Extra offers, much less money: Africa’s exit downside

There’s a saying you’ve got most likely heard since childhood: an apple a day retains the physician away. Utilized to Africa’s know-how ecosystem, the “apple” is the exit, an acquisition, IPO, or liquidity occasion that returns money to traders.

The “physician” is the gradual loss of life of the ecosystem, when capital dries up as traders lose confidence in its skill to supply returns. A wholesome exit returns cash to traders, who recycle that capital again into new startups.

Nonetheless, in the present day’s actuality is totally different as a result of there are extra dangerous apples than good ones.

The ecosystem is producing extra exits than ever, however these are usually not returning the one factor traders want, money. The priority is that if traders encounter too many poor outcomes, they cease trusting each the exits and the ecosystem.

To grasp what a superb consequence appears to be like like, think about October 2020. Stripe’s acquisition of Paystack for over $200 million, about 20x whole funding, in money and inventory, stays one of the consequential exits in African tech. It introduced early liquidity to traders.

Paystack’s traders obtained money and inventory in a deal that delivered actual returns. Early backers like Kola Aina of Ventures Platform and Maya Horgan Famodu of Ingressive Capital validated the market, raised new funds, and helped begin a cycle of capital that supported progress in Nigeria and throughout Africa.

Y Combinator invested $125,000 in Paystack for 7% fairness and obtained about $14 million. As the primary Nigerian startup in Y Combinator to ship venture-scale returns, Paystack elevated the accelerator’s urge for food for African startups, a development that has since slowed.

Examine that with exits in 2025 and 2026. The 67 mergers and acquisitions recorded in 2025, a 72% improve year-on-year, are structurally totally different. They’re greater in quantity however not in worth. Most have been all-stock transactions the place no money modified arms. Buyers obtained fairness within the acquirer, valued at numbers that will not maintain when offered.

Identical sample in 2026

Flutterwave’s acquisition of Mono in January 2026 was an all-stock deal valued between $25 million and $40 million. Mono had raised $17.5 million, together with a $15 million Collection A in October 2021 led by Tiger International. TechCrunch reported that early backers noticed paper returns of as much as 20x, and Mono’s CEO mentioned the deal worth exceeded whole capital raised.

This will likely seem like a hit, however the returns exist in Flutterwave fairness. Buyers should discover a purchaser and settle for typical reductions in secondary gross sales. Flutterwave’s final official valuation of $3 billion was set in February 2022. Secondary transactions in 2023 reportedly priced it at $1.5 to $1.6 billion, a reduction of greater than 50%.

If Flutterwave’s worth is nearer to $1.5 billion, the Mono deal could also be value $12.5 million to $20 million. A 20x return turns into nearer to 10x, and even that isn’t distributable. It’s fairness in a non-public firm with no clear exit timeline. Buyers have moved from one illiquid place to a different.

This isn’t a superb consequence as a result of income can’t but be returned to traders or redeployed.

Moniepoint’s acquisition of Orda’s Nigerian operations in March 2026 reveals an identical sample. Orda raised $4.5 million and didn’t attain Collection A. It had 1,075 eating places on its platform, with pricing from ₦1,000 ($0.73) to ₦20,000 ($14.5) per 30 days. Funds and credit score have been anticipated to drive progress however didn’t materialise.

The deal phrases weren’t disclosed. In African tech, undisclosed phrases usually counsel weak outcomes. Orda’s traders, together with Quona Capital, FinTech Collective, Lofty Inc., Norrsken, and Enza Capital, deployed $4.5 million. If the acquisition worth was at or under that determine, returns are minimal.

A fund that invested $500,000 may obtain the identical quantity or much less after 4 years, with no compensation for time. This ends in a damaging inside price of return. Typical VC targets vary from 20% to 40% yearly. Such outcomes don’t affect reinvestment selections.

For Moniepoint, the deal is strategically enticing. Nigerians spend about ₦8 billion each day at eating places by means of its terminals. Embedding software program into this circulation provides visibility into revenues, not simply funds, and might enhance credit score selections.

However strategic worth for the acquirer doesn’t translate into monetary returns for traders. Investor outcomes decide whether or not new capital flows into startups.

The structural downside

The difficulty isn’t an absence of exits however many exits that don’t recycle capital. When offers are paid in inventory, traders can’t write new cheques as a result of they maintain shares in personal corporations which will take years to develop into liquid. In sensible phrases, the exit is deferred.

This issues in an ecosystem the place about 80% of VC funding comes from overseas traders. These traders reply to restricted companions resembling pension funds and endowments, who measure efficiency in money returns, not paper good points. A $50 million all-stock deal doesn’t exhibit that the market works or generate capital for reinvestment.

Ido Sum, a former TLcom Capital companion, wrote in November 2025 that the median consequence for the subsequent decade will probably be a $50 million to $250 million commerce sale, not a $5 billion IPO. The type of that exit issues as a lot as the dimensions. A $100 million money acquisition delivers extra worth than a $300 million all-stock deal.

The best way ahead

All-stock offers are usually not inherently dangerous as a result of in lots of circumstances, they’re the one choice as a result of most VC-backed corporations don’t maintain massive money reserves. Consolidation can also be crucial in a younger ecosystem.

Flutterwave’s acquisition of Mono strengthens its product providing. Moniepoint’s transfer into restaurant software program expands its place.

However the monetary outcomes for traders stay weak. If the ecosystem data lots of of exits however returns little money, the headline numbers are deceptive.

What would change this? Extra life like pricing. Extra participation from patrons with money, resembling banks and telcos. South Africa’s ecosystem advantages from such a liquidity.

With out money exits, returns stay locked. That slows reinvestment and weakens the pipeline of recent startups.

Muktar Oladunmade

Senior Reporter, TechCabal

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