Raising capital from an African VC firm is not just about a pitch deck and passion. It’s about alignment. Market fit. Discipline. And above all, clarity.
Too many founders build in isolation, guessing at what investors want. But thanks to insights from the Investor Guide, a working document developed by TechCabal in collaboration with leading African VC firms, we now have a more precise picture.
Based on disclosed data and qualitative input from operators and funders across the continent, eight key traits consistently show up when investors decide who gets the cheque.
Here’s what African VCs are really looking for.
1. Addressing genuine local needs
African VC firms are seeking startups that solve real problems rooted in local contexts. Ventures that simply replicate foreign models without clear local relevance tend to struggle to secure serious backing.
Before seeking capital, founders are advised to reflect: Is this a critical need, or a convenience product? Solutions that demonstrate traction within their target environment tend to earn greater investor confidence.
Startups that succeed in Africa solve urgent, local problems, not just adaptations of Silicon Valley playbooks. Investors are scanning for businesses that are born out of friction on the ground.
If you’re not solving a pain point that people are actively paying (or willing) to solve, you’re already starting behind.
Before you pitch, ask: Is this a necessity or a novelty?
2. Building in high-impact sectors
Funding patterns/data over the last five years suggest that African VCs are concentrating capital in six core industries.
According to the Investor Guide, these sectors account for the majority of disclosed funding between 2019 and the first quarter of 2025.
They are:
- Financial Technology (Fintech) – $7.6 billion
- Energy and Water – $2.8 billion
- Logistics and Transport – $1.8 billion
- E-commerce and Retail
- Healthcare
- Agriculture and Food
These sectors represent not just commercial opportunity, but critical national infrastructure. As such, startups operating in these domains are more likely to attract sustained investor interest.
If you’re building in these areas, you’re more likely to align with long-term investor theses.
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3. Demonstrating cross-border potential
African VC firms are placing increasing emphasis on scale. A promising product confined to one country may not suffice.
Investors are more inclined to support ventures with credible strategies for regional or continental expansion.
Startups that can navigate language barriers, regulatory variation, and logistical challenges stand out in a crowded field.
4. Planning for long-term growth, not speed
Africa’s unicorn stories are the exception, not the norm. Investors are well aware of the structural headwinds faced by startups across the continent – from policy instability to infrastructural gaps.
Nonetheless, firms are willing to back ventures with a clear, sustainable growth strategy. Long-term vision and operational discipline matter as much as early traction.
What’s your 5-year roadmap? How do you plan to weather currency swings, policy shifts, and market slowdowns?
If your model can’t survive the storm, it’s not investable.
5. Outlining a credible exit strategy
While mission and impact are key, venture capital remains an investment business.
African VCs are looking for clarity on how and when they might cash out, whether through acquisition, initial public offering (IPO), or secondary sales.
Founders should integrate exit thinking into their pitch from the outset, rather than treating it as a post-funding consideration.
Show a clear path to liquidity.
VCs don’t just want impact. They want returns. And fast-growth storytelling is incomplete without an exit strategy.
This shouldn’t be buried in a due diligence doc. It should be frontline in your pitch.
6. Demonstrating financial prudence
The market downturn and a string of high-profile startup failures have shifted investor sentiment. Lavish spending without a path to profitability is no longer tolerated.
VCs now favour lean operations, data-informed decision-making, and robust financial controls.
Founders must show that they can manage funds responsibly and scale efficiently.
Post-2021, the era of burn-first, hope-later is dead. From Andela to Sendy, investors have seen what happens when founders treat capital like confetti.
Run your startup like you’re already public. Waste is no longer forgivable.
7. Strong corporate governance
Governance, transparency and accountability are now front of mind for investors.
Disorganised cap tables, internal disputes, and unclear leadership structures raise red flags.
African VC firms increasingly expect founders to run startups as board-ready companies, regardless of their stage.
Clean legal structures and defined responsibilities build trust early.
Start behaving like a company that’s audit-ready, even if you’re still pre-seed.
8. Choosing the right investment partners
It is not only founders who must be scrutinised. African VCs are also selective about where they deploy capital, and with whom. The ideal relationship is not purely transactional, but collaborative.
Investors are not just bringing funds; they are also contributing networks, guidance and long-term support. Alignment of values and vision is essential.
Choose Investors like you choose co-founders.
The right investor won’t just wire money. They’ll fight with you when the lights go out.
Finally
These eight themes consistently shape how African VC firms assess opportunities in 2025.
For entrepreneurs preparing to raise capital, focus on building something that is needed, durable, and scalable.
And above all, build with discipline.
