African investment professionals earn 33% less than global counterparts due to smaller ecosystem

African investment professionals earn less than their global counterparts due to the smaller assets and funds they manage, according to data on salaries and assets under management in African investment firms by Dream VC, a venture capital institute, and A&A Collective, a global investment community. 

The average annual salary for analysts at Africa-focused venture capital, private equity, and impact investment firms is $21,000. Outside Africa, that salary jumps by 33% to $28,000. At more senior levels, the gap widens—investment managers or principals outside Africa earn $40,000 more than a principal in Africa. 

The African investment salary gap can be explained by the size of assets under management (AUM) by African funds, with the average firm managing around $87.5 million for private equity (PE) funds. Most venture capital (VC) funds manage only $50 million, while impact investment funds manage $58 million. This pales compared to global counterparts like Asia, where the average VC fund size is $324 million.

“This report brings much-needed transparency to compensation, strengthening the industry for both emerging and established investors,” Mark Kleyner, the co-CEO of Dream VC, told TechCabal about the report, which pulled data from 209 participants across 28 African countries.

Investment firms pay salaries and other operating costs out of fund management fees. Venture capital firms, which account for two-thirds of the firms sampled, charge a 2% annual management fee on the fund size, leaving 80% of the capital for deployment. If a VC firm raises a $25 million fund, it earns $5 million in management fees over a typical 10-year fund cycle.

With the median AUM by African investment firms at $50 million, most firms operate with a $1 million annual operating budget, directly causing the salary gap. This disparity risks triggering a brain drain, as investment professionals seek better-paying opportunities abroad, further shrinking the pool of experienced talent in Africa. 

African funds may need to align compensation more closely with global benchmarks to retain leadership and expertise, especially as the ecosystem is younger than more mature markets and needs more experienced professionals. This may be possible in coming years as Africa’s ecosystem continues growing. In 2017, fifteen firms were founded for the first time; by 2022, that number had grown to 25. 

Besides the young firms, Africa’s investment sector is also dominated by young professionals, with 73% under 34 and 42% aged 25–29, reflecting an industry that is packed with emerging talent. Entry-level roles like Analysts (19%) and Associates (24%) are prevalent, while senior positions such as Principals (6%) and Directors (4%) are fewer. This imbalance shows the need for more African fund managers to strengthen and expand the ecosystem.

Given how young the average professional is, it’s not surprising that over half of investment professionals hold bachelor’s degrees, while 40% have master’s degrees, including 15% with MBAs. Only 39% of professionals have studied abroad, highlighting the demand for local market knowledge—a competitive edge in Africa’s cross-border investment landscape.

Carry—an investor’s share of investment profits—remains elusive for most professionals in Africa’s investment sector. Only senior roles like principals and portfolio managers receive meaningful equity, with a maximum carry of 10%, though the average remains low at 0.016% for principals. This contrasts with global norms, where carry is a key retention tool. 

Data around compensation among African employers and employees remain scarce, and with the report, the research team “sought to create a benchmarking study that could support salary transparency and help fund managers understand industry norms for compensation.”. 

The data, Kleyner said, would also help firms “professionalise Africa’s investment landscape”—a necessity as global capital flows into the continent’s tech hubs like Lagos, Nairobi, and Accra. 

You can read the full report for more context on the African investment salary gap here.