The Founder’s Exit Strategy: Think Acquisition, Not IPO

Africa’s venture capital ecosystem is confronting a hard reality: after more than a decade of investment activity, viable exit routes remain limited. In 2024, trade sales dominated the landscape, accounting for more than four out of five reported exits. Notably, no African tech startup went public last year (at least, no major ones were announced), underscoring the difficulty of IPOs on the continent and abroad.

This reality is reshaping how entrepreneurs and investors approach company building. Instead of optimising for IPO readiness, many founders are deliberately building businesses with strategic acquisition in mind – a shift that could redefine success in African tech.

Only 26 venture-backed exits were recorded in 2024, according to AVCA and Partech. Of the broader set of private equity and venture deals logged since 2019, the vast majority were trade sales. This points to a structural feature of Africa’s markets: public listings remain rare, while acquisitions by multinationals, regional incumbents, or larger African players are the most realistic path to liquidity.

Meanwhile, the funding environment is still constrained. Venture capital inflows fell to about $2.2 billion in 2024, down more than 50% from the highs of 2022. With capital tight, founders are adjusting expectations, prioritizing profitability, discipline, and strategic positioning over raw growth.

The new question many founders ask themselves is: “Who needs this solution badly enough to acquire it?” rather than “Can this be a standalone public company?”

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That mindset has influenced how startups structure their products and operations. BuuPass, for example, went beyond a consumer booking app to build a Bus Management System that digitises ticketing, payments, and fleet operations. That infrastructure creates value for telecom operators, financial institutions, and governments, making the company a potential strategic target for multiple industries.

Similarly, Logidoo developed cargo consolidation services that shorten trade-route transit times. Instead of trying to become “Africa’s Amazon,” it built capabilities that logistics providers and manufacturers cannot easily replicate. This kind of operational defensibility is what acquirers seek.

Experienced entrepreneurs who have achieved liquidity through acquisitions, such as the founders of Paystack (Stripe) or those with partial secondaries at companies like Andela, are recycling capital back into the ecosystem as angels or LPs. Their focus is increasingly on companies that solve painful operational problems for established players in banking, telecom, logistics, and retail.

For investors, the playbook is changing: exits via IPOs may remain elusive, but acquisition-driven strategies can still deliver strong returns if companies build strategic assets that acquirers need.

• Fintech: Infrastructure solutions (payments, risk tools, compliance layers) that banks and multinationals require.

• Telecom: Value-added services like mobile money integrations and data platforms.

• Retail/FMCG: Supply chain and distribution solutions for established players, not standalone e-commerce giants.

The capital drought has an unexpected upside: it is forcing startups to build leaner and more sustainable businesses. Profitability, clear revenue models, and regulatory savvy now matter more than flashy user-growth slides. These are exactly the qualities that make companies attractive to potential acquirers.

Looking ahead, M&A activity is expected to accelerate as stronger firms acquire distressed or strategically valuable startups. The most attractive targets will be those with defensible operational advantages, demonstrated product-market fit, and sustainable revenue streams.

For strategic buyers, acquisitions are often faster and less risky than building capabilities from scratch.

For African founders, success is no longer measured only in billion-dollar valuations or IPO headlines. Increasingly, it means building profitable, resilient companies that solve critical problems and can be integrated into larger platforms. The startups that survive and thrive in this environment will generate real value for acquirers, investors, and economies alike.

Hiruy Amanuel is Managing Director at Gullit VC. The firm focuses on technology and infrastructure investments across Africa, with portfolio companies including BuuPass, Logidoo, Gebeya, Wellahealth, and Qene Games.