Global investors have a massive blind spot.
“A dollar of venture capital in Africa is more efficient — more likely to produce a unicorn — than a dollar in Asia, in Europe, or in America.”
That’s Dr. Ola Brown, Founder & Managing Partner of Lagos-based VC firm Healthcap Africa, challenging assumptions about where venture capital delivers the best returns.
While receiving significantly less venture funding than counterparts in more established ecosystems, African startups as a whole have demonstrated remarkable capital efficiency in producing unicorns — private tech companies valued at over $1 billion.
This efficiency advantage stems from several factors, including:
- Massive underserved markets with high growth potential
- Founders building fundamental solutions for pressing problems rather than nice-to-have improvements
- Lower operational and customer acquisition costs at scale
The results speak for themselves.
Africa’s nine current unicorns include Nigeria’s Flutterwave, Egypt’s MNT-Halan, Senegal’s Wave, and South Africa’s Tyme — transformative businesses that have reached billion-dollar valuations while raising significantly less capital than their global counterparts.
For instance, Flutterwave reached unicorn status after raising ~$225 million, a fraction of what comparable, newly-minted fintech unicorns raised in other markets. And notably, eight of Africa’s nine unicorns are fintechs solving fundamental financial infrastructure and/or inclusion challenges.
“There’s not a single big company in Africa that was created to solve boredom in terms of our tech industry. And that’s what makes [it] quite unique,” Dr. Brown argues, contrasting foundational 10x innovation on the continent with more incremental innovation seen in Silicon Valley and elsewhere.
Yet despite this efficiency advantage, Africa continues to receive a disproportionately small share of global venture capital — less than 1% according to most estimates.
The disconnect between capital efficiency and capital allocation suggests a significant opportunity for global investors willing to look beyond traditional markets to explore Africa’s burgeoning innovation economy.
What’s your take?
- Do you find Africa’s efficiency in unicorns created per venture dollar compelling? Or are there other metrics you’d point to instead?
- What would it take to shift more global institutional capital toward African startups if the efficiency advantage is real?
- How might the focus on solving foundational vs. incremental challenges impact the long-term trajectory of the continent’s tech ecosystems?
Join the conversation on Linkedin.
Hear more from Dr. Brown here:
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