In 2017 I gave a TEDX talk entitled “Who owns our future unicorns?” At the time, the only billion-dollar startup on the continent was Jumia, a pan-African e-commerce, logistics and payments company that became a unicorn in 2016.
But I was sure there would be more to come. And they went with Fawry and Interswitch in 2019. Since then, we have seen more African startups achieve a billion valuation, attract international funding, and even withdraw from major global players.
This is an important growth marker for the continental launch ecosystem, and many of these companies solve important issues and become an important part of everyday life, especially within the payments sector.
However, the original questions I raised during the 2017 TEDX Talk still remain. Who truly owns the benefits of Africa's innovation economy? More specifically, who is responsible for maintaining it?
African startups continue to attract meaningful global interest. In 2024 alone, they secured $3.2 billion. This is a testament to the talent and ambition that thrives on the continent. Most of this funding came from foreign investors, including development financial institutions and international venture companies.
These partners have played a key role in catalyzing the African innovation ecosystem. This continues to be a necessary role and is deeply appreciated. Their contributions, including capital, institutionalization, risk appetite and a proven playbook, have helped lay a strong foundation for growth.
As ecosystems mature, new dynamics are beginning to emerge, namely the rise of “context capital.” For the first time in the first quarter of 2025, local investors participated in more transactions than foreign investors.
This is a meaningful signal, not a transition from what worked, but an extension. This is an indication that the foundation for support for innovation has widened and more local stakeholders feel empowered by their role, the responsibility it carries, and the appeal of the key benefits.
What you need now is deeper participation. I use the “capital of context” to describe local capital. Local capital has context and living experience in the markets run by the companies it invests in.
The capital can also come from angel investors and institutions. Local capital does not replace global capital, but it adds a unique and valuable layer of understanding. These sources of capital experience have experienced busy Cairo traffic and understand the traditions of WhatsApp groups in the diverse niche communities of Lekki, Lagos State.
Investors with local contexts can move beyond contractual transactions into deeper embedded relationships. They help navigate informal “permission-based” systems, understand regulatory nuances, and provide trust built on proximity and sharing experiences.
Alongside global capital, this type of capital is highly appreciative that it can strengthen startups in practical ways by supporting coordination with local needs, ensuring relevance in complex environments and promoting long-term sustainability.
This does not diminish the role that foreign capital has or continues to play. The goal is to build a more balanced, resilient, and comprehensive partnership. As seen in markets such as Silicon Valley, Deep Shenzhen and Bengaluru, the local strong capital base often grows with international support. The results are less global. It's more rooted and ultimately more sustainable.
Turning Point
A turning point may have appeared. In the first quarter of 2025, local investors surpassed foreigners in the start-up participation for the first time. This is proof that the tide can actually turn. But it's still a vulnerable moment. Without intentional action, we risk losing momentum.
Thankfully, these days, many early investors in African startups have experienced liquidity events through strategic exits or secondary sales, with up to 50 times the investment capital.
The reality is that as a local investor, our proximity to challenges in the market has an advantage when combined with capital. Benefits that help increase the chances of successful startups investing in.
To build lasting momentum, the Africa Playbook must employ local investors who have built local businesses from start to finish.
Also, leveraging deep pockets, growth capital, global playbooks and input from foreign investors that bring experience from other markets and international networks, the Africa-based founder is increasingly hoping to expand from Africa to the world as a global champion.
The number of scaled African startups, which started locally, supported by LEMFI, Move and local capital, is increasingly expanding globally by leveraging a global network of investors.
In the United States, funds and pension funds served as the basis for emerging capital, bringing a long-term vision and scale. In China, state-backed funding and technology conglomerates led the way. In India, there was a mix of regulatory reforms, participation in the family room and government co-investment. Each market has found a clear path. Ours looks different, but not so intentional.
So, what does the African roadmap include?
Institutional and Angelic Capitals
Our pension and insurance funds account for more than $20 billion in undeveloped capital. These pools are patient, suitable for the long-term perspective of the venture, domestically. While startups are high-risk ventures, the potential feature returns can provide the benefits of an attractive barbell strategy that can help boost the overall return profile of what is in a low-risk portfolio.
The Nigerian Sovereign Investment Authority (NSIA) including Egypt's Micro, Small Business Development Agency (MSMEDA), are burning the trails, but more is needed.
Reforms are ongoing, but remain incomplete. For example, the Nigerian Startup Act includes tax incentives to promote local investment. However, these incentives have not been implemented yet.
We have seen similar policies achieved in places like the UK, where plans like the Enterprise Investment Scheme (EIS) dramatically increased Angel's activities by lifting early stage bets. Activating a similar mechanism lowers the barrier for local capital to be involved, especially in important seeds and series A stages where local context is most important.
Reevaluated scale
We also need to revisit ideas for scale and terminal exit assessment. Not every company has to become unicorns. In fact, a healthy ecosystem needs to accommodate a variety of outcomes. This is a capital-efficient company that will withdraw for $50 million or $100 million, startups that list on local exchanges, and companies that will steadily dividend or adopt revenue sharing models.
Our capital markets may not yet support large IPOs, but they can generate liquidity at a more accessible level. Even as we work to deepen it, it is essential to start building a company designed to succeed within our current infrastructure. Ultimately, liquidity is important to promote sustainable investor participation, whether local or foreign.
One of the most important changes we can make is cultural. It is to encourage more local participation at the angel level. For example, after the PayStack exit in 2020, I was flooded with calls from people who wanted to invest in startups. However, by 2024, much of that interest had faded amidst the Forex shock and economic uncertainty.
This cycle of excitement and the subsequent retreats are understandable. Currency devaluation and macrosing are important issues. But for those of us investing in emerging markets, these challenges are not bugs. They are functions. Rather than going on years of comfort, ventures are investing in vintages. If we want to make a profit, we need to work hard and continue to exist throughout the cycle – this is held for all investments.
This is why we are excited about the work that groups such as the Lagos Angel Network, African Angel Academy, and African Business Angel Network are doing to educate and expand the pool of active angel investors. On the institutional aspect, the venture platform is committed to supporting a broad, resilient base of capital allocators that evolve the cycle and invest.
