South Africa’s venture capital ecosystem is showing signs of increased maturity, with new research indicating that locally backed startups and scale up companies are beginning to deliver stronger returns for investors while contributing to employment creation, innovation and economic diversification.
A new report titled South African Venture Capital: Exit & Performance Analysis, produced by Southern African Venture Capital and Private Equity Association (Savca), the SA SME Fund and Endeavor South Africa, examined 226 realised venture capital exits between 2009 and 2026. The study found that successful exits generated returns ranging between 2.01 and 2.45 times the original capital invested.
The findings suggest that South Africa’s venture capital market is moving beyond an early stage funding environment towards a more established investment ecosystem, where entrepreneurs, investors and institutions are increasingly able to demonstrate the value created through long term capital deployment.
Venture capital remains a relatively young asset class in many African markets compared with North America, Europe and parts of Asia. However, the emergence of successful exits is considered an important indicator of market development because it allows investors to recover capital, generate returns and reinvest into new businesses.
The report identified several pathways through which South African venture backed companies have generated liquidity for investors, including international acquisitions, domestic mergers and acquisitions, secondary transactions and public listings.
Historically, international acquisitions have represented the most common exit route, reflecting the ability of some South African technology companies to develop solutions with relevance beyond their domestic market. At the same time, domestic acquisitions have become increasingly significant, particularly in sectors such as financial technology, where established banks, insurers and technology companies have sought partnerships with innovative firms to strengthen their digital capabilities.
The findings reflect a broader shift taking place across Africa, where technology enabled businesses are increasingly addressing local challenges while building commercially viable models capable of expanding across borders. From fintech and digital services to health technology and enterprise software, African entrepreneurs are developing solutions shaped by regional realities while participating in global markets.
“Exits are the mechanism through which venture capital proves its ability to recycle capital, reward risk and attract new investment into the ecosystem,” said Ketso Gordhan, according to the report. He noted that the evolution of global markets demonstrated how technology companies that were once venture backed startups had become major contributors to economic growth.
The report also highlighted the growing scale of South African venture backed companies. Among a sample of 20 businesses that achieved successful exits, companies created significant employment opportunities and recorded substantial revenue growth over a five year period. The study found that these businesses employed approximately 230 people on average during that period, while revenues increased by about five times.
Exit values among companies analysed ranged from R1-billion to R30-billion, with an average exit value of approximately R1.6-billion. Successful investments recorded internal rates of return of 54% or higher, indicating the potential of venture capital to generate competitive returns when investments reach commercial maturity.
Alison Collier said the development of stronger exit pathways represented an important milestone for the sector, as exits provide confidence to investors, create opportunities for founders and employees, and contribute to the development of future entrepreneurs.
The report noted that South Africa experienced a significant increase in successful exits between 2020 and 2023 compared with previous periods, with expectations that activity could continue expanding as more companies reach later stages of growth.
The development of venture capital markets also reflects a wider conversation about how African economies finance innovation. Historically, many African businesses have relied heavily on traditional banking models, which often favour established companies with existing assets and predictable cash flows. Venture capital provides an alternative mechanism by financing companies whose value is based on growth potential, technology and market opportunity.
Across the continent, policymakers and investors have increasingly focused on strengthening startup ecosystems, recognising that small and medium sized enterprises are central to employment creation, productivity growth and economic resilience. However, challenges remain, including limited access to growth stage capital, regulatory barriers, infrastructure constraints and the need for stronger connections between research institutions and commercial markets.
The South African experience demonstrates both the opportunities and complexities of developing an innovation economy. While successful exits indicate progress, venture capital remains concentrated in a relatively small number of companies and urban centres, with broader ecosystem development required to ensure that opportunities extend across different regions and sectors.
Savca chief executive Anusha Naidu said the evidence from the report provides important information for institutional investors, including pension funds, family offices and development finance institutions considering venture capital as part of diversified investment portfolios.
The findings may encourage greater participation from long term investors seeking exposure to innovation driven businesses, while also supporting a more sustainable cycle in which successful entrepreneurs become future investors, mentors and ecosystem builders.
For Africa, the growth of venture capital represents more than a financial trend. It reflects a changing approach to economic development, where innovation, entrepreneurship and locally developed solutions are increasingly recognised as important components of inclusive growth.
South Africa’s emerging venture capital success stories demonstrate that African companies can create globally relevant businesses while remaining connected to the markets and communities that shaped their origins. As the ecosystem continues to evolve, the challenge will be ensuring that investment growth translates into wider economic participation and sustainable development across the continent.
