EARLY. NOT BROKEN.

Reflections on Africa’s Tech Ecosystem and Why a Slightly Different Point of View Might Materially Improve Our Outcome

After nearly 20 years of working at the crossroads of Africa and tech (someone is starting to feel old…), I finally have the benefit of taking a breather and trying to arrange some of the thoughts that have accumulated over recent years. This piece is not “the truth”. I don’t believe there is a single truth when it comes to Africa’s evolving ecosystem. This is an exploration, a journey many of us have been on together.

That said, a decade in, with significantly more money invested, with yet-to-be-seen eye-watering returns, with evident struggles to expand the pool of interested capital beyond the obvious players, and with the persistent desire to be viewed as equals on the global VC/tech stage, I’ve allowed myself to take a slightly more contrarian view on where things might actually stand, and to offer a few thoughts on what I think could work better.

Before all of that, a much-needed disclaimer:

As many of you know, I recently parted ways with TLcom Capital after more than 14 years. The thoughts shared below are mine and mine alone. They do not represent or reflect anyone else’s thinking, and should be viewed as such.

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Trust Building - Why Does It Matter?

VC is a simple business model: take a dollar from investors, and try to return three. It is an outcome-oriented business, measured in both IRR and cash returns. Everything else is noise. The raises, the valuations and even the “impact” (apologies to some of my favourite DFI investors) are distractions. If you can’t systematically take a dollar and return more in hard cash, the cycle breaks and the industry folds.

Money allocators have more choices than ever. And without getting into the broader future of private investing (which is steadily losing ground to public markets and other more liquid and often better-performing asset classes), the basic truth holds:

Returns matter the most. Everything else comes after.

The pull of capital - the total AUM (Assets Under Management), the money entering the ecosystem - grows only on the foundation of trust. And in our world, trust is built in one way: by returning money, rinse and repeat.

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Over the last decade, we have all watched Africa’s tech ecosystem blossom from almost nothing into something real. Capital flowed in, companies were built, meaningful exits started to happen and talent density increased. But when I zoom out and compare Africa’s current stage with the trajectories of other ecosystems, a more sober and more interesting picture emerges.

Africa today looks far more like:

• the US in the 1970s and 1980s

• Israel in the 1980s and 1990s

• Europe in the late 1990s and early 2000s

• India in the early 2000s

than anything remotely close to “US VC in 2025”.

And when you use that framing, everything suddenly makes much more sense: the funding gaps, the slower scaling, the smaller exits, the thin pipeline of Series B and C companies, the shortage of scale-up talent - all of it.

It is early. Not broken.
This is the natural stage of development for a young tech ecosystem, and one that still has tremendous upside.

And the beauty is that there is nothing wrong with this. While we cannot compress time, I see a huge opportunity in adapting our toolset (read: expectations, strategies and capital structures) to our reality, and hopefully delivering the medium-term trust-building outcomes that unlock the long-term scale, growth and recurring returns many of us believe so strongly in.

So, after this long setup of the rationale, let’s get to the main meal. And like any proper one, let’s start with the appetisers: what can one infer from the growth journeys and timelines of other ecosystems?

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Appetizers from the Global Cuisines: How Things Started in Other Ecosystems That Turned Successful

Before diving into Africa’s own story, it helps to sample a few small plates from the global kitchen. Not the glossy unicorn (or ‘decatron’…) dishes we all love to chat over at fancy dinners, but the early, humble recipes – the ones that shaped the flavour, tempo and expectations of the ecosystems that eventually became global giants. Because if you strip away hindsight bias and look closely, the early years of the US, Israel, Europe and India all shared the same ingredients: small funds, modest investments, uncertain outcomes and a whole lot of trial and error.

These are the appetizers – opening the appetite for a potentially different view.

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United States – the original “slow-cooked” experiment

Today the US is the reference point for everything, but its first decades looked surprisingly ordinary. While the first VC like firms started popping up in the 1950’s, the industry was getting initial recognition from only 10-15 years later in a shape that resembles more what we know today. In the 1970s, many VC funds were only $5m–$20m. Early investments ranged from $250k to $1m, and the idea of a modern multi-stage capital stack did not yet exist.

What many people forget: the first generation of founders often came from industry, not “tech startups” as we think of them now. They were engineers, operators and product managers who had spent years at places like Bell Labs, Fairchild, Hewlett-Packard or semiconductor plants, and were solving problems they personally knew well. Research on early Silicon Valley notes that founders often emerged from established corporate R&D departments rather than university labs or garages (Source: Kenney – history of VC).

Even the most iconic early exits were modest relative to today. Intel, Apple and Genentech shaped the mythology, but most exits in the 1970s and 1980s sat in the $20m–$100m band. The Nasdaq was not yet tech-heavy, and institutional investors remained sceptical of “risky” venture-backed firms. For a quick (wrong!) sense of market size comparison, US GDP in 1980 was roughly that of all of Africa in 2024 (~$2.8t), without normalising for value of money over time.

It took the US roughly 20–25 years to evolve from this small-ball environment to one where IPOs and larger acquisitions became common. By the late 1990s – nearly 30 years in – Silicon Valley saw its first wave of consistent billion-dollar outcomes (Source: US dot-com IPO data).

In short: even the mother of all ecosystems spent two full decades looking like a place that might work, not a guaranteed success.

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Israel – the small-fund specialist that built scale over time

Israel is often portrayed as an overnight success, but the real story is slower and more grounded. In the 1980s, Israel had deep technical talent but almost no institutional VC. The major turning point came in 1993 with the government backed Yozma Programme (‘Initiative’ in Hebrew), which seeded early VC funds of $15m–$30m (Source: Yozma overview).

Israel’s early talent advantage came from two key channels:

1. Unit 8200
   Israel’s cybersecurity and intelligence unit produced a disproportionate number of technically elite founders, many specialising in cryptography, telecoms and cybersecurity (Source: Guardian - Unit 8200 and Israeli tech boom).

2. Returning diaspora talent
   Israeli engineers and executives returning from US corporates (Qualcomm, Intel, Motorola, etc.) brought global product DNA and early commercial networks (Source: Stanford GSB - early US-Israel corporate and talent ties).

These dual sources of talent pushed Israel heavily into deep-tech and B2B products long before consumer apps entered the picture. The early successes – Chromatis, Nice Systems, VocalTec, Check Point – were all enterprise infrastructure plays.

Most early Israeli exits sat between $50m and $500m, with only a handful breaching $1b. Nearly all were sold to foreign buyers, mostly US corporates, because Israel did not have large domestic acquirers (Source: IVC exit reports).

It took roughly 15 years for Israel to consistently generate mid-sized exits, and another 5–10 years to see breakout successes like Waze, Mobileye and Wix. For deeper dive into the history of this unique ecosystem’s story, I warmly recommend to read ‘Start-Up Nation’ by Senor & Singer, published in 2009.

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Europe – fragmented markets, slow capital, patient compounding

Europe is often described as one ecosystem, but in its early decades it was a collection of fragmented markets (which some will argue still didn’t change…). In many ways, it is the closest to Africa in terms of the difficulty of scaling across markets. In the 1980s and 1990s, funds were usually €20m–€50m, sometimes less. Rounds were small, and very few companies raised meaningful growth capital.

In the early decades, most successful exits for European VC-backed companies came through trade sales rather than IPOs, typically to domestic or intra-European buyers. Banks, telcos and industrial companies frequently acquired technology firms to upgrade legacy systems or add specific capabilities, rather than to build global standalone platforms. (Sources: EIF – Performance and Prospects of European VC, Government as Venture Capitalist, The Exit Decision in the European VC Market, ECB banking M&A, Campa & Moschieri – European M&A Industry).

These deals usually landed in the €20m–€200m range. Cross-border scaling was rare, and IPOs were even rarer.

Europe’s inflection point arrived only in the late 2000s and early 2010s, with breakout companies like Skype (acquired by eBay in 2005), Adyen, Spotify, Elastic, Zalando and others (Source: Atomico State of European Tech). That was after 25–30 years of slow compounding.

The early appetizer period was long, but the consistency eventually paid off.

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India – the slow and steady ascent

India may be the closest comparison for Africa on some economic axis (though still ~1.5x in GDP and a single market). In the 1990s, India saw less than $1b of VC/PE capital cumulatively in the entire decade (Source: Bain India VC report, worth looking through all the recent annual ones). Funds were small, and exits were rare.

In the early 2000s to early 2010s, India’s first real cycle of startups followed an emerging B2B playbook:

• Exporting software and IT services

• Leveraging high-quality technical talent

• Selling to the US and Europe first

• Competing on price and higher efficiencies
  (Source: Turning India into a SaaS power)

These companies rarely targeted Indian consumers early on, because domestic purchasing power and adoption were still low. Instead, they built credibility abroad before expanding at home.

Most early exits were $20m–$100m M&A deals from US and European corporates. Local acquirers and domestic IPOs were not yet viable paths.

Only in the late 2010s – roughly 20–25 years after ecosystem inception – did India generate true scale: large $100m+ rounds, multibillion-dollar exits like Flipkart, and consistent global recognition (Source: India startup exit timeline).

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The global pattern – early ecosystems all rhyme

Across all four regions, the first 20 years looked remarkably similar:

• Small funds, often $10m–$50m

• Modest investment rounds

• Very few companies raising more than $20m before exit

• Exits dominated by local M&A

• Outcomes mostly in the $25m–$300m range

• Rare billion-dollar exits

• Limited scale-up talent

• Slow development of growth-stage capital

• Trust built through many small wins, not a few large ones

Only after 20–30 years of repeated mid-sized outcomes, recycled talent, institutional capital growth and maturing domestic buyers did these ecosystems break into their “big exit” phase.

Africa today sits in that early window. And that is perfectly fine.

The question is not whether Africa can produce large outcomes. It absolutely can. The question is whether we are willing to use the right playbook for the stage we are actually in, rather than the stage we wish for it to be.

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The Main Dish – What a “Working” Ecosystem Actually Looks Like, and What Does It Mean For Africa Now

If the appetisers were about how other ecosystems started, the main dish is about what they look like once they mature and achieve scale.

This is important, because when we talk about “mature” ecosystems, we often think of a very specific picture: large growth funds, big cheques for Series C and D, a regular drumbeat of $1b exits, IPO headlines, secondary sales, founders doing podcasts about “hypergrowth”, and GPs/LPs proudly listing their DPI multiples (there will be another time to expand on that…).

In Africa, we sometimes hold that picture in our heads as if it is the natural state of things – as if “good” should look like that today. The reality, of course, is that what we are seeing in the US, Israel, Europe and India in the last 5–10 years is the outcome of 20–40 years of compounding. So it is worth pausing and asking: what does a working ecosystem actually look like when it has some miles on it, and what does it take to get there?

What maturity looks like – and how much capital sits underneath it

Let me start from the top of the food chain: very large exits.

If you look at the last 100 tech companies globally that exited for more than $1b – across IPOs, trade sales and buyouts – the pattern is fairly clear. The average company raised close to $500m, and even the median sits around $230m before exit (Source: Behind Genius Ventures – last 100 $1b+ exits). This is not one or two outliers. This is the base case.

Most of these businesses also hit scale before anyone was willing to call them “successful”. In SaaS, for example, the bar has quietly moved to what Bessemer and others now call the “centaur”: around $100m ARR, with some path to profitability, before public markets or serious acquirers get truly comfortable (Source: Bessemer – State of the Cloud; Age of the Centaur). You can find exceptions – WhatsApp, Instagram – but the direction of travel is clear. To build a big outcome today, you usually need both time and a lot of capital.

If you think back to the US and Israeli stories from the ‘appetizers’ above, this lines up. The original generation of Intel, Apple and Genentech did not raise hundreds of millions, but they were also operating in a very different environment. Today, even in those same markets, the companies that go on to be worth billions have typically raised many tens or hundreds of millions, sometimes several billions, along the way.

And the same applies to India and Europe. The Flipkart transaction in India, often cited as a defining moment, came after more than a decade of operation and billions of dollars of capital. European names like Spotify and Adyen raised large, multi-stage rounds over long periods before they could list where they did. To further contextualise, in recent years (read: post 2021 hype) Europe is back to seeing only a few +$1b exits a year of VC backed startups (Sources: State of European Tech 24 and State of European Tech 21).

So when we hold up those ecosystems as role models, we should be honest with ourselves. We are pointing at the end of a process that required deep capital stacks, not at the beginning.

The scaffolding underneath – grants, guarantees, credit lines and other “invisible” money

All of this would already make it hard to copy-paste the US 2020’s playbook onto Africa 2025. But there is another layer that is almost never discussed in African VC conversations: the non-equity capital that supported those ecosystems in their early and middle years.

Israel is the most straightforward example. The famous Yozma Programme in the 1990s was not just a nice story about clever government design. It was a real fund of funds, with public money taking the first risk (on commercial innovation, not impact metrics) to attract foreign GPs into a completely unproven market. Alongside that, the Office of the Chief Scientist (now the Israel Innovation Authority) pumped hundreds of millions of dollars into R&D grants, incubators and joint industry programmes, effectively subsidising a large part of the technology risk (Source: OECD and NBER on Israeli R&D policy).

Europe did something similar, but in a more bureaucratic way. Horizon 2020, the EIC Accelerator, national schemes like Innovate UK, Bpifrance or KfW – all of these provided grants, soft loans and guarantees that allowed European founders to build version one and version two of their products without having to give away 30 per cent of their company at Seed. India leaned on SIDBI’s Fund of Funds and sector programmes like BIRAC in biotech to do a similar job.

And in the US, beyond the glamour of Sand Hill Road, you have decades of SBIR/STTR grants, ag-tech and defence contracts, venture debt providers, revenue-based financers and a whole shadow infrastructure that helped bridge the gap between “seed” and “real business”.

In most African markets, very little of this exists at comparable scale and with a commercial mind. We are trying to play the same game, but with far fewer safety nets. That has two implications. First, it makes failures costlier and more final. Second, it means that even to get to a “mid-size” exit, founders have to use equity for things that in other places are funded with grants, debt or working capital lines. This dilutes funders and founders further, and shortens the runway, right when they most need time.

The “Conversion Funnel” analysis and what it tells us

If ecosystems evolve like meals, the funding funnel is the progression from prep to plating — the structure that helps companies move forward when they’re ready, and gives others a natural moment to exit before the next ‘course’.

In the US, when CB Insights followed 1,119 tech companies that raised seed between 2008 and 2010, about half of them went on to raise a Series A, roughly a third raised a Series B, and around 30% had some form of exit by 2018. Only around 10% of the original cohort exited for more than $50m, and about 1% became unicorns, but the point is that the funnel had enough “breathing room” (read: conversion) at each stage for companies to make it to the next level.

More recent data from Carta and others shows that those graduation rates have fluctuated with market cycles, but the order of magnitude is similar: historically, you would expect perhaps a third of seed-funded US startups to eventually hit Series A or an exit, and a meaningful fraction of those to reach B and beyond.

Now let’s look at Africa, using the Africa BigDeal dataset (which I could not recommend more!) and some numbers I pulled together using that as a base (note: numbers as of Sep 2025).

Between 2019 and 2022, there were about 582 companies in Africa that raised Pre-Seed or Seed. Out of those:

• just over a quarter (26.3%) managed any subsequent round at all

• 16% reached something that looks like Series A (including “Pre-A”)

• 4.5% made it to Series B (note: as some of those raised seed in 2022, that should be accounted for and numbers should grow with time)

• 0.5% got to Series C or beyond (see note above)

• and a little under 3% had some sort of exit in that window.

There is a second group of roughly 500 companies that first appear in the data at later stages – Venture/undefined, A, B or C – without a recorded seed round. If you blend the two populations, you get a picture of just over 1,080 African startups entering the equity funnel over those four years. Out of that combined pool, roughly 21% reach Series A, about 5% reach Series B, and less than 2% make it to Series C or later.

Those numbers are not disastrous, but they are clearly thinner than the US (and most other mature ecosystems) pattern. And once you get past Series A, the funnel narrows further very quickly. The most obvious interpretation is not that African founders are less capable, but that there simply is not enough capital – especially growth capital – to pull more companies through the later stages.

In other words, our funnel looks exactly like what you would expect from an ecosystem that is still early: plenty of activity at the top, real but modest conversion to A and B, and very few companies reaching the scale that global investors like to see. It is the shape of the kitchen, not the quality of the cooks.

Africa’s exits – still in the small-plate era

If we then ask where this funnel currently leads, the answer is: mostly to small and mid-size exits.

Looking at the larger tech exits (north of $50m) in Africa from about 2015 to 2025, the crude picture is as follows. The average company in that group raised around $250m in equity and debt before exit. For those that managed to sell for more than $100m, the average capital raised is closer to $350m. For the ones in the $50m–$100m band, it is around $75m.

The average time from founding to exit is roughly ten and a half years. Close to half of these companies are based in South Africa, with Nigeria and Egypt following well behind, and a scattering of names from Kenya, Morocco, Tunisia, Senegal and Ghana. That maps neatly onto where you would expect deeper corporate balance sheets and more established M&A infrastructure. South Africa looks, in many ways, like Europe twenty years ago: the banks, insurers and telcos are large enough to acquire, the legal and regulatory systems can digest those deals, and there is a history of PE and corporate transactions to anchor valuations.

On the sell-side, about three quarters of the exits are strategic M&A. Only two are IPOs – one in the US and one in Egypt (yes, I am ignoring ValU which was a corporate spin off), another one via a (failed…) SPAC in the US. Two others are sales to a South African PE firm. When you look at the headlines, you recognise some of the larger names: Paystack’s sale to Stripe, DPO Group to Network International, GetSmarter to 2U, InstaDeep to BioNTech, and so on. The rest are usually in that $50m–$150m zone, often to regional or local buyers (many in South Africa).

If you add it all up, the total disclosed exit value over that decade is just around $5b, split across just over 20 exits, with several not being VC backed. For a continent of more than one billion people, that number feels small. But if you go back to where Israel, India or Europe were in their second decade, it looks far less shocking. Early ecosystems are dominated by small and mid-size domestic M&A. Only later do the capital markets, the regulators and the corporate balance sheets line up to support larger and more frequent outcomes.

The question, again, is whether we interpret this as a sign that “Africa is not working”, or as evidence that Africa is roughly where everyone else was at a similar phase.

The talent curve – why experience cannot be skipped

The last ingredient in this main dish is talent. Not raw IQ or hustle, but the very boring thing we call experience and expertise.

There is a persistent myth in our industry that the ideal founder is 23, hoodie-wearing and straight out of a Computer Science degree. The global data says something very different. A large study by MIT and the US Census found that the average age of a founder of a high-growth startup is about 45. In other words, most successful founders have already had a 15–20 year career before they start the company that “works” (Source: HBR – The Average Age of a Successful Startup Founder is 45). Endeavor’s research on unicorn founders shows a similar pattern: roughly a decade of work experience before founding the $1b+ business, often including prior startups, senior operator roles or both (Source: Endeavor – Where Do Unicorns Come From?).

That has implications. In every ecosystem, the people who end up scaling companies from $5m to $100m ARR, who manage 300-person organisations or take businesses public, usually did not jump from zero to that in one go. They first went through the benches of smaller successes and failures. They learnt how to run sales teams, how to implement ERP systems, how to manage boards, how to open new countries, how to hire senior leadership. They had the benefit of someone else’s balance sheet while they were learning.

In the US and Europe, a lot of this training happened inside large corporates and then in first-generation startups that exited for $20m–$100m. In Israel, it happened in the army, in multinational R&D centres, and in early deep-tech exits. In India, it happened in IT services and BPO firms that scaled globally before product startups did.

In Africa, we simply have not yet had enough cycles for this to happen at scale. There are pockets of deeply experienced operators – often in South Africa or Egypt and sometimes in Nigeria, and increasingly among the diaspora who return from global roles. But across the continent, we still have relatively few people who have actually lived through multiple rounds of fundraising, large-scale hiring, cross-border expansion and exit processes.

When you combine that with the thin funnel and the lack of non-equity support, it is not surprising that the number of companies able to reach “global scale” is small. The ecosystem has not yet had time to grow its own bench.

So where does this leave us?

If you pull the threads together, the story is almost disappointingly straightforward.

Mature ecosystems look the way they do today because they had:

• decades of repetition and learning

• heavy capital stacks sitting under the winners

• non-equity scaffolding to stretch runways and de-risk early bets

• funnels that gave a reasonable share of startups a chance to progress

• domestic buyers willing and able to absorb exits

• and a deepening pool of experienced operators

Africa, by contrast, is (maybe) a decade into its serious tech experiment. Our funnel is thinner. Our exits are smaller and more local. Our non-equity support is minimal. Our talent bench is still being built. None of this is flattering, but none of it is abnormal either.

If anything, it tells us that the African tech story is behaving like every other ecosystem’s story – just on a different timeline, with a few extra constraints around currency, fragmentation and unstable (and unpredictable) regulation layered on top. The right response is not to pretend we are in act three of the play when we are clearly still in act one. It is to design funds, strategies and expectations that are honest about the stage we are in, and to build towards the next chapter with that reality in mind.

The dessert, hopefully, will taste better building on flavours from the starters and main, but focused on proposing a potential path forward that might support better outcomes mid and long term.

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Dessert – or what should we actually cook now?

If the starters were about history, and the main course about where Africa really is today, dessert is about what we do with all of this.

Let us assume, for a moment, that Africa has another 10–15 years of what we have already started to see: mostly small and mid-sized exits, with “good” outcomes sitting in the $50m–$250m range, and only the occasional larger transaction. That picture fits both the African data from the last decade – where most meaningful tech exits cluster below $120m with a few outliers like Paystack’s $200m+ sale to Stripe or DPO’s ~$291m acquisition by Network International – and the path other ecosystems took in their second decade.

In that world, local balance sheets and M&A systems can probably support a growing number of $50m–$150m exits, with the occasional $200m–$500m deal driven by pan-African or global strategics as well as PE. TechCrunch’s summary of “Africa’s biggest exits” still reads like a short list, with InstaDeep, Paystack, DPO and a handful of others standing out precisely because they are still rare.

So if that is the likely shape of the next chapter, what does it mean for fund sizes, investment strategies and not less (and maybe more) importantly - expectations?

Smaller funds for an early kitchen

If the median “good” outcome for the next decade is in the lower hundreds of millions – and if the frequency of those outcomes is still limited – then it is hard to argue that a $500m Africa-only growth fund is the right tool for the job.

The math is simple, even if we ignore fees. A $500m fund needs to return something like $1.5b to hit a 3x gross. If your “great” portfolio company exits for $300m and you own 10 per cent at exit, that is $30m back. You would need a long list of such wins just to get your money back, let alone beat public markets. Even a $500m outcome, with the same 10 per cent stake, gives you $50m. Nice, but not fund returning.

In an environment where most exits are in that $50m–$250m band, it simply fits better to have $20m–$75m early-stage funds that write sensible cheques into Seed and A, can be meaningfully moved by a $100m exit, and do not rely on three unicorns to make the maths work. This is broadly what we saw in the first 15–20 years of Israel, India and Europe: smaller funds, more modest expectations, but very healthy multiples when the vintage lined up.

That does not mean “small = easy”. Small funds can also underperform spectacularly. But structurally, in an ecosystem where the funnel to B and C is still narrow, capital-efficient early funds make much more sense than trying to force a billion-dollar-growth-fund reality into a market that is not ready.

Expectations, not just fund sizes

Smaller funds on their own are not the solution. What we really need is aligned expectations all the way through the chain.

For LPs, that means underwriting Africa funds against a realistic distribution of exits, not an imaginary pipeline of $5b IPOs. For GPs, it means being honest about what fund size can actually be supported by the opportunity set and the funnel. And for founders, it means building companies that are designed to be valuable at $50m–$250m, with clear strategic buyers and credible paths to profitability, rather than pitching every business as if it must become “the Stripe of X” or “the Uber of Y”.

This is where the exit strategy stops being an afterthought and becomes part of the original recipe. If your most likely path to liquidity in the next 10 years is:

• a local bank or telco buying you to upgrade its infrastructure, or

• a regional player (say, a Network International–type acquirer) expanding across Africa, or

• a global strategic looking for distribution, licences or product gaps,

then the company should be built with that in mind from day one. Who needs this asset? What would make it plug in neatly? What regulatory, data or integration “moats” matter to those buyers? Paystack and DPO did not just stumble into their exits. They built real payments rails and merchant relationships in markets that were strategically important to their acquirers (with big difference in strategies between single market depth, and multi market breadth).

The same logic applies to sectors where Africa can sell into the world, not just to itself. Israel leaned heavily into deep tech – cybersecurity, chips, defence-adjacent AI – where it had a structural edge and global demand (today, Israel attracts roughly 20 per cent of global cyber funding). India played the “India for the world” game in SaaS and IT services, building cost-competitive tools for global SMEs and enterprises – Zoho, Freshworks, Postman and others all started from that premise.

Africa will need its own version of those “unfair advantages”. Some of it may be in payments, infrastructure and fintech. Some in climate and energy, where Africa’s resource base and constraints are different (including tech for and around natural resources security, where US and Europe are starting to spend much more money and time). Some in logistics, agriculture or AI models trained on under-served data sets. But whichever wedges we pick, we will need to think much harder about who buys and why, not just “how big can the TAM slide be”.

Realism is not pessimism. It can be optimism, with a sense of reality intact. While there are always outliers, the chances of building the next global leader in AI is smaller when you have neither the GPUs, constant power supply or the experienced talent to build around. But there are areas where the combination of younger population (vs. the fast aging developed world) and the ability to test and iterate fast due to less constraining regulation or cultural expectations – can be a huge plus.

Expectations management goes to founders and funders as one. Owning 40% of a $50m exit is life changing. And globally, many founders built one (or more) ‘smaller’ successes before hitting it out of the park. You build, you learn, you grow, you repeat. We also sometime avoid the more obvious (better tech talent in SA, that has a relative cost advantage, going from Egypt to the Middle East first, where there is more liquidity and higher buy power) or avoiding a ’smaller’ African market as it doesn’t support a ‘billion dollar outcome’ - looking for the perfect story.

Touching back on the funding funnel point made earlier, every fundraising round is a junction. Turn right to exit, or keep straight and go further up. What we sometime fail to remember, is that the further you climb (on valuation and money raised), the smaller the buyers’ universe (read: exit routes) becomes. There are much less SaaS buyers at $1b then at $200m. Something we tend to speak less about.

There is a fundamental thing we shouldn’t forget. To scale, you need first to build trust. Trust over time in the ability to return consistently (smaller amounts) is what powers ecosystem from early to mature. Not a single ecosystem seems to have skipped that.

Building actual bridges, not just slogans

If we accept that corporates (local, regional and global) will be the primary liquidity route for the next decade (and yes, we also need some IPO routes, but realistically, on a scaled basis, they are for a bit later for now), then part of the work is painfully unsexy: building the bridges.

On the local side, that means doing the hard work of getting African corporates comfortable with acquiring tech assets rather than just procuring software. There are early signs of this in South Africa’s M&A market, where local acquirers have been more active and comfortable with buying growth stories than in many other African markets. But in Nigeria, Egypt, Kenya and elsewhere, the default mindset is still often “vendor” rather than “target”.

On the global side, it means picking a few archetypes and going deep. For instance:

• Global payments and fintech rails, where the Stripe/Paystack and Network International/DPO pattern can repeat in other segments of the stack.

• Cost-competitive B2B software, taking a page from the Indian SaaS playbook: build for the world from day one, price intelligently, and sell remotely.

• Food or natural resources security for the developed world, looking to reduce dependency on places like Russia or China.

For each of these, someone has to sit down and design the actual playbook: which conferences matter, which BD relationships, which standards, which compliance regimes, which small acquisitions or partnerships could be stepping stones. “Global winner from day one” is a nice slide. “Here are the five buyers, the three routes to them, and the metrics they care about” is a strategy.

Yes, we will still need growth funds – just not yet, and not any size

None of this is to say that Africa should give up on growth-stage capital. Quite the opposite. If we do our job properly in the Seed-to-B years, there will come a point – as in other ecosystems – where the constraint flips. Suddenly there are enough companies at $10m–$100m ARR or equivalent, and not enough local capital to help them double or triple.

Growth funds will be essential at that point. But they should probably look and behave differently from some of the “aspirational” vehicles we have seen floated in the last cycle.

In a world where:

• the typical strong exit is still $200m–$500m,

• ownership at exit is often 10%–20% for any given fund, and

• the number of such exits per decade is limited,

it is hard to make the case for multi-hundred-million-dollar single-strategy Africa growth funds today. More focused vehicles – for instance $150m–$250m funds with concentrated portfolios, clear sector theses (including creative roll-ups and consolidation plays) and a willingness to combine equity with structured instruments – are far more consistent with the exit landscape we are likely to see in the medium term.

Over time, as the funnel thickens and the exit ceiling rises, that can change. In the US, Israel, Europe and India, the big growth funds showed up in force in the second and third decades, when trust in the asset class had been earned through repeated distributions, not just TVPI. There is no reason Africa should be different. We just need to let the trust compounding happen first.

Getting creative with capital, because equity cannot do it all

Finally, I want to talk about the tools.

As things stand, most African startups fund almost everything with equity: product development, market expansion, regulatory licences, sometimes even working capital for inventory or receivables. Venture debt exists, but it is still super thin and concentrated. Local banking systems are often not set up to lend against software cashflows or early recurring revenue. Currency risk, political risk and shallow capital markets only make it harder. Reports from AVCA and others continue to show that the overwhelming share of disclosed startup financing on the continent remains equity, especially at the earlier stages.

If we want more companies to survive long enough to matter, equity needs more help. That could mean:

• Funds with flexible mandates that can do a mix of equity, quasi-equity and structured revenue-sharing (read also: reduced return risk adjusted over time).

• Local instruments that look a bit more like working capital guarantees, inventory financing or offtake-backed lending.

• Public or blended schemes that mimic, in an African way, what SBIR, Horizon, Yozma, BIRAC and others did elsewhere that are commercial first, and less impact.

I am far from believing I can offer any comprehensive solution. But it is clear that a world in which every risk – technology, product, go-to-market, FX, regulatory, working capital – is priced into one equity cheque is a world in which very few businesses make it to scale.

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Closing Thoughts

If the opening of this piece was about saying “early, not broken”, the dessert is about accepting the consequences of that.

Early means exits that are mostly small and mid-sized for a while. Early means fund sizes that are disciplined, less constrained and more aligned. Early means being explicit about who buys what we are building, and why. Early means investing in bridges – to local corporates, to more specific global buyers and to specific niches where Africa can actually have an edge. Early means being creative about capital, because we do not yet have the luxury of deep, liquid credit markets.

The good news is that every ecosystem we admire went through exactly this stage. The bad news is that there are no evident shortcuts. The only way out is through: a decade or two of matching our strategies, our tools and our expectations to the reality of where we are, rather than to the fantasy of where we wish we were.

If we can do that, the next generation may very well be where many of us wanted to already be now. Mature, scaled, and world class.

And because all of this is only one person’s view – shaped by a couple of decades in and around this ecosystem, full of my own biases and blind spots – I would genuinely prefer if this piece became the start of a wider conversation rather than the end of one. We have some extraordinary thinkers, operators, founders and investors across this continent (and around it), and I am convinced that the more we compare notes, interrogate data, challenge assumptions and share lived experience, the faster we will find the right paths. If anything, the next decade will reward exactly that kind of honest, collective exploration. So take this as an invitation: disagree, refine, build on it – and let’s keep talking. Because if there is one thing history shows across all ecosystems, it is that progress compounds fastest when the people building it are learning together and speaking their minds openly.