This paper identifies the determinants of venture capital activity using a cross-sectional
data set covering 36 African countries in a semi-logarithmic model. It finds that rule of
law, R&D expenditure as a percentage of GDP and better information between investors
and potential investees are positively and significantly related to venture capital activity
in Africa. It also finds that capital gains tax rates are negatively and significantly related
to venture capital activity on the continent.