Report: 2019 Was A Record Year For VC Funding In Emerging Markets

Last year marked records for venture investment in a number of emerging private capital markets, including Africa, Southeast Asia, Latin America, India and CEE and CIS 1, according to a recent report by EMPEA.

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In fact, venture capital in emerging markets has more than doubled (in dollar terms) to $27.4 billion in 2019 compared to $12.6 billion in 2014, the report said.

New York-based EMPEA describes itself as the global industry association for private capital in emerging markets. The nonprofit organization brings together more than 300 firms — including institutional investors, fund managers and industry advisers — who manage more than $5 trillion in assets across 130 countries.

Every emerging market tracked by EMPEA saw a bump in venture dollars raised in 2019, with the exception of China, which saw a pretty dramatic drop, as you can see below.

Africa, in particular, saw venture capital investment surge more than 10 times since 2015 to $764 million raised across 53 deals in 2019. Also, dollars invested more than tripled year over year in 2019. Nearly half of all VC dollars ($358 million) were deployed in Nigeria. Logistics startup Zipline raised $190 million in 2019, marking the continent’s largest deal.

500 Startups, Egypt’s Algebra Ventures, South Africa-based CRE Venture Capital and Europe’s Goodwill Investments were among the most active VC investors.

Investment themes

Julie Ruvolo, managing director of venture capital for EMPEA, believes that global emerging markets — at least with respect to their VC/tech ecosystems — are approaching the COVID-19 crisis from a position of relative strength.

Indeed, Crunchbase News recently reported on how Latin America has experienced consecutive years of venture capital numbers doubling, with 2019 being a record investment year and also a record fundraising year.

But overall, for emerging markets, a lot of the top deals were in fintech, logistics and ecommerce, according to the report.

“A number of these players only become more relevant in the emerging market context — access to cash and financing, the ability to move things around, and the ability to transact online versus in-store,” Ruvolo pointed out.

Also, ed tech and health tech were already major investment themes in 2019. The EMPEA report spotlights health tech for Southeast Asia and China, and ed tech for India specifically.

“These sectors only stand to become more relevant in 2020,” Ruvolo said.

Illustration: Li-Anne Dias