The Illusion of Success
Olu Oyinsan, General Partner at Oui Capital, sees a stark paradox in African venture capital. While his firm's first fund, launched in 2019, is on track to return more than double its initial investment – a feat achievable even without its most successful portfolio company, Moniepoint – Oyinsan maintains that the ecosystem is grappling with an existential crisis. This isn't a critique of individual fund performance, but a deep-seated concern about the sustainability and maturity of the broader African VC landscape. The success of Oui Capital's first fund, which backed companies like Appzone and Lami, is a testament to the team's strategy and the burgeoning potential of African tech. Yet, this individual win, Oyinsan suggests, is an outlier that masks fundamental challenges.
What's Fundamentally Broken?
Oyinsan points to several critical areas where African VC falls short. Firstly, the reliance on a few outlier successes creates a distorted view of the market. While these successes are celebrated, they don't necessarily indicate a robust, replicable investment model. The ecosystem needs more consistent, predictable returns across a broader portfolio of companies, not just a handful of unicorns. This suggests a need for deeper operational support and a more mature understanding of value creation beyond just scaling.
Secondly, Oyinsan highlights the scarcity of sophisticated, experienced talent within the ecosystem. This includes not only founders who can build and scale globally competitive businesses but also investors who possess the strategic acumen and operational expertise to guide these companies through complex growth phases. The lack of seasoned professionals can lead to suboptimal decision-making, missed opportunities, and a slower pace of innovation. It’s like trying to build a skyscraper with a team of enthusiastic but inexperienced construction workers; the ambition is there, but the execution falters due to a lack of deep expertise.
The third major issue is the disconnect between the capital available and the types of businesses that can absorb and effectively utilize it. Many African startups operate in sectors that require patient capital and deep operational understanding, yet the VC model often pushes for rapid, capital-intensive scaling. This mismatch can lead to premature pivots, unsustainable growth strategies, and ultimately, failure. Oyinsan’s observation implies a need for a more nuanced approach to capital allocation, one that considers the specific operational realities and growth trajectories of African businesses.
The Moniepoint Effect and Diversification
The success of Moniepoint, a financial services platform that has experienced exponential growth, is a key case study. While Oui Capital's fund would have performed exceptionally well even without Moniepoint, its trajectory underscores the potential for deeply impactful, category-defining companies to emerge from Africa. However, Oyinsan is quick to caution against over-reliance on such singular successes. The goal, he implies, should be to foster an environment where multiple companies across diverse sectors can achieve sustainable, significant growth, rather than pinning the hopes of the entire ecosystem on a few mega-rounds or IPOs.
This diversification of success is crucial for building long-term resilience. If the African VC landscape is dependent on a small number of high-profile exits, it becomes vulnerable to market downturns and shifts in investor sentiment. A more diversified ecosystem, with a healthy pipeline of companies achieving strong, albeit perhaps smaller, returns, would be a far more stable and attractive proposition for both local and international investors.
Beyond Funding: The Need for Deeper Engagement
Oyinsan's critique extends to the very nature of venture capital engagement in Africa. He suggests that many investors, particularly those unfamiliar with the local context, often adopt a 'spray and pray' approach, hoping that a few investments will yield outsized returns. This overlooks the critical need for hands-on, strategic support. Building successful companies in Africa requires more than just capital; it demands a deep understanding of local market dynamics, regulatory environments, and operational challenges. Investors need to act as true partners, providing mentorship, operational expertise, and strategic guidance.
The challenge for firms like Oui Capital is to demonstrate this deeper engagement model and prove its efficacy. By focusing on operational excellence, strategic value addition, and a long-term perspective, they aim to build a more sustainable and robust venture capital ecosystem. This approach, while potentially yielding slower but more consistent returns, is what Oyinsan believes is necessary to move African VC from a state of potential crisis to one of enduring strength.
The Path Forward
The implications of Oyinsan's perspective are significant for all stakeholders. For founders, it means a greater emphasis on building fundamentally sound businesses with clear paths to profitability, not just rapid user acquisition. For investors, it calls for a more rigorous due diligence process, a commitment to active value creation, and a willingness to adapt investment strategies to the unique realities of the African market. For policymakers and ecosystem builders, it highlights the need to cultivate local talent, improve infrastructure, and create a more supportive regulatory environment.
Oui Capital's journey with its first fund, while successful by many metrics, serves as a potent reminder that true progress in African VC requires more than just impressive return figures. It demands a fundamental re-evaluation of strategies, a deeper commitment to operational support, and a collective effort to build a more mature, resilient, and diversified ecosystem. The existential crisis Oyinsan speaks of is not one of capability, but of a need for systemic evolution.