Six founders ask investors questions about venture capital

For many founders in emerging markets, venture capital can feel like a black box. Investor expectations are often opaque, and founders rarely get the chance to question the gatekeepers of capital. 

More often than not, founders are in the hot seat answering questions about their business, while investors decide whether their company is worth backing.

In this week’s Ask an Investor, I switched the roles and gave six founders the opportunity to ask investment professionals questions about venture capital and investing. The founders asked questions about their investment thesis, support for founders, exit strategy, and just about anything related to investing. 

In this edition, founders from fintechs like Sycamore and Allawee, social media startup Storipod, regtech startup Regfyl, e-commerce startup Selar, and lending startup Reown asked investors from Endeavor, Consonance, Catalytic, Kuramo, Launch Africa, BRB, and Alitheia Capital questions. 

The questions spanned startups they missed out on that went on to do well, what the future of investing on the continent looks like, why venture capitalists keep backing the same sectors in Africa, and several others.

It is important to note that these answers reflect the personal opinions of the analysts and not their firms. 

The interviews have been edited for length and clarity.

Babatunde Akin-Moses (Sycamore’s founder): Do you foresee a time when a new investment (perhaps a blend of venture capital and private equity) would emerge to address pressing African problems that are not technology-based? 

Chukwuemeka Agba (private equity analyst at Kuramo Capital): I think that any business that really solves pressing African problems (for example, power) should be scalable. Scalability is a significant component of sustainability. 

With respect to investment sentiment around the non-typical tech-based solutions, I believe we are increasingly seeing blended financing activities on the continent with participation from development finance institutions, impact investors and returns-focused venture capital and private equity players. I believe we will continue to see growth in these types of investments across the continent.

I do not expect this to be a common source of funding for startups, but I definitely hope we see more of these collaborations between impact and returns in the future. 

James Nelson (Storipod’s founder): When many investors describe themselves as ‘sector agnostic,’ the default still seems to be fintech, mobility, and logistics. But what platforms are truly exploring or backing the creative economy in Nigeria? 

Jeffrey Akemu (platforms and operations at Launch Africa): Yes, even among sector-agnostic funds, true engagement with the creative industry remains limited. The creative economy in Nigeria is vibrant, with music, film, design, animation, and digital content generating not only cultural capital but significant commercial value. Still, it struggles to attract venture capital at the same scale as fintech or mobility. 

This is partly due to investors’ lack of familiarity with the business models that drive creative ventures, which often rely on royalties, IP monetisation, long-tail distribution, and artistic influence, which are elements that don’t always fit traditional tech VC metrics.

Ikenna Enenwali (Allawee’s founder): Have you ever passed on a startup you wish you hadn’t,  and what did they get right in the end?

Fisayo Durojaiye (investment director at WAEV Capital): I really do not have an example of a startup I passed on only to become a runaway success eventually. All of them were successful for a time and they have all crashed afterwards.

Temidayo Oniosun (serial angel investor): I wish I had a story like that. But no, I don’t think there’s any startup I’ve passed on and later regretted.

There’s never been a case like that.

What I’ve seen happen a lot is: I pass on a startup, and then a few months down the line, things become more obvious—why I actually passed on them. The issues I raised as red flags usually end up coming to light.

So for me, it’s more like being vindicated. I don’t think I’ve ever passed on a company and then later thought, “Oh, I made a mistake.” That hasn’t happened.

There was this startup. They said they had a deal with Paystack to launch Paystack’s POS business and that Paystack wanted to use them as a partner to roll it out.

The founder sat in my house pitching me hard, putting pressure on me to invest. But as I investigated, I realised he had exaggerated a lot of the claims, especially the supposed agreement with Paystack. He made it sound way bigger than it was, probably as a tactic to raise money.

I flagged those and told him straight up, “I’m passing on your startup, and this is why.”

The next month, I saw he had taken a job at another company. So I’ve had quite a few of those experiences, where startups are either on the wrong track or pushing a narrative that doesn’t hold up, and I walk away. And then months—or a year or two—later, it plays out just like I expected.

Audu Ayodeji (Reown’s founder): What triggers a follow-up conversation or a pass after the first call with a founder? 

Favour Eniola Ubaka (portfolio manager at Catalytic Capital): A terrible pitch deck that does not contain very important details like the numbers, team, or fundraise amount will lead to a pass on. There would be a pass on if the founder is unable to answer investors’ questions with confidence.

On the other hand, there would be a follow-up conversation if the founder’s pitch is in sync with the investment thesis and all necessary details are addressed during the call or on the pitch deck. The founder’s confidence can also lead to a follow-up. There are also instances where the investor’s instinct is drawn to the founder. In cases where investments cannot be made, the investor could provide business advisory, mentorship, or introductions to relevant stakeholders that can support.

Douglas Kendyson (Selar’s founder): In this current climate, what would convince you to invest in a startup with no traction?

Sumayyah Adefolu (investment and operations intern at Consonance Capital): In today’s climate, three key factors would convince me to invest in a startup with no traction: the founding team, the founder’s track record, and my conviction in the solution they’re offering.

The Founding Team: I’d be looking closely at whether the team has the resilience, passion, and competence to build something meaningful. Do they have relevant experience? Are they resourceful and credible? Reputation currency matters. I’m immediately cautious if I sense founder fatigue from repeated attempts or if it feels like they’re chasing VC funding for its own sake. As Naval Ravikant once said, “Even when I invest, it’s because I like the people involved… I learn from them… I think the product is really cool.” That sentiment resonates with me deeply.

The Founder’s Track Record: In this case, a strong history of execution matters. Ideally, I can consider a repeat founder—someone who has launched and built at least one or two ventures that have exited. Do they love the work enough for it to feel like play? Do they treat VC capital with the respect it deserves—as stewards of other people’s wealth? I’m also keen on whether they prioritise integrity and transparency in reporting and have the analytical skills to understand and work with data. That kind of founder gives me confidence, even without traction.

Conviction in the Solution: Is the product just hype, or are they tackling a real, overlooked problem that people would be willing to pay for once it’s uncovered? Can I clearly see scalability, a network effect, and a unique value proposition? If it’s simply a copycat model trying to retrofit another market’s success, I’m less likely to back it. But if I see the potential for a 10x return and genuine innovation, I’ll lean in.

Opeyemi Lawal (associate at Endeavor): Before anything else, I have to really believe in the business model. That’s always the starting point. I look closely at the market too—specifically, is there demand for the solution this business is proposing? If a startup has no traction yet, it’s typically because they’re just starting out—maybe at the pre-seed or seed stage. 

In those cases, I focus on two key things: Is there a real market for the solution, and do I believe in the founder’s ability to execute?

If both check out—if the market is clear and the founder is someone who deeply believes in the vision and can scale—then I might consider investing, even without traction. That said, it’s definitely harder to take that leap in today’s climate.

Now, if I believe the market is large, that helps determine the amount I’d be willing to invest. But sometimes, even if the market data isn’t convincing, I’ll still invest because I really like the founder or the idea—that’s more of an emotional decision.

However, if I’m relying purely on data and I don’t see market validation or founder grit, it’s going to be very difficult for me to go in. The only reason I might overlook the market is if I believe the founder has the drive and resilience to scale the business, overcome challenges, and outwork the competition.

But if I don’t see that level of grit, and I don’t believe in the market either, then it’s a no.

Babatunde Ibidapo-Obe (Regfyl’s founder):  In your experience, what are some of the bigger mistakes that founders make after raising their first institutional round?

Aisha Hassan (portfolio manager at BRB Capital): The most common and crucial mistake founders make after raising their first fund is diversion of funds from the original use of the fund during the raise round. This includes allocating capital to non-core activities, pursuing unplanned initiatives without a clear return on investment, overspending on other projects without any significant impact, rather than focusing on product development, customer acquisition and retention, and scaling operations. Also, failure to maintain financial discipline, poor cash flow management, and inadequate performance tracking can quickly compound these problems.

Aishat Adigun (value creation analyst at Alitheia Capital): One recurring issue I’ve observed is scaling faster than demand. Founders often assume that once funding is secured, it is time to hire more staff and expand the supply side of their product or service without adequately tracking or fulfilling actual demand. A good example is WeWork. They began renting and leasing workspaces at scale without securing enough demand, leading to a low occupancy rate that could not justify the supply of spaces. As a result, capital was tied down, and the runway quickly disappeared.

Another major mistake is the presence of a loose internal operating system following expansion. As startups grow, we often see a breakdown in company culture, a lack of clarity around the company’s mission, and fading alignment on the long-term vision. Objectives and Key Results (OKRs) become disconnected from day-to-day execution, and strategy remains on paper without translating into tangible actions.

One way investors can stay ahead of this is by implementing a 100-day and 1,000-day plan framework, tracking progress over time. This helps clarify what is being done, at what cost, and when, ensuring accountability and alignment across the company as it scales.

Mark your calendars!  Moonshot by TechCabal is back in Lagos on October 15–16! Join Africa’s top founders, creatives & tech leaders for 2 days of keynotes, mixers & future-forward ideas. Early bird tickets now 20% off—don’t snooze! moonshot.techcabal.com.