Powering Africa’s future through the rise of corporate venture capital

Corporate venture capital (CVC), once the preserve of more developed markets, is increasingly making its mark in Africa. As global corporations turn their gaze toward the continent, they are drawn by its rapid digital transformation and a youthful population eager to innovate.

In 2022, CVC represented approximately 10% of venture capital deals across Africa – a promising figure, yet modest when compared to the global stage, where CVC is projected to account for 35% of all venture capital investments by 2025. This disparity underscores the growing potential for CVC in Africa, a continent uniquely poised to leverage innovative financing to fuel its burgeoning startup ecosystem.

“The high inflation and rising interest rates faced by African startups in 2023 underscored the importance of strategic investments during economic downturns,” says Audrey Verhaeghe, CEO of Anza Capital. “Many growth-stage startups were forced to cease operations due to funding shortages, presenting a missed opportunity for CVCs to step in and provide the necessary support.”

In a recent webinar hosted by the CVC Consortium in collaboration with JSE Private Placements, the potential for CVCs to revolutionise Africa’s innovation landscape was brought into sharp focus. The discussion opened with a striking reminder from Sam Mokorosi, head of Deals and Origination at the Johannesburg Stock Exchange, that Africa’s market cap stands at a staggering $1 trillion, with R50 billion in cash on corporate balance sheets – the opportunity for CVCs to catalyse growth and innovation on the continent is ripe.

In the same discussion, Alex Fenn, head of Technology and Innovation at Sibanye Stillwater, described CVC as a phenomenal and highly effective way of helping commercialise solutions that can apply to the core business, which is where the true value of CVC lies.

As more corporates look to emerging markets like Africa for growth opportunities, Anza Capital is one local investment business whose strategy aligns with global trends in corporate venturing. The firm’s focus on early-stage investing meets the growing demand for innovative, homegrown solutions that address the continent’s unique challenges. As global corporates increasingly recognise the value of investing in African innovation, Anza Capital is well positioned to lead in this space, with the aim to fuel the next generation of African startups.

“The South African investment ecosystem faces several challenges that limit its ability to attract and deploy capital efficiently,” says Buntu Majaja, CEO of the SA Innovation Summit. “According to the Partech Africa (2020) report, there is a significant $42-billion funding gap for early-stage, high-growth potential startups, particularly in the technology and innovations sectors. Yet, traditional financial intermediaries are not equipped to meet these needs, preventing many promising startups from scaling effectively.

“Furthermore, a 2022 SAVCA report notes the lack of strategic investors who provide capital, guidance, market access and mentorship, with only 15% of venture capital in South Africa coming from strategic investors – underscoring the need for CVCs to support sustainable startup growth.”

Geographical disparities also persist, with the ‘Big Four’ markets – South Africa, Nigeria, Kenya and Egypt – capturing 79% of all deals. Yet, regions like Francophone Africa are beginning to draw attention, increasing their share of equity funding from 11% to 15%. These trends highlight both the opportunities and challenges as CVCs seek to broaden their reach across the continent.

To address this, Anza Capital leverages its extensive network and deep understanding of local markets to connect corporates with startups capable of revolutionising industries. Expanding the focus beyond traditional hubs will enable CVCs to tap into a broader pool of talent and innovation that is often overlooked.

“Our unique role as an intermediary is crucial in the African context, where early-stage startups often struggle to secure funding and mentorship. Our approach provides startups with dual support: capital, along with access to corporate resources, expertise and markets. This is vital for startups looking to scale and make a meaningful impact in their respective sectors,” says Verhaeghe.

In partnership with key players such as RIIS, Dream VC, JSE Private Placements and the annual SA Innovation Summit set to take place on 19 and 20 September in Cape Town, Anza Capital is fostering a collaborative ecosystem that supports innovation across the continent. These CVC consortium partners bring together a wealth of resources, expertise and networks essential for nurturing startups and helping them thrive in a competitive global market.

“Directing corporate capital to invest in high-growth and IP–led enterprises with the aim of increasing capital available for fund managers, and early-stage startups is one way for CVCs to increase local startup investment. Mobilising existing general partners and creating co-investment panels can address this gap and increase startup success rates by up to 30% (AVCA 2023, World Bank report),” adds Majaja.

The potential for corporate venturing to unlock innovation is clear; what remains is for Africa’s businesses to seize the opportunity and lead the charge into a new era of growth and innovation. Anza Capital is fuelling a new wave of innovation by bridging the gap between corporates and startups, with the potential to transform industries and improve lives across the continent.

“We have seen that despite the economic downturn, the continent’s share of funding from emerging venture markets grew to 16%, up from 13% in 2022. This indicates that while there has been a global pullback, Africa remains an attractive region for venture funding, including corporate backers,” says Verhaeghe.

As CVCs in Africa continue to drive innovation and economic growth, Anza Capital’s focus on early-stage investments and strategic partnerships positions it to lead this charge. Deeply involved in the broader startup ecosystem, Anza has partnerships with venture builders, incubators, accelerators and other entrepreneurial support organisations that help catalyse innovation for local businesses.

Find out here how you can attend the SA Innovation Summit and engage with a global network of investors and Africa’s cutting-edge startups.

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