Unpacking African VC Funding: Insights from the Yale Africa Startup Review Conference 2025
- samuelkitara14
- Apr 6
- 4 min read
After a delicious lunch featuring an incredible variety of dishes drawn from all four corners of Africa—think jollof rice, injera, mandazi, and hearty goat stews—attendees gathered to absorb insights from some of the continent's most influential venture capitalists. These industry leaders discussed a pressing topic for many: the intricacies of raising startup capital in today's challenging landscape.
The event sparked vital conversations for startup founders navigating a complex financing environment. Speakers offered diverse perspectives, but one theme resonated throughout: the importance of adapting to the changing dynamics of investment in Africa.
The Tough Fundraising Climate
Magdi Amin, Managing Partner at Africa Renaissance Ventures, opened the discussions with a stark reminder. He noted that the difficult fundraising environment has persisted for over three years, showing no immediate signs of improvement.
He emphasized that now is the time to invest in less saturated markets. "That’s when you'll uncover true value dislocations," he stated.
While larger markets like Nigeria and South Africa attract most VCs, Magdi's made a compelling for focusing on East Africa. This region not only has faster-growing economies, averaging growth rates above 7%, but it also serves as a testing ground for startups. For instance, countries like Kenya and Ethiopia have shown resilience and innovation, allowing founders to refine their products and generate revenue without the intense pressure of scaling rapidly in much larger, competitive markets. The ability to grow in East Africa can establish sustainable business models that can then be expanded to larger markets.
Local Understanding Creates Opportunity
Sherif Nessim, Managing Partner at Jedar Capital, shifted the conversation to the broader economic challenges impacting African startups. The early-stage VC funding landscape has tightened due to factors like rising global interest rates and the complexity of operating in infrastructure-limited markets.
Yet, Sherif highlighted a significant opportunity: the growth of local VC firms and diaspora angel investors. This trend is promising since these investors understand the unique challenges of the African landscape. For instance, local VCs can navigate regulatory environments and often bring more patience in their investment horizons, allowing startups to grow steadily without the pressure of immediate returns.
This is encouraging news for startup founders looking for capital. Investors with local insight can serve as valuable partners who understand the intricacies of the market.
The Shift in Investment Expectations
The energy in the room peaked as Jason Marshall, COO of Yellow Card Financial, emphasized a major shift occurring in the VC arena. He posed that the era of “vibe and hope” investment strategies has come to an end.
Marshall indicated that traditional credentials, such as being an ex-Google or ex-Yale alum, are no longer sufficient for securing funding. In today's investment climate, African VCs seek clear evidence of revenue and solid business fundamentals, even from pre-seed startups. This evolution suggests a maturing investment landscape, urging entrepreneurs to focus on measurable results and sustainability in their business models.
As investors and founders navigate the uncertain path ahead, the resilience of African startup founders is evident. The changing access to capital serves as a catalyst for entrepreneurs to innovate and adapt their business strategies.
On Exit Markets for Africa and Future Bets
As the panel reflected on the question of exits in Africa, there was a both sense of optimism and recognition of the reality that exit markets in Africa are still nascent and face uphill growth trajectory. Sherif sees mergers and acquisitions between larger & smaller Africa startups as the dominant near-term exit strategy. He noted a trend towards more established startups pursuing these business combinations as a way to achieve quicker market entry in new African geographies with unique cultural complexities and regulatory regimes. It is indeed a promising trend.
For Magdi & Jason, a there remains a gap and opportunity for governments to create public listing frameworks and establish capital markets policies that can support the ecosystem. Hoping for listings in London, Hongkong or New York may not support the needs of the most Africa startups whose market stories are hyperlocal and poorly understood by external capital allocators.
Magdi's Africa Renaissance Ventures has invested is several YASR30 startups featured in prior editions by the Yale Africa Startup Review - including Chapa Financial (Ethiopia, Fintech, YASR30 2023), Emata (Fintech, Uganda, YASR30 2023), Kapsule (Rwanda, Healthtech, YASR30 2024) and Kubik (Ethiopia, Energy, YASR30 2023). Magdi promises to bet on healthcare, agriculture, energy and the creative economy- sectors his views as infrastructure-intensive but ripe for real productivity gains.
Sherif has invested in YASR30 featured startups Fincart (Egypt, Logistics, YAS30 2024) and in Jem (Payments, South Africa) which was co-founded by ex-YASR editor Caroline van der Merwe. For Sherif, the logistics and transportation sector remains an intriguing venture playground
Jason Marshall's startup YellowCard Financial was featured in the YASR30 2022 list and recently closed a $33M series C to scale into Morocco, Kenya and support it's B2B pivot. He is alumnus of the Yale School of Management and a returning panelist for the Yale Africa Startup Review. Jason continues to see stable coins as a strong investment opportunity - a critical bridge for multi-currency economies all across West and Eastern Africa.
As the investment landscape continues to evolve, the entrepreneurial spirit of Africa's innovators shines brighter than ever, ready to overcome challenges and reshape the continent’s narrative of success.
Author: Samuel Kitara, Yale MBA Alum, 2020. Co-founder of the Yale Africa Startup Review
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