Venture capital deals in South Africa have bucked the trend of a global slowdown in the sector, growing in size and value. In contrast, global deals showed a considerable decline in the first quarter of this year.
According to the Southern Africa Venture Capital Association (Savca) 2025 survey, R13.35bn was invested in 1,325 active deals in 2024, representing a 24% increase from 2023.
Nicola Gubb, interim executive director of Savca, called this “a compelling story of resilience”. She said the technology sector continued to lead the way, accounting for nearly two-thirds of total investment.
“Behind these numbers lies the story of a maturing market, more sophisticated capital deployment, deeper investor networks and an encouraging shift towards early-growth-stage funding, which speaks to a growing confidence in scalable local innovation.”
The ICT sector continued to attract the lion’s share of capital at 65.9%.
The Savca survey reported that the number of investment rounds increased to 222, a 20% rise from the previous year, involving 110 companies, the highest number ever recorded. The ICT sector continued to attract the lion’s share of capital at 65.9%.
She said there was potential for other sectors to see the same levels of growth. While limited exits and follow-on funding remained barriers in the sector, they underscored the urgent need to build a more robust and connected venture capital (VC) ecosystem.
“We’re seeing encouraging signals from other critical areas such as health tech. Regional hubs, particularly the Western Cape and Gauteng, remain vital, with notable growth also coming from beyond South Africa’s borders, reflecting the pan-African potential of our startups.”
ICT's 65.9% share in 2024, was down slightly from its peak of 67.3% in 2023. Health is the only other sector to show continued growth.
Julian Nixon, associate fund principal at the Public Investment Corporation (PIC), said the growing VC activity motivated the state-owned asset manager to invest in firms and fund managers using money from the Government Employees Pension Fund (GEPF) and the department of science, technology & innovation (DSTI).
“A landscape analysis was done two to three years ago, and what was identified is that there is a significant funding gap, particularly in underrepresented funders and underrepresented fund managers.
“The PIC approached its clients, the GEPF and the DSTI, and said there was a funding gap we wanted to take part in. And so we were initially capitalised with about R1.7bn, of which R1.4bn was from GEPF and R300m from the DSTI, and our mandate was quite simple ... invest directly into the portfolio companies, and indirectly into fund managers.”
Paul Hoffman, data analyst at investment research platform BestBrokers, said VC deals fell globally by 32% in the first quarter of 2025, yet investment in artificial intelligence (AI) more than tripled year over year.
“Economic and geopolitical instability has taken its toll on venture funding this year, as quarter one of 2025 recorded a record low of 7,551 VC-backed deals, down 32% from the first quarter of 2024.
“Yet, in a surprising twist, the AI sector saw an unprecedented surge in capital. In the first quarter of this year, a total of $73.1bn (R1.3-trillion) was invested in AI startups by venture capital companies, a record-high amount and more than three times the $22.9bn recorded in quarter one of 2024.
Among the largest deals of the year, OpenAI raised $40bn in a SoftBank-led funding round in March and Meta invested roughly $14.3bn in Scale AI. In the first quarter of 2025, $126.3bn was invested by venture firms, $73.1bn of which went into AI start-ups, representing 57.9% of the total value.
The BestBrokers report said investors were increasingly cautious about startups without a clear path to monetisation, leading to a 16.5% fall in the number of AI-focused deals. The first quarter of 2025 saw just 2,101 AI deals, the lowest level since 2021.
In 2025, the largest AI funding rounds are overwhelmingly late-stage deals, a trend driven by increasingly cautious investors and a heightened focus on profitability, marking a shift from the aggressive investment strategy of the early AI boom of 2021.
Appetite for investment in renewables was still healthy across the board. Holly Turner, climate specialist at Schroders Capital, said that in private markets, climate-named funds accounted for $90.5bn in total capitalisation.
“Within this, renewable electricity accounts for over 40% of private climate funds’ net asset value, followed by industrials at 21%. While this covers all climate-related investing, it is clear from the proportion of renewable energy and industrials, the latter largely through VC and private equity, that climate solutions investing plays as a central theme.”
She said Schroders Capital had $12.9bn under what the group considers to be climate solutions strategies as of December 2024, excluding mandates and cross investments.
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