South African VC Returns Rival Developed Markets As Exits Surge Counters Scepticism
One of the perennial gaping holes in African venture capital’s growth story, exits, is finally starting to close in South Africa.
New data shows 226 realised exits since 2009, returning more than ZAR 2.9 B (~USD 175 M) to investors at a 2.45x multiple. That performance matches or exceeds US and European benchmarks, upending a decade of LP reluctance based on a perceived lack of exit history.
For years, global backers passed on African markets, branding them too risky with no track record for getting money out. They often cite a lack of exit history and, as a result, are hesitant to commit. The data, however, tells a different story.
A pair of new studies from the SA SME Fund, Endeavor South Africa and SAVCA have pulled together a comprehensive picture of South African venture capital exits. The numbers tell a story that doesn’t match the narrative that has dominated LP due diligence calls for the better part of a decade.
Between 2009 and 2026, South African fund managers reported 226 realised exits. The capital-weighted realised returns ranged from 2.01x to 2.45x invested capital. For every rand invested in exited deals, the reported portfolio returned ZAR 2.45 in realised cash proceeds before fund-level costs, fees and taxes.
Compare that to the numbers the industry treats as gospel. The US sits at 2.0 to 2.3x. Europe at 1.7 to 2.1x. The UK at 2.2x. South Africa matches or beats every one of them.
“African VC does not have an exits problem,” said Wura Kayode, founder and CEO of FundFlow.VC, in her analysis reacting to the findings. “It has a perception problem.”
The data bears that out. Of the 226 exits analysed, the majority were profitable. Losses and write-offs occurred at expected levels for venture capital investing. The median realised investment was modestly profitable. And like venture markets everywhere, a relatively small number of high-performing investments drove a significant share of total value creation, mirroring the power-law return profile observed internationally.
The South African story is particularly interesting in how the exit landscape has shifted. For most of the past decade, a South African tech founder looking to sell had to hope a foreign buyer came knocking. That has changed.
Domestic mergers and acquisitions, led by the country’s banks, have emerged as a major exit route. Nedbank bought payments fintech iKhokha in a ZAR 1.65 B deal. Capitec acquired WalletDoc. TymeBank swallowed SME lender Retail Capital. Lesaka Technologies took over payments group Adumo. Mastercard is pursuing a deal for BVNK. Motorola Solutions bought RapidDeploy. Ticketmaster acquired Quicket. And Optasia listed on the JSE.
“Between 2015 and 2020, the businesses that exited were all sold to international companies,” said Endeavor South Africa managing director Alison Collier at a briefing on the research. “That changed in the early 2020s. Now we’re seeing many more local corporates looking to acquire”.
SAVCA investment data suggests the emergence of a second investment cycle from 2019 onwards, characterised by a marked increase in new deal activity. More than 1,100 companies have received VC funding since 2016. With a median holding period of around six years, much of the capital deployed in recent years has yet to reach typical exit maturity. The first wave of related exits is only beginning to emerge from 2024 onwards.
There are caveats, however. The research reports only the portion of exit value attributable to the reporting fund manager’s equity stake, meaning the actual market valuations at exit were often larger. Data collection relied on fund manager self-reporting, and 43 confirmed profitable exits did not disclose exit values, meaning the reported aggregate proceeds almost certainly understate actual realised value.
But the broader point stands that South Africa’s venture capital ecosystem is producing realised returns comparable to more mature international markets.
