Episode 5 Risk VS Reward – A story curated by Change Com
Episode 6 The Future - A story curated by Change Com
Impact investing is redefining the future of finance in Africa, bridging the gap between high returns and meaningful social change. With a rapidly evolving startup ecosystem, the continent presents a unique opportunity for investors looking to create both financial and developmental impact.
Phylis Njongoro, an Investment Analyst at VestedWorld, is passionate about leveraging capital to drive sustainable growth and economic transformation. VestedWorld’s mission, “to remove barriers to access, catalyze capital, and nurture the next generation of African entrepreneurs”, aligns closely with the broader goal of fostering long-term, sustainable impact on the continent.
We sat down with Phylis Njongoro to explore the role of venture capital and private equity in shaping Africa’s business landscape, the challenges and opportunities within the startup ecosystem, and what it takes to unlock the full potential of investment in Africa.
IA: Can you share a reflection on the potential of early stage venture capital and private equity to generate high returns and make a positive impact on society on the African continent?
Phylis: Early-stage venture capital and private equity play a transformative role in Africa by addressing the dual opportunity of high financial returns and significant social impact. The continent’s unmet demand for essential goods and services ranging from financial inclusion to healthcare and infrastructure creates a fertile ground for investors to back high-growth businesses.
While traditional markets are maturing, Africa presents a rare asymmetric opportunity, the chance to invest in businesses at their inflection points, with valuations that remain competitive relative to global markets. However, success requires patient capital, local expertise, and business models that can withstand macroeconomic volatility.
Impact is inherently embedded in African startups, as many solve fundamental challenges whether it’s access to credit, energy, or market linkages making early-stage investing both a commercial and catalyst for development.
IA: Which focus areas or investment themes are you excited about on the continent and why?
Phylis: One of the most exciting investment themes on the continent is cross-border payments. Africa’s fragmented markets, with over 40 currencies and complex regulatory environments, create both a challenge and a significant opportunity. The African Continental Free Trade Area (AfCFTA) is unlocking intra-African trade, while remittances to the continent approach $100B annually. Startups that build seamless, cost-effective cross-border payment solutions leveraging technologies like blockchain and mobile money are addressing a critical pain point for businesses and consumers.
By reducing transaction costs and fostering economic integration, these innovations not only drive financial inclusion but also catalyze regional growth, making cross-border payments a transformative theme for investors focused on Africa’s future.
IA: How has the journey been raising capital for your fund? Which barriers have you had to overcome?
Phylis: Raising capital for an Africa-focused fund is a complex yet rewarding endeavor, as many investors still perceive the continent as high-risk. Key barriers include the limited track record of exits. While successes like Paystack are notable, the overall liquidity market remains nascent, leaving LPs cautious without more demonstrable success stories.
Currency volatility and macroeconomic risks also deter some investors, necessitating innovative solutions such as local currency hedging or blended finance to mitigate concerns. Additionally, misaligned risk perceptions persist, with international investors often overestimating Africa’s challenges while underestimating the resilience and ingenuity of its entrepreneurs.
Finally, limited LP education and market familiarity remain significant hurdles, requiring extensive engagement to showcase the continent’s vast potential. Overcoming these barriers demands patience, persistence, and a commitment to reframing Africa’s narrative as a land of opportunity rather than risk.
IA: How do you believe one can unlock more venture capital into Africa? And what is also needed to enable even more investments from the African space as well?
Phylis: To attract greater venture capital, Africa must focus on building a stronger exit ecosystem, including increased M&A activity, robust secondary markets, and the development of regional public markets to enhance liquidity and investor confidence. Local capital participation is also critical African institutional investors, such as pension funds and sovereign wealth funds, need to allocate more capital to venture capital, mirroring trends in mature markets.
Innovative investment structures, like blended finance, revenue-based financing, and convertible instruments, can help de-risk investments and attract risk-averse capital. Additionally, entrepreneurial capacity building is essential as startups require more than just funding, they need support in governance, financial discipline, and long-term vision to build scalable, investable businesses.
IA: How do you experience international investors perception in the meeting with them on investing in African startups?
Phylis: International investors’ perspectives on Africa are evolving, but skepticism remains. While they acknowledge the region’s potential driven by digital adoption, demographic growth, and resource richness, concerns around regulatory uncertainty, currency volatility, and exit pathways persist. The key to bridging this gap is presenting African success stories, emphasizing market resilience, and aligning investor expectations with realistic growth timelines.
IA: What are the things you look for when investing in a startup?
Phylis: A strong investment case in Africa hinges on several key factors. First, market validation and product-market fit are critical. We look for startups solving real problems with tangible traction and paying customers. Second, the founding team must demonstrate deep industry knowledge, adaptability, and strong leadership, as execution is often the difference between success and failure. Third, capital efficiency and unit economics are essential, especially given the funding gap in Africa, startups must show financial discipline and sustainable growth models. Fourth, scalability and defensibility matter, businesses with clear competitive moats, such as proprietary technology, regulatory advantages, or robust distribution networks, are particularly compelling. Finally, regulatory awareness is crucial, as navigating Africa’s complex markets requires a proactive approach, especially in sectors like fintech, healthtech, and logistics.
IA: What trends do you see on the African startup scene? What developments are you most hoping for going forward?
Phylis: The African startup ecosystem is undergoing a dynamic transformation, driven by several key trends. Digital payments and financial inclusion are at the forefront, with cross-border payments and fintech innovations significantly reducing the continent’s financial exclusion gap. AI and automation are empowering SMEs, enabling small businesses to boost productivity through advanced platforms. B2B commerce is evolving, with marketplaces integrating embedded finance solutions to help businesses scale efficiently. Localized manufacturing and industrialization are gaining momentum, as Africa shifts from import dependency to producing consumer goods and industrial inputs locally. Additionally, climate tech and green energy are emerging as critical sectors, with investments in renewable energy infrastructure and carbon markets gaining traction. Looking ahead, we hope to see more patient capital entering the ecosystem investors willing to back long-term African growth stories rather than focusing solely on short-term metrics. This shift will be crucial for sustaining the continent’s entrepreneurial momentum and unlocking its full potential.
IA: How do you believe African startups can be an enabler to reach the 2030 Global Goals?
Phylis: African startups are uniquely positioned to advance the UN’s Sustainable Development Goals (SDGs) as they are often built to address fundamental challenges. Fintech innovations, such as digital lending, insurance, and remittance platforms, are driving financial inclusion (SDGs 1, 8, 9), while agritech solutions are enhancing food security and sustainability through innovations in farming, supply chains, and food processing (SDGs 2, 12, 13). Edtech platforms are equipping Africa’s youth with future-ready skills through AI-powered learning and vocational training (SDGs 4, 8), and healthtech startups are expanding access to affordable healthcare via telemedicine and decentralized solutions (SDGs 3, 9). Additionally, renewable energy startups are bridging the energy gap with off-grid solar and energy-efficient technologies (SDGs 7, 13). The real opportunity lies in supporting startups that blend financial viability with social impact, demonstrating that commercial success and developmental progress can go hand in hand, ultimately accelerating Africa’s contribution to the 2030 Global Goals.
