tyme, Onafriq, and Sendmarc. The fund is now fully deployed, and its successor, Harvest Fund III, successfully secured R190 million in its first close in late 2024, surpassing initial targets and attracting blue-chip investors such as Standard Bank, Allan Gray, and the SA SME Fund.
The Value of Strategic Capital
In this cautious environment, Collier stressed that not all capital is created equal. “What we’re seeing is a flight to trusted, strategic capital,” she said. “Endeavor’s rules-based co-investment model, backing only rigorously vetted, founder-led companies with strong inflection points, has given investors greater confidence in a period where diligence is more critical than ever.”
Endeavor South Africa continues to build a robust pipeline of over 135 high-growth companies through its rigorous international selection process. This strategic positioning enables Harvest Fund III to invest in a diversified and thoroughly validated portfolio across the continent.
Despite ongoing macro headwinds, Endeavor firmly believes in African innovation as a long-term megatrend. “There is no shortage of talent or ambition here,” Collier affirmed. “The bottom-up drivers of digital adoption, financial inclusion, and youth entrepreneurship are firmly in place. What we need now is the patient capital and partnerships to fuel the next chapter of scale.”
With its global network of over 5,000 mentors, extensive access to capital, and a mission-driven investment thesis, Endeavor is well-positioned to support its entrepreneurs in navigating the current cycle while building for sustainable future growth.
