In the first half of 2026, we published 22 editions of Ask an Investor. The investors we spoke to could not have been more different. A $670 million private equity manager taking African companies to global markets. A former partner at a venture capital firm managing over $200 million. A bank in Luanda that tracked one startup for three years before investing. A Nairobi firm that spent a decade in equity then left it. The only thing they have in common is appearing in this column.
Despite their different approaches to investing in African startups, the running theme has centred on a single question: can invested money come back? Almost every conversation, whatever the starting point, ended up there.
Here is what the past six months have taught us and what founders should take from it.
Lesson 1: The exit problem is now the centre of discussion
In 2026, exits became the only thing investors wanted to discuss.
Ido Sum, who spent 14 years as a partner at TLcom, an Africa-focused venture firm managing over $250 million, told us that African venture capital is not broken as many think because of the slow pace of exits; it is just early.
In our conversation, he outlined his thoughts on how Africa currently sits where the US was in the 1970s and Israel in the 1980s. Those ecosystems matured through stepping-stone exits first: deals in the tens of millions, then the low hundreds, with systematic in-continent mergers and acquisitions building trust before anyone realised a billion-dollar outcome.
Despite his enthusiasm, he still warns founders that they have a number problem. Every time founders raise at a higher valuation, they shrink the pool of people who can buy the startup. So the question becomes: who are they actually building value for?
Launch Africa gave the clearest example of an answer. The Mauritius-domiciled fund returned $2.5 million to its investors, roughly 7% of paid-in capital on its $36 million first fund, after completing 11 exits. Eight of those were secondaries to other VCs and growth-stage investors; three were trade sales or management buyouts. No position came in below 1x, and the best returned 5x. Managing partners Zachariah George and Janade du Plessis made two points worth holding onto.
First, they chose to start returning capital in year five rather than waiting for the fund to wind down at year ten, because early liquidity is what convinces limited partners (LPs) to back the next fund. Second, they built a dedicated head-of-exits role, which most African firms do not have, because in this market, an exit has to be worked for, not waited for.
Lesson 2: Local capital now comes first, not second
The single biggest structural change of the half-year is who is writing the cheques. African investors now account for nearly 40% of funding on the continent, up from 25%, as global money pulled back from roughly $5 billion in 2022 to about $2.3 billion, according to Briter, a research firm.
Fadilah Tchoumba, the chief executive of the African Business Angel Network (ABAN), put the principle plainly: Africa must fund Africa. She reminds us that the angels who backed Flutterwave and Paystack before anyone else were Africans on the ground, and without that first layer of capital, foreign investors have nothing to follow. There is no example anywhere in the world of foreign money arriving first while local money waits.
In May, the Africa Finance Corporation gave us the most surprising version of this local capital. The $19 billion development finance institution, known for funding bridges, ports, mines, and subsea cables, made its first commitment to African venture capital: $40 million anchoring Future Africa and LightRock as the first deployments from a $100 million programme.
Begna Gebreyes, who runs the technology desk, said the board initially resisted, telling him they sat on the board of an infrastructure developer, not a VC firm. The strategy now is to anchor funds as the first and largest LP, then crowd in another $300 to $500 million in institutional capital from foreign foundations, endowments, and pension funds.
Lesson 3: Debt is having its moment, because equity’s limits finally showed
The clearest shift in conviction of the half-year was toward credit.
AHL Venture Partners spent more than a decade doing a bit of everything: early-stage equity, growth equity, fund commitments, and mezzanine. Around 2020, the family behind the firm gave CEO Rosanne Whalley a blank canvas and one question: what can make money and have a durable impact? The answer was private credit.
Debt recycles faster than equity in African markets, the returns are more predictable, and the liquidity profile lets you fund more businesses over time. Whalley’s nuance matters for founders: she lends against cash flows, the team quality, and the ability to keep raising, not against collateral, which she assumes will recover nothing if a company fails. She also deliberately prices currency risk, favouring USD-revenue businesses or structured hedges, and walks away from sole founders, fragmented cap tables, and too much talk of disruption.
Ido Sum made the structural case from the founder’s side. Over-dilution happens because everything is funded with equity. A company raising $5 million, where $3 million is really working capital, could split the round, price better, and dilute less if the market allowed it.
BFA Asset Management’s Rui Oliveira described his Kimbo Fund as closer to mezzanine, thinking like a fixed-income investor who asks whether a company could one day support a bond. And by February, with only 26 startups raising $174 million in January, the column noted that African funding was starting to look more like credit underwriting than long-term experimentation.
Lesson 4: DFI money is the foundation
Development finance institutions remain the backbone of African venture, and the half-year showed how uncomfortable that has become.
Ido Sum estimated DFIs make up 70 to 75% of the capital in the ecosystem and was blunt that none of it would exist without them. But that dominance creates friction, because DFI mandates do not always align with what maximises financial value. Whalley’s complaint was sharper: DFIs still treat private-credit managers as competition rather than anchoring them, and few have dedicated teams for the asset class.
The numbers show why this matters now. DFI money fell to just 27% of commitments in 2025, and Africa-focused fund managers raised only $107 million across six final closes, an 87% drop by value year-on-year, according to the African Private Capital Association. That retreat is exactly the gap AFC is stepping into, using permanent, treaty-based capital that, unlike a finite-life fund, faces no pressure to force an exit by a deadline.
What founders should take from all this
Across 22 conversations, the same requests came up repeatedly. If you are raising in this market, this is what investors are telling you they want:
Keep your cap table clean and concentrated. Ido Sum, Whalley, and the Launch Africa team all flagged fragmented cap tables as a problem, and Launch Africa is now targeting 5 to 15% stakes in fund two specifically because larger positions are easier to exit.
Show real cash flow and unit economics, not subsidy-propped ones.
Be investor-ready before you ask. Seven24, BFA, and Shell Foundation all pointed to data rooms, documentation, and basic governance as the difference between getting funded and getting passed.
Know who will eventually buy you from day one. Sango, Ido Sum, ABAN, and Launch Africa all framed the exit as something you design for by engaging corporates and later-stage funds early, not something you hope for at the end.
Build a real team that stays in the conversation when things go wrong. Whalley’s red flags were sole founders and founders who go quiet; Sango, Satgana, and Uche Divine all put the team first.
Do not over-raise on equity. Ido Sum and Whalley both argued that working capital and debt belong in the mix and that funding everything with equity is what pushes dilution and valuations too high.
