The Matter of Exits
Today’s edition is a based on an edited reproduction of a tweet storm by Kola from a few weeks ago. We would love to know what you think?
— over to Kola
If today, you are active in the African startup ecosystem, then you need to give some thought to the matter of exits.
Recently I had a very interesting sit down with an aspiring micro fund manager to share from our experiences at Ventures Platform. This was the 3rd of that kind of meeting in less than a month. On this occasion like always, I wished him the best and offered our support.
Then it got me thinking.
As we continue to see an increasing number of micro funds, accelerators, syndicates and VC funds come on stream in this market, all looking for alpha — the thinking of all these brilliant people needs to start shifting to “exits.”
When you raise outside capital for a fund, long term performance (exits / liquidity) matters alot. In this market we aren’t or perhaps, “haven’t started” seeing much of this desired outcome and this should be a cause for concern or at the minimum, create some anticipation.
Fund managers and other actors must burden themselves with this puzzle.
How do we create liquidity and orchestrate the exits that are urgently required to ensure the air in this balloon we are inflating isn’t suddenly let out. How do we better build high growth companies that can produce the exits and liquidity that keep market momentum going like a rolling snowball.
We don’t have all the answers yet; but we suspect that a few things matter in this discussion;
- What venture funding model is most optimal in Africa. What does the “Wakanda Venture Model” look like and how does it need to differ from the Silicon Valley model?
- Should alternative forms of capital returns, like dividends or profit-sharing, be an option?
- How do we get more corporates involved to drive M&A activity downstream?
- How might we sustainably explore the possibility and promises of blockchain and ICO’s?
- How might we curate our portfolios such that we create strategic alignment and generate greater value?
- How might we strengthen the size, depth and quality of our customer markets so scaling companies don’t contend with glass ceilings of growth despite our large populations?
- What is the place for secondary listings and public markets?
There are many questions, and not enough answers. But it’s obvious that what got this ecosystem here, won’t take us further.
We’ll be interested to hear your own thoughts and hypothesis on exits in Africa.
See you next week,
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