Launch Africa is arguably Africa’s most active early-stage investor. The firm started investing in African startups in 2020, and by the time it had finished deploying its $36.3 million fund, it had invested in 133 startups across 25 countries and sectors, including startups like Kuda, Omnibiz, and Julaya. 

“If you look at our first fund, 90% are still operational—an impressive rate for any fund in Africa,” Umem Uwemakpan, Launch Africa’s head of investment, told TechCabal. 

The firm is currently deploying its second fund and has already backed startups such as VaulFi, an Algerian fintech, and Toum AI, an artificial intelligence startup. The second fund targets business-to-business (B2B) and business-to-business-to-customer (B2B2C) early-stage startups across the continent, with cheques between $250,000 and $500,000. The fund can also invest up to $1 million cumulatively through follow-on investments in a few startups. 

“We believe B2B models offer more sustainable growth, lower acquisition costs, and clearer paths to profitability in the African context,” Uwemakpan said, describing Launch Africa’s investment approach. “We actively invest across five regions, including underserved markets in Central and North Africa. Our strategy is rooted in disciplined, conservative decision-making. We’re not chasing trends or inflated valuations—we’re building a balanced portfolio with sound fundamentals.”

If you hear Uwemakpan tell it, Launch Africa was created to solve four problems in Africa’s startup ecosystem: bridging the critical gap between seed-stage funding and Series A rounds—a stage where many startups struggle and often fail to scale; bridging the knowledge gap for international investors; and creating a “more structured pipeline for Series A investors in Africa” by identifying, funding, and supporting promising seed-stage companies. 

Now, Launch Africa is raising its third fund—but with a different approach. This time, the fund will follow a mezzanine structure, offering a hybrid of debt and equity financing. 

“Equity—or VC funding—is the most expensive form of capital and for most founders on the continent, it’s not what they need. The real issue is the lack of viable alternatives,” Uwemakpan said. 

In this interview, Uwemakpan speaks about the thinking behind the third fund and the lessons from the first two funds. 

This interview has been edited for length and clarity.

Why is your third fund a mezzanine fund? 

In our experience, especially in high-growth sectors, what’s often needed isn’t equity but debt—working capital to keep the business running and growing. That’s what inspired our third fund. We’re asking: how can we invest using debt instruments, take meaningful ownership stakes, and still position ourselves to exit at higher valuations and deliver returns to our limited partners (LPs)?

At the same time, we want to recycle capital from one company to the next without relying solely on new fundraising. That’s where a mezzanine fund comes in—a hybrid of debt and equity. It allows us to deploy capital as debt, take equity positions, and recycle repayments. As founders repay the debt, we can reinvest that capital into other companies. This flexibility is critical if we want to build more high-growth companies across the continent.

Looking back, was there a defining moment that validated your approach to early-stage investing in Africa?

The defining moment that validated our approach came during Fund I when we began seeing strong follow-on rounds for our portfolio companies, with international investors coming in at significantly higher valuations. This validated both our thesis and our ability to identify promising startups at the seed stage.

Another validation came through our B2B focus. While many consumer-focused startups struggled with high customer acquisition costs and challenging unit economics, our B2B companies were achieving sustainable growth with clearer paths to profitability – exactly as our thesis predicted.

The most powerful validation, however, was seeing the real economic impact of our portfolio companies – creating jobs, solving critical infrastructure gaps, and demonstrating that technology can indeed address fundamental challenges across Africa.

What type of support does Launch Africa give founders, given that you have a lot of startups in your portfolio, and how do you measure the success of that support?

I often give this analogy: First-time founders will say their biggest challenge is access to capital—and rightly so. But when you speak with second or third-time founders, their concerns shift dramatically. They talk about recruitment issues, internal culture, marketing challenges, and board formation.

Given our extensive Fund I portfolio, we’ve identified two main support areas for founders: strategic support and operational support. Early-stage founders—post-angel or pre-seed—need very different resources than those preparing for a Series A round. For early-stage founders; we leverage relationships with corporate partners like MTN and other leading corporates, connecting them directly with startups. These corporates often become customers or even potential acquirers, helping founders secure early revenues and validation. While B2B sales cycles can be lengthy, once closed, they’re beneficial to our startups.

Because we’ve spent years building a robust network, we often co-invest alongside trusted partners and maintain close relationships with later-stage investors—Series A, B, and growth-stage funds. These relationships create a natural progression for further fundraising.

We also go beyond simple introductions. We actively coach founders on pitch preparation, deck refinement, cap-table management, and investor targeting. Inspired by private equity models, we’ve implemented a “coverage model”, assigning each team member a set number of portfolio companies. This fosters deeper, one-to-one relationships, crucial when founders face challenges. Founders who trust us enough to communicate transparently, especially in tough times, are the relationships we aim to build.

We hold regular weekly office hours where founders can openly discuss issues or seek guidance. Our portfolio management team also reviews monthly founder reports, enabling us to proactively address issues, offer assistance, or identify companies ready for their next funding round.

Finally, having a large portfolio has allowed us to organically build a founder community, fostering peer-to-peer learning and support. Founders actively engage with each other, and we encourage this from the start by identifying potential synergies in our investment memos. 

Do you have sector favourites or do you maintain a purely sector-agnostic stance?

While we maintain a sector-agnostic approach, the data and market dynamics naturally lead us to focus on certain sectors. Our Fund I portfolio breakdown showed fintech leading, followed by marketplace, big data, healthtech, and logistics.

For Fund II, we’re seeing exciting opportunities in sectors that were previously under-represented. We expect stronger exposure to cleantech, given Africa’s energy challenges and the global focus on sustainability; agritech, recognising the continent’s agricultural potential; and AI/big data, as these technologies become fundamental enablers across industries.

That said, we don’t exclude any sector with strong B2B fundamentals. Our investment decision ultimately comes down to the strength of the team, the size of the market opportunity, evidence of traction, and alignment with our investment criteria – regardless of sector.

How do you determine the cheque sizes for your deals, and has that changed from when you started to now?

Our approach to cheque sizes has evolved significantly since we started. In Fund I, we were more flexible with our investment amounts, sometimes writing smaller cheques to get exposure to promising companies or larger ones for particularly compelling opportunities.

For Fund II, we’ve become much more strategic and systematic. Our ticket sizes now average $250K, with the specific amount calibrated to achieve our target ownership. This ownership target is crucial; it ensures we maintain sufficient equity to meaningfully benefit from successful outcomes, even after dilution from subsequent funding rounds.

This change was directly informed by our experience with Fund I, where we saw that the effective percentage holding in a company significantly impacts the contribution of exit proceeds to the fund’s overall returns. Companies where we had larger ownership percentages made disproportionately positive contributions to fund performance.

How do you approach portfolio construction in terms of stage, geography, and sector distribution?

We take a very deliberate approach to portfolio construction, balancing risk and opportunity across multiple dimensions.

For stage distribution in Fund II, we have a weighted approach that allows us to capture the value creation at the seed stage while maintaining flexibility to support our winners. Geographically, we maintain a balanced pan-African presence. This distribution is carefully calibrated based on factors including growth rates, currency stability, political environment, and ecosystem maturity in each region.

For sectors, while we’re technically agnostic, market dynamics and our B2B focus naturally create a distribution. Fintech remains significant, but for Fund II, we expect stronger representation from cleantech, agritech, and AI-powered solutions, while sectors like edtech may see reduced allocation.

This balanced construction gives us exposure to the continent’s most promising opportunities while mitigating concentration risk. We review and refine our allocation targets regularly based on market trends and portfolio performance.

What kind of internal processes or frameworks guide you in deciding how many and what startups to back each year?

We’ve developed robust internal processes to guide our investment decisions. At the core is our disciplined approach: being disciplined and conservative, creating our deals, adding value beyond capital, aligning closely with management teams, and focusing on superior returns.

Our investment process begins with a rigorous deal funnel. Based on our market profile and network, we expect to review approximately 100-150 deals monthly, translating to 1,200-1,800 deals annually and 3,600-5,400 deals throughout our three-year investment period.

For valuations, we use a methodology that considers both qualitative and quantitative factors. This framework ensures consistency, discipline, and alignment with our overall portfolio construction strategy.

Several African startups are now exploring secondary sales. How has Launch Africa participated in secondary exits, and what drives those decisions?

We’ve seen increasing opportunities for secondary sales in Africa’s ecosystem, particularly for our Fund I portfolio companies that have demonstrated strong performance but may not be approaching a traditional exit yet.

Our approach to secondary opportunities is strategic rather than opportunistic. We consider secondary sales when they meet specific criteria: first, the valuation must represent a meaningful return on our initial investment; second, the timing needs to align with our fund lifecycle; and third, we evaluate the potential future upside we might be foregoing.

In some cases, we’ve executed partial secondary sales, liquidating a portion of our holding while maintaining exposure to the company’s continued growth. This approach allows us to return capital to our LPs while still participating in potential future upside.

 Are you seeing appetite from later-stage investors looking to buy out your positions in startups doing well?

Yes, we’re seeing that. And to be honest, that’s a more practical route to liquidity for our ecosystem. We’ll see more secondaries, more than we’ll see IPOs. I’m not a prophet, but secondaries are the path of least resistance for liquidity. Though secondaries typically come at discounts, we see later-stage investors closely linked to the growth of these companies interested in them.

What is your preferred type of exit—full acquisition, secondary buyout, or IPO—and why?

We maintain flexibility regarding exit pathways. Acquisitions are a practical exit mechanism in the African context. Strategic acquirers—both regional champions and international companies seeking African expansion—have demonstrated consistent interest in well-performing startups that solve specific market challenges.

Secondary sales to later-stage investors have become increasingly important in our exit mix, particularly for portfolio companies that are performing well but may not be immediate acquisition targets. These transactions allow us to realize returns while the company continues its growth journey.

IPOs remain more theoretical than practical for most African startups at this stage of the ecosystem’s development. The limited liquidity in local public markets and the significant scale typically required for international listings make this exit path available to only a small subset of companies.

Our investment approach accounts for this reality. We focus on building companies with clear strategic value to potential acquirers. We also structure our investments and target ownership percentages to ensure meaningful returns no matter the exit route.

How has your assessment of risk versus reward changed over time?

As a greenhorn, I’d do things strictly by the book. But in Africa, cultural differences, infrastructure deficits, and government policies mean the math isn’t linear. I’ve learned to factor data and intuition, using my head (analytical) and heart (intuition and gut feeling).

How does inflation or currency devaluation affect your deployment of capital?

Great investors build portfolios considering macroeconomic and geopolitical factors. We’re cautious given volatility but still invest.

What lessons from your first two funds are influencing how you structure and position your upcoming third fund?

The most significant lesson from our fund is the importance of ownership percentages. In Fund I, we observed that the effective percentage holding in a company dramatically impacts the contribution of exit proceeds to the fund’s overall returns. This directly informed our Fund II strategy of targeting up to 10% ownership from initial investments.

For Fund II, we’re building on these lessons while adapting to the evolving African ecosystem. We’re further refining our sector focus based on performance data, increasing our attention to areas showing the strongest unit economics and exit potential, particularly those at the intersection of technology infrastructure and traditional industries.

We’re also adjusting our geographic distribution based on macroeconomic developments and ecosystem maturity. While maintaining our pan-African approach, we’re becoming more selective about specific countries within each region based on regulatory environment and market stability.

Another key lesson influencing Fund II is the importance of co-investor quality. We’ve seen that companies backed by strong investor syndicates are more likely to successfully raise subsequent rounds and achieve attractive exits. We’re now more deliberate about who we partner with from the initial round.

Finally, the post-investment support model is evolving based on data from our portfolio. We’re doubling down on the types of operational support that have demonstrably accelerated company growth, particularly around enterprise sales, talent acquisition, and strategic partnerships.

How is the fundraising climate for African-focused funds changing, and how do you plan to stand out to global LPs?

The fundraising climate for African-focused funds has become significantly more challenging. Following the general venture capital contraction globally, LPs have become more selective, focusing on funds with proven track records and distinctive strategies. This environment favours established managers with demonstrable returns over first-time funds.

For African funds specifically, there’s increased scrutiny on exit pathways. LPs are asking tougher questions about how investments will ultimately return capital, given the still-developing nature of the secondary, acquisition, and IPO markets on the continent.

Despite these challenges, we’re seeing variations in LP interest. While some Western institutional investors have pulled back from emerging markets, we’re seeing increased interest from development finance institutions, impact-oriented investors, and regional family offices who understand the long-term structural opportunity in Africa. We are also seeing a growing number of individual retail LPs (Africans in the diaspora and other folks interested in Africa).

Launch Africa stands out to LPs through several differentiators. First, our disciplined portfolio construction approach demonstrates sophistication in fund management. Second, our genuinely Pan-African presence provides diversification advantages over country-specific funds. Third, our B2B focus addresses legitimate LP concerns about exit pathways, as these companies typically have clearer routes to profitability and strategic acquisition.

Our track record of identifying promising companies early and supporting them in successful follow-on rounds speaks for itself. We’ve demonstrated an ability to generate strong markups across market cycles, positioning us well even in this more selective fundraising environment.

Which specific mistakes have shaped how you now handle deal sourcing, due diligence, or post-investment support?

In deal sourcing, we initially relied too heavily on inbound opportunities, which proved to be biased toward founders with existing investor connections. We’ve since developed a more proactive approach, building relationships with developer & founder communities, and ESOs to identify promising founders earlier.

In due diligence, we had situations where we may have overvalued technical capabilities while undervaluing commercial execution. 

Our post-investment support evolved after we observed that companies where we facilitated strategic client introductions significantly outperformed others. This led to a more structured approach to leveraging our network for commercial partnerships rather than focusing primarily on fundraising support.

We also noticed that weak reporting practices masked deteriorating unit economics. By the time the issues became apparent, the runway was too short for meaningful correction. We made the mistake of not onboarding appropriately and emphasising the need for transparency in reporting at the beginning of the relationship 

If you could start Launch Africa again, what would you do differently in those initial months or years?

If I could restart Launch Africa, I would prioritise ownership percentages from day one. Our experience has conclusively shown that meaningful ownership is the single biggest driver of fund returns, yet in our earliest investments, we sometimes accepted smaller positions that limited our upside in successful companies.

I would also implement our structured due diligence and follow-on frameworks earlier. The discipline these processes bring to investment decisions significantly improves decision quality, but we developed them iteratively over time rather than having them in place from the start.

I would also place even greater emphasis on co-investor quality from the beginning. The composition of the investor syndicate greatly influences a company’s ability to raise follow-on capital, and I would be more selective about which co-investors we work with on early deals.

Finally, I would set more explicit expectations with founders about reporting and communication. Companies that maintain disciplined financial reporting and transparent communication with investors typically perform better and are easier to support.

How do you balance generating returns for LPs with contributing to the continent’s wider socio-economic development?

I don’t see generating returns and contributing to Africa’s development as competing objectives. Rather, they’re mutually reinforcing. The companies that deliver the strongest financial returns are precisely those solving fundamental challenges at scale.

Our investment focus on B2B and B2B2C business models that improve the efficiency of existing industries naturally aligns with developmental impact. When a fintech platform enables small businesses to access working capital, a logistics solution reduces the cost of moving goods, or a healthtech company extends quality care to underserved communities, these innovations generate both economic returns and societal benefits.

We maintain this alignment through our investment selection process. We look for businesses addressing substantial market gaps with sustainable models, which typically means they’re solving important problems in ways that customers are willing to pay for. This approach ensures that impact is baked into the business model rather than treated as a separate consideration.

The time horizon of venture capital also supports this alignment. As patient capital with a 7-10-year outlook, we can support companies through the extended periods often required to build transformative businesses in challenging environments. This patience allows founders to build properly rather than cutting corners for short-term gains.

By generating strong returns through companies that create meaningful impact, we demonstrate that Africa represents an attractive investment destination, ultimately attracting more capital to the ecosystem and accelerating the continent’s development.

Ten years from now, what does success look like for Launch Africa in terms of both returns and ecosystem impact?

Ten years from now, success for Launch Africa will be measured across multiple dimensions, financial returns that validate African venture as an asset class, a transformed entrepreneurial ecosystem, and lasting institutional impact.

On the financial side, success means delivering top-quartile returns to our LPs across multiple funds, demonstrating consistent performance throughout different market cycles. We want to create a pattern of successful exits through various pathways – strategic acquisitions, secondary sales, and potentially the first generation of African tech IPOs. These results will have attracted significant new capital to the African venture ecosystem, both to our funds and to the broader market.

From an ecosystem perspective, success means having helped build category-defining companies across multiple sectors that have transformed how business is done in Africa. Our portfolio will include companies serving tens of millions of customers, employing thousands of people, and setting new standards for entire industries. Many of our founders will have become ecosystem leaders themselves, investing in and mentoring the next generation of entrepreneurs.

Institutionally, Launch Africa will have evolved into a multi-strategy firm with vehicles addressing different stages of the venture lifecycle. Our team will include partners who began as analysts or associates, demonstrating our commitment to developing African investment talent. Our investment frameworks and methodologies will have influenced how venture capital is practised across the continent.

Most importantly, we’ll have proven that disciplined, patient capital deployed with deep local knowledge can simultaneously generate exceptional financial returns and contribute meaningfully to Africa’s development, creating a model that others can follow and build upon.