African Tech VC Sees 2024 Funding Stabilize at $2.2 Billion Amidst Debate on Fund Sizes and Strategic Industries

London, UK – Stephen Deng, a prominent voice in the African technology sector and former Partner at TLcom Capital, has offered a nuanced critique of investment strategies and growth trajectories, aligning with some views of fellow industry leader Ido Sum while pushing back on others. His recent commentary underscores a critical dialogue within the continent's venture capital landscape, particularly concerning fund sizes, exit pathways, and the role of diverse funding instruments.

Deng expressed agreement with the notion that "Fund sizes should be strategically small <$50m and built for more local exit windows," a perspective that resonates with current market trends. The 2024 Africa Tech Venture Capital Report by Partech indicates that while overall equity funding stabilized at $2.2 billion, seed-stage average ticket sizes saw a 26% increase to $1.6 million, suggesting a focus on earlier, potentially smaller, investments. This trend aligns with the evolving exit landscape, where private equity is increasingly becoming a dominant buyer for tech scale-ups, offering alternative liquidity pathways beyond traditional IPOs.

He also supported the idea that "African tech needs to define its competitive archetypes incl. a geopolitical category of what Ido calls resource security, but what I am starting to call 'strategic industry'." This highlights the growing importance of sectors like telecommunications, cybersecurity, and data centers for national security and economic resilience. Experts note that African nations are prioritizing the development of these strategic industries to foster local innovation and reduce technological dependence amidst global power competition.

Deng further concurred that "Equity cannot do it all - it'll take debt, state, and other instruments built to the continent's unique S curves," advocating for a more varied financial approach. This suggests a move towards blended finance solutions, incorporating non-equity funding to address the continent's unique development challenges and support a wider range of businesses.

However, Deng challenged the prevailing "longtermism" narrative, stating, "I do not believe another 20 years is the only way through given how tech is shifting in the next decade. Africa's opportunity set comes at a unique time and there's too much of sense of 'longtermism' here." He also questioned the applicability of global ecosystem comparisons, citing "stark differences in statecraft and industrial policy" in Africa. Deng concluded by addressing the perception of Africa as an "impact sink," asserting that "things are fixable and that there are near-term wins in the pipeline," emphasizing a more immediate and pragmatic outlook for the continent's tech future.