Y’all Need To Leave VC Alone

Wait, wait, let me explain-don’t go! 

I’ve just realised that if I keep talking like this, I might get excommunicated from the African startup ecosystem. But hear me out. 

I’ve come to the very difficult realisation that we need to leave VC alone. Yes, I said it. But, before you grab your pitchforks, let me explain. 

Here’s the thing: less than 0.05% of businesses globally raise venture capital, and Africa, as of 2023, sat at 1.26227209% of global VC funding. Predictable and still somehow shocking.

So why are we acting like VC is some kind of magic bullet? Easily found on your local street corner?

I fully understand why VC is such an appealing source of capital and investment.  

And let’s be honest, 10% of a $1 billion company sounds pretty sweet, right? I get the appeal. I’ve placed all my eggs in this basket, too. You see me here, I am both feet in the space. I know the value, and I will defend the use case, done correctly.

But here’s the thing: VC is a very small answer to a very big question. 

Part of the reason this ecosystem is causing so much pain and suffering is that there’s often a significant capital mismatch. 

No amount of investor readiness programs, business model tweaks, or wishful thinking will make a company venture-backable if it’s just not. 

No amount of training can make a customer with no money suddenly have money. And no amount of software wizardry will leapfrog the lack of basic infrastructure. 

And if we accept that, there’ll be a lot less heartbreak and a lot more energy left to solve for those businesses.

Some (Most) industries require infrastructure before we can even consider building software. The chicken must, in this case, come first. Or something like that.

Building without infrastructure means the founder starts to build one thing and realises they also need to build everything else, and I don't need to tell you that this in itself can cause untold chaos. Building the whole value chain. 

Often, people talk about what M-Pesa was able to do, but we fail to mention the network of distributors they had to have. They already had 1000s of airtime distributors, who used to receive scratch cards in armoured and police escorted vehicles 😁

Even this innovation, which played a massive part in the mobile money revolution in Africa, required what? Yes, class, INFRASTRUCTURE.

Would this idea have gained any sort of appeal from VC at the time if it hadn't been driven by a telco?

Here’s the big question we need to answer: What does a healthy capital stack look like for innovative African Businesses ( SMEs, Social enterprises, Startups)?

We’ve got VC, sure. But what else? Who are those other investors? Who’s investing in baseline infrastructure? Who’s funding the businesses that don’t fit the VC mould? 

And how do we create investor readiness programs for the right investors? 

Maybe it’s me. Perhaps I’m in a bubble. Can someone point me to where diverse forms of capital are coming from? Who’s leading this conversation? Who’s rallying the troops? 

Or maybe-just maybe-it’s me. Maybe I’m the one meant to do this? But I already mentioned those eggs, right? I’ve got none left for other baskets. 

But let’s start the conversation. Let’s talk about what a diverse, inclusive, and sustainable funding landscape looks like for Africa. Let’s move beyond the VC hype and build additional layers to this stack that work for more than just that one founder and her high-growth, high-innovation business. Who’s in? 

Also, please, don’t leave us alone; we are looking for pipeline and LPs, I was just making a point 😂