The African tech ecosystem's first generation of exits is being written right now. Chowdeck's acquisition of Mira. LemFi's $85M raise. These aren't outliers — they're early signals of a new pattern. We explain why strategic M&A will define the return profile for the next five years of African VC, and what it means for how we underwrite.
Why IPOs Are Not the African VC Exit Story
The conventional venture capital return model is built around IPOs. Back a company early, hold through multiple rounds, exit when it goes public. That model works in the US and to a lesser extent in Europe and Asia. In Africa, public markets are at an earlier stage of development, and the pathway to a liquid IPO on a major exchange is long and uncertain for most venture-backed companies. Investors who are underwriting African VC returns on the assumption of IPO-led exits are building on a shaky foundation.
Strategic M&A Is Already Happening
The more important exit pattern in African tech is strategic M&A — and it is already underway. Chowdeck's acquisition of Mira, in which Ajim Capital held a position, demonstrated that African tech companies are becoming acquisition targets for larger platforms looking to expand their product surface area and geographic reach. This is how the return profile works in practice: you back a company at pre-seed, it builds a valuable product or user base or technology, and a larger player acquires it at a meaningful multiple. No IPO required.
What This Means for Underwriting
If M&A is the primary exit path, then the most important question at the underwriting stage is not 'can this company go public?' but 'who would buy this company, and why?' We now explicitly ask this question as part of our diligence process. We want to understand the strategic value of the company to potential acquirers — telcos, banks, super-apps, international platforms expanding into Africa. A company that is building infrastructure that a larger player needs is more attractive to us than one that is competing for the same territory as potential acquirers.
The Compounding Opportunity
As the first generation of African tech exits validates the M&A pathway, we expect to see it accelerate. The exits produce capital that recirculates into the ecosystem. They produce experienced founders who start again. They produce a track record that makes it easier for the next generation of African VC funds to raise internationally. We are at the beginning of this cycle. The investors who are positioned correctly at the early stage — with ownership in companies that have genuine strategic value — will benefit disproportionately from what comes next.