From Capital Advocacy to Capital Readiness: Rethinking Investment Logic in African Entrepreneurship

Authors: Nji Mbitaownu & Kwame Norvixoxo

Authors’ Note: Over the past decade, we have engaged extensively with African entrepreneurs, innovation hubs, and ecosystem stakeholders—advising startups, co-designing accelerator programs, facilitating investor roundtables, and evaluating early-stage ventures. Across these experiences, one concern has echoed consistently: limited access to capital for African founders.

This article unpacks that concern from the perspective of investors, particularly institutional ones, and proposes a paradigm shift: from capital activism to capital readiness. Our argument is simple, yet rigorous: access to funding is not merely a function of moral appeal or geographic equity. It is, above all, a function of return and risk. Though the former remains a valid concern, we argue that without addressing the latter, African ventures will continue to struggle to unlock sustainable investment.

Capital Follows Return—Not Sympathy

We often view the capital gap in African entrepreneurship through the lens of inequality, and rightly so. Historical injustices, systemic bias, and global power imbalances have shaped who gets funded and who doesn’t. But here’s a hard truth, or at least a significant part of it: capitalism doesn’t reward suffering; it rewards performance above all.

Investors, particularly those managing other people’s money, are not making moral decisions. They are making portfolio decisions. The guiding question is always: “Where do I get the highest return for the least acceptable risk?”

Despite representing nearly 17% of the global population, Africa receives less than 1% of global venture capital funding—just $6.5 billion in 2022 compared to over $600 billion globally (Partech Africa, 2023; Reuters, 2023). Whether they are investing in a fintech startup in Nairobi or a laundromat in California, the lens remains the same: what is the return and what are the risks?

When we fail to critically consider this perspective, African entrepreneurship risks becoming a capital sinkhole, absorbing funding without generating commensurate value. Capital deployed without a clear expectation and delivery of return leads to misallocation, inefficiency, and disillusionment. Worse still, it erodes trust across the entire ecosystem. We must place the burden of performance on the venture. Entrepreneurs must build businesses that generate meaningful returns, not just for themselves, but for their investors and communities. This is how we create capital efficiency and, more importantly, a multiplier effect that fuels broader development: jobs, innovation, and reinvestment.

Return: The Promise of Value

At the heart of every investment decision lies one basic question: “What do I stand to gain?” Return, in investor terms, is not just about short-term profits—it’s about the growth potential, unit economics, and exit path of a business. Most venture capital firms, for example, target internal rates of return (IRRs) of 20–30%, with expected exit multiples of 2–5x over a 5–10 year horizon (Vazilegal, 2023).

Too often, we mistake impact with investability. While solving grand challenges is critical, impact without return is short-lived. A tomato-processing startup in Kano may be tackling food waste and rural unemployment, but unless it can scale profitably and outline how an investor might recoup their capital, it won’t attract serious capital. Investors want to see how their money creates change and value, and how they eventually get it back, with a gain.

To attract capital, founders must learn to communicate return with clarity, numbers, and a practical vision. Show traction, prove your margins, and map a true and believable path to scale or exit. Because ultimately, return is the cornerstone of every sustainable investment decision, and if we want African ventures to thrive, not just survive, we must start treating return not as a side note, but as a central pillar of business development. The “no free lunch” mentality.

Risk: The Invisible Tax

If return is what draws capital in, risk is what pushes it away. It is the invisible tax that erodes the attractiveness of any investment, and it comes in many forms: operational (can the team deliver?), market (is there demand that can be met?), regulatory (will the rules change overnight?), and infrastructural (can the product even get to market?). For many of us building ventures across the continent, the challenge isn’t a lack of brilliant ideas, it is navigating environments that make execution unpredictable and costly.

For African entrepreneurs, navigating these risks is often the greatest hurdle. According to the World Bank’s Ease of Doing Business Index, many African countries still rank low—Nigeria (131st), Ethiopia (159th), Cameroon (167th), and the DRC (183rd), indicating significant challenges in starting, operating, and exiting businesses.

This is where governments play a critical role—not as a grant-maker, but as a risk mitigator. When a farmer’s tomatoes rot on the roadside because a rural bridge has collapsed or the truck transporting them is trapped in the mud due to the rains, it is more than a local tragedy; it is a signal to investors that the ecosystem is not investment-ready. Infrastructure, power supply, legal systems, and stable macroeconomic policies don’t just serve citizens—they are de-risking mechanisms.

By investing in the basics—roads, digital infrastructure, and enforceable contracts, governments lower the cost of doing business and make capital flow not just possible, but probable. In that sense, every kilometre of good road is also an economic development strategy. Because capital doesn’t chase sympathy, it chases stability. 

Case Study: Primetel Health – A Vision Stalled by Systemic Risk

Founded by African Leadership University alumnus Emmanuel Samwel, Primetel Health is a digital-first mental health venture based in Monduli, Tanzania. Leveraging a low-bandwidth USSD platform to deliver telehealth services, Primetel has reached a generally sensitized population of over 35,000 through community outreach, over 15,000 ⁠students sensitized, over 2,500 ⁠active USSD users, over 500 Treated patients and over 50 impacted ⁠institutions. In a region where mental health care is often inaccessible or stigmatized, the venture has created significant social value.

Yet despite its promise, Primetel’s growth has stalled, not for lack of vision, but because of unmitigated systemic risk (especially from stringent and bureaucratic processes). For more than two years, the startup has struggled to secure a government license and to expand into primary care. This regulatory bottleneck has delayed its planned scale-up, restricted its ability to diversify services, and raised red flags for prospective investors.

Compounding the challenge is limited capital traction. Despite multiple attempts to raise $100,000 in seed funding, the company has secured only $30,000, primarily from grants and donor programs. Investors, though impressed by the venture’s mission and user engagement, remain wary. Their concerns center not on the value Primetel offers, but on the risk it presents: unclear regulatory timelines, weak infrastructure support, and an uncertain path to scalable revenue and exit. A regulatory cage.

Primetel’s story exemplifies the very gap this article seeks to address: a compelling mission stalled by system-level risks and a capital ecosystem misaligned with the realities of early-stage African ventures. The problem is not the absence of innovation, it is the absence of systemic capital readiness. If we want ventures like Primetel to thrive, we must build ecosystems that enable the conversion of potential into performance and impact into investable opportunity.

This case highlights a critical challenge for Africa’s entrepreneurial ecosystems: we must support founders not only in crafting powerful narratives but in navigating compliance, de-risking their business models, and articulating viable return pathways. Primetel’s constraints are not rooted in its market demand or operational intent, they lie in the absence of a coordinated ecosystem capable of converting social value into investable opportunity.

Building for Capital, Not Just Calling for It: Capital Whisperer

If African entrepreneurship is to attract the kind of capital that scales businesses, transforms communities, and drives long-term economic development while addressing global issues, then we, as entrepreneurs and ecosystem builders, must embrace a fundamental shift in mindset. We must stop positioning our ventures solely as moral imperatives and start shaping them as competitive investment opportunities.

Yes, conversations around inequality, representation, and access are important and real, but they should not replace the logic of capital. Investment is not activism. It is a value exchange grounded in the realities of return and risk. The burden, then, is on all of us to build ecosystems that earn trust, demonstrate performance, and reduce uncertainty—so that capital doesn’t just arrive, it stays and grows.

Let us build ventures and ecosystems that aren’t just fundable, but fundamentally investable.

Bonus: Fundable vs. Investable

In our work with early-stage ventures, we have observed a crucial but often overlooked distinction: not all fundable businesses are investable. Many founders mistake early enthusiasm, grants, pitch competition wins, and donor interest for long-term viability in capital markets. But fundability is not the same as investability. The gap between the two is where many African ventures stall.

A fundable venture is one that captures imagination. It may be tackling a socially relevant problem, telling a compelling story, or representing an underserved demographic. Fundable ventures often attract non-dilutive capital (grants, fellowships, incubator stipends) or early-stage angel funding driven by passion or affinity. These are important and necessary forms of support, especially in the early days of building.

But being investable requires a different level of discipline. Investable ventures speak the language of capital. They demonstrate strong execution, measurable traction, credible paths to revenue, and risk mitigation strategies. Most importantly, they offer investors a way out, a clear exit through acquisition, secondary sale, or dividends. For institutional and venture investors who must report to LPs or boards, return is not optional; it is the mandate.

Think of it this way:

• Fundable = Good story, potential, and early excitement
• Investable = Solid execution, financial logic, scalable and repeatable growth

One is vision-fueled, the other is results-driven. While one can lead to the other, too many ventures remain stuck at fundability, thriving in pitch circuits and donor-funded programs but never reaching the thresholds required by serious investors.

For African entrepreneurship to reach its full potential, we must build ventures that graduate from fundable to investable. We must train founders to speak in metrics, not just mission. And we must support ecosystem actors in structuring programs that don’t just reward storytelling, but demand business readiness.

Only then will we close the gap between visibility and viability, and create an ecosystem that doesn’t just get applause, but earns sustained investment. Because the future of African entrepreneurship will not be won by sympathy, it will be won by competitive performance. An infertile goat is only worth a single party.