It's almost more an issue of the lack of normalcy on risk/reward calculations. If it isn't completely outsized or completely risk-free (relative to lending to government), then it's a no go.
Co-Founder Balloon Ventures | Validate Startup | Building the world's first financial institution dedicated to Good Jobs
Sharing some thoughts on fundraising after a couple of days at AFSIC - Investing in Africa in London, talking with lots of funds, DFIs, and entrepreneurs. Let’s say you’re running a great business — 5 years old, $10m in revenue, $2m profit, growing 50% year-on-year. A solid foundation. You want to scale. You’re looking to raise, say, $2m–$5m in equity. Who writes those tickets? First thought: VC. DFIs have VC arms. They fund VC funds. But almost every VC I’ve spoken with — both at DFI and fund level — applies the same unit economics as Silicon Valley: they need 10x ROI potential on every deal to make the portfolio math work. Spoiler alert: that’s nearly impossible in the African context. GPT tells me there have only been nine unicorns in Africa. Nine! Nearly all in Egypt, South Africa, and Nigeria. So if you’re in one of the other 50 countries — and you’re not doing fintech or remittances — forget about it. Then you might think: okay, growth equity. Solid business, great traction, strong team. NOPE. You’re still way too small. You’d need a $50m–$100m valuation just to get a meeting. So what’s left? A handful of family offices, angels, and foundations. Tiny pockets of capital. How can it be that there’s almost zero institutional equity for growing, profitable, real-economy businesses in Africa? Even when those businesses feed populations, educate children, provide healthcare, and create tens of thousands of jobs. Doesn’t matter. Financial metrics alone are the gatekeepers. And yet, we somehow expect businesses — the only real engine of job creation we know — to deliver 450 million new jobs in Africa by 2035… with no institutional backing? I don’t think this is an issue of “unit economics.” It’s easy to see how backing these businesses could generate solid, repeatable returns. It feels more like an issue of imagination, vision, and especially leadership from capital allocators and market shapers. So what am I missing? Would love to hear others’ thoughts.
