While the deployment of venture capital (VC) in South Africa in 2025 moderated from the record levels achieved in 2024, investment activity for the year remained well above historical norms and reflects a maturing sector, industry organisation the Southern African Venture Capital and Private Equity Association (Savca) reports.

Its latest 'Venture Capital Industry Survey' shows that R2.48-billion of venture capital was deployed in the country in 2025, with R2.23-billion deployed as equity and R247-million deployed as debt funding.

While overall capital deployment moderated from the exceptional levels recorded in 2024, investment activity remained historically strong. South African venture capital investors completed more than 200 funding rounds during the year, continued to expand their active portfolios and increasingly supported existing portfolio companies through successive follow-on investments.

Collectively, these findings point to an ecosystem that is evolving from one primarily focused on funding startups to one increasingly focused on scaling them, says Savca CEO Anusha Naidu.

The ecosystem continues to mature; not through rapid expansion alone, but through increasing sophistication, stronger collaboration and a growing focus on building companies over the long term, she says.

South Africa's VC ecosystem is also increasingly follow-on driven, with 31.7% of investments in 2025 being follow-on investments, the report shows.

While the number of investment rounds remained high at 212 in 2025, capital was deployed across fewer companies. Despite a large number of local deals annually going to early investment stages, this increase in capital concentration reflects a notable shift in global VC investment, with capital concentrated into fewer, but stronger deals.

Such concentration is further strengthened locally with fund managers deploying follow-on capital to support existing portfolio companies through successive funding rounds, as companies mature towards commercial scale and eventual exit, Savca says.

Further, venture capital is delivering its strongest measurable impact through business growth. Survey results show that one new job was created for every 3.2 employees at the time of investment, and 71.1% of the 212 investment rounds in 2025 led to higher employment.

Additionally, for every R1 invested into exited deals, the reported portfolio has returned R2.45 in realised cash proceeds, which led to R2.91-billion of net realised value created in 2025 before fund-level costs, fees and taxes.

The Savca report analysed 226 realised exits in 2025, that saw R4.9-billion in proceeds from fully disclosed deals, and an average 2.45-time multiple on invested capital achieved.

VC BY SECTOR
Information and communications technology (ICT) remained the dominant sector, accounting for 62.7% of all deals in 2025. This reflects a continuation of the trend observed since 2020, with ICT consistently accounting for more than half of annual venture capital deals.

Health remained the second-largest sector, representing 17.1% of deals in 2025, continuing its consistently strong performance over the past decade and reflecting its importance as a strategic innovation priority for both the public and private sectors, the report shows.

Further, energy increased to 8.8% of deals in 2025, which is its highest share over the ten-year period, largely driven by a small number of highly syndicated transactions in 2025, rather than a broad-based increase in energy deals in general.

Business products and services continued its long-term decline, falling to 2.1% of deals in 2025 from 28% in 2016. This reflects a shift towards technology-enabled business models, leveraging technology, especially AI, as the primary driver of innovation, productivity and economic transformation.

While AI is reported as a sub-category of ICT, in mature VC markets like the US and UK, AI is not seen as a separate business category, as it permeates every part of the investment landscape.

Increasingly, South African startups develop software, AI, financial technology (fintech), cybersecurity and other digital solutions that are being adopted by banks, telecommunications operators, retailers and industrial firms, which positions startups as innovation partners within corporate value chains rather than standalone service providers.

Across the healthcare subsectors, investment remained broadly diversified. General healthcare increased to 9.3% of healthcare deals in 2025, up from 7.6% in the prior year, while biotechnology remained stable at 3.6%.

Investments in medical devices declined to 1.6% from 8.8% in 2024, indicating that the elevated activity recorded in 2024 was not sustained.

Further, energy increased to 13.5% of deals, up from 1.2% in 2024, which is its highest share over the ten-year period.

Historically, energy has featured only marginally in early-stage VC, as the sector typically requires larger capital investments than traditional venture funding.

The 2025 increase was driven by a handful of Series A and late pre-Series A investments in energy technology businesses, which attracted significant local and international co-investment, the report notes.

Meanwhile, consumer products and services also declined over the decade, although less sharply, accounting for 7.3% of deals in 2025, compared with peaks of over 20% in earlier years.

Non-fintech financial services accounted for 0.5% and materials and resources accounted for 1.6% of deals in 2025, while the overall financial services sector allocation remained relatively diversified for a market of South Africa's size, the Savca report shows.

ICT investments continued to be concentrated within specialist technology verticals. Fintech increased to 24.9% of all deals, up from 15.9% in 2024, which is its highest level over the decade. Cybersecurity increased to 8.8%, up from 5.9% in 2024.

Conversely, the broad software category declined to 4.1% from 20%, as businesses were increasingly classified according to their technology application rather than software development.

Within ICT, fintech at 39.7% of ICT deals in 2025, ICT security at 14%, and agricultural technology at 10.7% were the three largest subsectors, together accounting for 64.5% of ICT deals in 2025.

FUNDING STAGE BREAKDOWN

Meanwhile, South African VC investors remain firmly invested in the earliest institutional funding stages with pre-seed/seed accounting for 58.2% of reported deals in 2025, up from 40.7% in 2024 and consistent with most years since 2021.

Early VC, or Series A, represented 30.8% of deals in 2025, down from the record 42.5% in 2024, but still well above historical levels, which suggests a rebalancing after an exceptional 2024.

Late VC declined to 11% of reported deals, continuing its long-term decline.

While South Africa continues to face a limited pool of dedicated domestic growth-stage capital, this decline is consistent with the apparent slowdown in exit activity observed globally, with investors and portfolio companies seemingly willing, or having to remain private for longer.

Overall, the data points to a maturing VC ecosystem, with investment remaining concentrated across the Seed-to-Series A continuum as more startups progress through successive funding rounds supported by follow-on investment, Savca says.

These findings provide an important baseline for understanding how early-stage capital fits within the wider continuum of private capital required to support businesses throughout their growth journey, says Naidu.

While capital is increasingly available, the real challenge is ensuring that it finds the right investment opportunities, structures and partnerships.

The findings of this report suggest that South Africa's venture capital ecosystem is demonstrating early signs of maturity, she says.

High-quality, credible data is becoming an increasingly important enabler of institutional confidence and will play a critical role in demonstrating the long-term value of the asset class.

The next phase of growth will require continued collaboration across the ecosystem.

Improving exit pathways, unlocking greater participation from domestic institutional investors, strengthening the pipeline of investment-ready businesses and maintaining an enabling policy environment will all be critical if the industry is to realise its full potential, Naidu says.