In 2017, I gave a TEDx talk entitled‘Who Will Own Our Future Unicorns?’ At the time, the only billion-dollar startup on the continent was Jumia – a pan-African e-commerce, logistics and payment company – which became a unicorn in 2016.
Yet I was convinced more would emerge; and they did in 2019, with Fawry and Interswitch. Since then, we’ve witnessed more African startups achieve billion-dollar valuations, attract international funding, and even exit to major global players.
This represents a significant growth-marker for the continent’s start-up ecosystem, with many of these businesses solving critical pain points and becoming an essential part of our daily lives, particularly within the payment sector.
However, the original question I raised in the TEDx talk in 2017 still lingers: Who truly owns the upside of Africa’s innovation economy? More specifically, who carries the responsibility for sustaining it?
African startups continue to attract meaningful global interest. In 2024 alone, they secured $3.2bn, a testament to the talent and ambition thriving on the continent. Most of this funding came from foreign investors, including development finance institutions and international venture firms.
These partners have played an essential role in catalysing Africa’s innovation ecosystem, a role that continues to be required and one that is deeply valued. Their contributions, including capital, institutionalisation, risk appetite, and proven playbooks, have helped lay a strong foundation for growth.
As the ecosystem matures, we’re beginning to see the emergence of a new dynamic: the rise of ‘capital-with-context’. For the first time, in the first quarter of 2025, local investors participated in more deals than foreign investors.
This is a meaningful signal, not a shift away from what has worked, but an expansion. It’s a sign that the base of support for innovation is broadening and that more local stakeholders are joining the journey, feeling empowered by their role, the responsibility it carries, and the allure of significant upside.
What’s needed now is deeper participation. I use ‘capital-with-context’ to describe local capital, which has context and lived experience in the markets where the businesses it invests in operate.
This capital can come from angel investors or institutions alike. Local capital does not replace global capital, but it adds a layer of unique and valuable understanding. These capital sources have experienced the hectic Cairo traffic and understand the WhatsApp group traditions of the diverse niche communities in Lekki, Lagos State.
Investors with a local context can move beyond contractual transactions to deeply embedded relationships. They help navigate informal, ‘permission-based’ systems, understand regulatory nuance, and offer trust built on proximity and shared experience.
There’s a growing appreciation that this kind of capital, alongside global capital, can strengthen startups in practical ways – by supporting alignment with local needs, ensuring relevance in complex environments, and fostering long-term sustainability.
None of this diminishes the role foreign capital has played or continues to play. The goal is to build partnerships that are even more balanced, resilient, and inclusive. As seen in markets like Silicon Valley, Shenzhen, and Bengaluru, a strong local capital base often grows alongside international support. The result isn’t less global; it’s more rooted and, ultimately, more sustainable.
A turning point
A turning point may have emerged. In Q1 of 2025, local investors outpaced foreign ones in start-up participation for the first time. This is proof that the tide can indeed turn. But it’s still a fragile moment. Without deliberate action, we risk losing the momentum.
Thankfully, in recent times, many early investors in African startups have experienced liquidity events through strategic exits or secondary sales, with multiples of up to 50 times invested capital.
The reality is that as a local investor, your proximity to the challenges in our markets is an advantage when paired with capital. An advantage that can help increase the likelihood of success for a start-up you invest in.
To build lasting momentum, the ‘Africa Playbook’ must employ local investors who have either built local businesses from start to finish and beyond, with battle scars and lessons to share with founders, or who are deeply connected via their experiences in large local enterprises on the continent.
Drawing also on the input of foreign investors, who bring deep pockets, growth capital, global playbooks, experience from other markets and international networks, Africa-based founders increasingly want to expand from Africa to the rest of the world as global champions.
Just like LemFi, Moove and a growing number of scaled African start-ups that started locally, backed by local capital, but have leveraged global investor networks to expand globally.
In the US, endowment and pension funds became a cornerstone of start-up capital, bringing long-term vision and scale. In China, state-backed funds and tech conglomerates led the way. In India, it was a mix of regulatory reform, family office participation, and government co-investment. Each market found its distinct path. Ours will look different, but no less deliberate.
So, what might Africa’s roadmap include?
Institutional and angel capital
Our pension and insurance funds represent over $20bn in untapped capital. These pools are patient, domestic, and well-suited to ventures’ long-term horizons. While startups are high-risk ventures, the potential outsized return can offer an attractive barbell strategy advantage that helps boost the overall return profile for what are meant to be low-risk portfolios.
The Nigeria Sovereign Investment Authority (NSIA) and others, such as the Micro, Small and Medium Enterprises Development Agency (MSMEDA) in Egypt, are blazing the trail, but much more is needed.
While reforms are underway, they remain incomplete. The Nigerian Startup Act, for instance, includes tax incentives to spur local investment; however, these incentives have yet to be implemented.
We’ve seen what similar policies have achieved in places like the UK, where plans like the Enterprise Investment Scheme (EIS) dramatically increased angel activity by de-risking early-stage bets. If we activate similar mechanisms, we’ll lower the barrier for local capital to engage, especially at the critical seed and Series A stages, where local context matters most.
Reevaluating scale
We also need to revisit our idea of scale and terminal exit valuations. Not every company needs to become a unicorn. In fact, a healthy ecosystem should accommodate a range of outcomes: capital-efficient businesses that exit at $50m or $100m, startups that list on local exchanges, and companies that generate steady dividends or adopt revenue-sharing models.
Our capital markets may not yet support massive IPOs, but they can and should create liquidity at more accessible levels. It’s essential to begin building companies designed to succeed within our current infrastructure, even as we work to deepen it. After all, liquidity is critical to driving sustained investor participation, whether local or foreign.
One of the most important shifts we can make is cultural: encouraging more local participation at the angel level. After Paystack’s exit in 2020, for instance, I was flooded with calls from people wanting to invest in startups, many of whom had never considered venture capital. But by 2024, much of that interest had faded amid FX shocks and economic uncertainty.
This cycle of excitement followed by retreat is understandable. Currency devaluation and macro swings are significant challenges. But for those of us investing in emerging markets, these challenges aren’t bugs; they are a feature. Venture invests across vintages, rather than cherry-picking years of comfort. If we want to benefit from the upside, we must be dogged and stay present through the cycles – this holds for all investing.
This is why I am excited about the work that groups like the Lagos Angel Network, Africa Angel Academy, and African Business Angel Network are doing to educate and expand the pool of active angel investors. On the institutional side, at Ventures Platform, we’re committed to supporting a broad and resilient base of capital allocators that evolve and invest through cycles.
