The Exit Conundrum: Why African Startups Are Unprepared for Acquisitions
Despite a surge in funding rounds across the continent, Africa’s startup exit landscape remains notably sparse. Successful exits, whether through acquisitions or initial public offerings (IPOs), are still a rare occurrence for many African tech companies. This challenge was a key topic at a ‘State of Exits in Africa’ session during Moonshot by TechCabal 2025, where experts Freda Isingoma, Senior Fund Manager at Octopus Investments, and Ariel White-Tsimikalis, Partner at Goodwin Procter, highlighted a crucial underlying issue: many founders are simply unprepared for an exit. They aren’t building their ventures with the end goal of acquisition or IPO in mind, which significantly limits opportunities for investors and founders alike.
Deconstructing the Barriers to Exit-Readiness
The core of the problem, as articulated by industry leaders, lies in how African startups are structured and managed from their inception. A lack of foresight means that many companies scale rapidly, driven by the urgency of securing subsequent funding rounds, but fail to establish the foundational elements that make a business attractive and truly acquirable. Specific deficiencies include weak governance frameworks, fragmented ownership structures, and often, poor documentation of critical assets and processes. These issues mean that while a startup might achieve significant operational growth, it builds little that a potential buyer can concretely acquire or integrate. Ariel White-Tsimikalis succinctly captured this sentiment, stating, “I see that a lot of founders optimise for now, focused on their next funding. But you have to build a business that thinks beyond that. You have to build structures and put procedures in place.” This perspective underscores the need for founders to adopt a long-term strategy, prioritizing robust corporate hygiene alongside product development. According to data from Africa: The Big Deal, the continent recorded only 19 tech startup exits in 2023, a figure that starkly illustrates the limited exit pathways available.
Ultimately, for the African tech ecosystem to mature, there must be a fundamental shift in founder mindset. Rather than solely optimizing for the next funding round, startups need to embed exit-readiness into their strategic DNA from day one. This involves proactively establishing strong governance, clarifying ownership, and maintaining meticulous documentation. By building businesses with enduring structures and procedures, African founders can create genuinely acquirable assets, fostering a more vibrant and successful exit landscape that benefits all stakeholders and accelerates the growth of the continent’s innovative tech sector.
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