Exits in Africa, VC support, and the hottest sectors
Five weeks ago, we rebooted our Ask an Investor column, and in that time, we spoke to the heads of investment at Oui Capital, Antler Nigeria, Capria Africa, HoaQ, and Launch Africa. Scattered from Nairobi to Lagos, these fund managers told TechCabal how they find startups, guide founders, and, more importantly, how they land or think about exits in Africa.
This week, we are publishing a recap that highlights the three biggest questions that have come up in our conversations so far: How do you deliver successful exits in Africa? What kind of support can startups expect? Which sectors are most likely to produce big wins?
Exits and how to deliver them
Secondaries are the practical path to liquidity
In our first episode back, Oui Capital’s Olu Oyinsan told TechCabal that secondaries—where an investor or founder sells some or all of their stake in a company to other investors—are not the gold standard for investors, but “liquidity is better than no liquidity.”
In 2021, Oui Capital invested $150,000 for a 1.2% stake in Nigerian fintech Moniepoint, and three years later, when it became a unicorn, Oui Capital partially exited its $150,000 investment to other investors and returned $8 million—enough to return its first fund twice to investors.
All five investors we spoke to echoed Oyinsan’s thoughts: Africa’s exit landscape is still evolving as full acquisitions and IPOs remain relatively rare. Consequently, secondary sales have emerged as the “path of least resistance for liquidity,” according to Launch Africa’s Uwemakpan.
His firm has observed significant demand from later-stage VCs or strategic investors who want to buy out early investors in successful startups. Given the relative scarcity of large-scale M&A or IPOs, secondaries are a practical exit lever for seed-stage funds like theirs.
HoaQ experienced this firsthand when it used the secondary strategy to secure a 6x return on Raenest at the Series A stage. Despite being a small cheque, the partial exit was enough to deliver substantial gains to their angel syndicate members.
Patience and discipline bring exits
Across the board, the VCs caution that the best exits in Africa require patience. They also emphasised that the best way to achieve a good exit—whether via acquisition, secondaries, or even an IPO—begins with strong governance and rigorous reporting from day one.
At Capria, startup founders are told that the importance is on staying focused on good governance, strong financial controls, and local resilience from the earliest stages. Good fundamentals, Mobola da Silva argued, will always be an exit magnet.
However, the discipline cuts both ways. Oyinsan told TechCabal that investors also need to understand the importance of “portfolio construction discipline” and “thinking about the exit math” as early as the seed round. In their Moniepoint deal, they deliberately sized their cheque so that if (and when) the startup reached a lofty valuation, their stake would be large enough to return the fund.
Antler’s Anil Atmaramani, who invests extremely early in Nigerian startups, explained that “inception-stage” bets take time to mature. His approach is to help founders pivot fast if needed, build disciplined habits early, and keep them on a pathway towards eventual acquisition or robust follow-on rounds.
Sometimes, investors have to create their exits
Exits are hard, and investors often have to be proactive in securing exits in Africa. Oui Capital helped Moniepoint set up “a data room and the entire due diligence process,” specifically to make the company more legible to future growth-stage VCs. They also facilitated partial buyouts of an early stakeholder who opposed the startups’ pivot to retail customers. All of these steps smoothed the road for bigger rounds—and, in turn, a lucrative partial exit.
Launch Africa designs their follow-on strategy and constantly coaches founders to meet the diligence expectations of Series A and B investors. They have also repeatedly teed up secondaries that bring in new investors and grant Launch Africa partial liquidity.
The type of support startups get from VCs
Deep operational support and networks
While money is crucial, all five investors stressed that African founders need robust operational support.
Launch Africa, a VC firm with over 140 startups in its portfolio, identified two main support areas for founders: strategic support and operational support. The firm uses what it calls a “coverage model,” where each partner oversees a handful of startups deeply. They also run weekly office hours and “actively coach founders on pitch preparation, deck refinement, cap-table management, and investor targeting” while also leveraging their network of corporate partners. The ultimate goal is to make each startup “Series A–ready” as soon as the metrics allow.
HoaQ stressed giving founders “hands-on, founder-first” guidance on everything from recruiting to forging corporate partnerships. Because it operates both a syndicate and a fund, it has built a large community of angels, founders, and micro-VCs. Startups that take their cheques get introduced to this crowd for co-investments, pilot customers, or future hires. It’s a distinctly community-driven form of support, with a big emphasis on curated introductions.
Antler provides a structured “day zero” approach and provides “pre-company” support. They recruit aspiring founders—often with domain expertise—and match them with co-founders, provide a monthly stipend so they can focus on building, and host them in a structured residency program. They continue with board-level guidance through future rounds, basically “staying in the trenches” until Series C.
Capria maintains an in-house AI team that can partner with portfolio companies on product development. This offering is optional yet highly valued by founders looking to implement advanced technologies without hiring entire engineering teams. They also employ a local partner model, investing in local VCs with on-the-ground insights. This dual model ensures that startups receive not just a global vantage point but also hyper-local, daily operational guidance.
The best-performing sectors to invest in
Fintech remains the star
Unsurprisingly, the consensus across almost every article is that fintech continues to lead, generating the largest raises and most rewarding exits in Africa. Launch Africa allocates 30–40% of its portfolio to fintech and fintech-adjacent solutions, while Capria devotes half of its Africa portfolio to fintech.
But B2B models are increasingly hot
The investors all cited a shift toward business-to-business solutions that bring steadier revenue streams and clearer paths to profitability. Launch Africa invests heavily in B2B and B2B2C because they find “more sustainable growth and lower acquisition costs” compared to purely consumer-facing models.
Rising interest in agtech, healthtech, and “tech-enabled”
Capria actively invests in agtech, healthtech, and jobtech. Their view is that these “transformative, large-scale solutions” are not just profitable but also essential, given Africa’s infrastructural gaps.
Antler is sector-agnostic but keeps an eye on overlooked or “non-traditional” segments that are “ripe for disruption” with the right founder teams, particularly if integrated with fintech-like revenue mechanics. Their example: a skincare brand (Uncover) that thrived in East Africa with modest but well-targeted tech enablement.
AI and data
While pure AI infrastructure plays are less common, many funds see AI as the next layer of innovation. Capria invests in “applied AI,” meaning startups that integrate AI into core workflows (like job matching or automated lending decisions). They believe “applied AI can be transformative in emerging markets” and have set up an entire AI team that portfolio founders can tap for integration projects.
Launch Africa expects AI/data startups to become a key theme, presumably as B2B solutions get more sophisticated about analysing consumer or enterprise data, and HoaQ invests in “tech-enabled” businesses across the board, and saw an AI-based developer tool (Baseline) exit to Cloudflare.
Crédito: Link de origem