Do African VCs really lack conviction, or are they playing a different game?

30 November -0001

Terra Industries’ seed round reignited claims that African VCs lack ambition, but a closer look suggests the story is less about fear and more about structural constraints.

Do African VCs really lack conviction, or are they playing a different game?

When Terra Industries announced its latest funding round last week, the news was met with widespread excitement not only because of the capital raised but also because a Nigerian defence technology startup had secured one of the largest seed rounds ever by an African technology startup. In a continent where hardware startups rarely attract significant venture funding, the raise felt like a rare win.

But the celebration quickly gave way to a more pointed debate. Terra’s funding was framed by some not just as a milestone for African innovation but as an indictment of African venture capital. Despite the scale and ambition of the company’s mission, African investors were notably absent from the round, though it is worth noting that Terra’s first institutional raise did include local funds.

The takeaway, for critics, was that African venture capitalists lack the conviction of their Silicon Valley counterparts, shying away from true moonshot projects in favour of safer, more predictable bets.

Yet this framing raises a deeper question that goes beyond Terra Industries itself. Do African VCs truly lack conviction, or are they operating within constraints that fundamentally shape what conviction looks like in practice?

The myth of no conviction

The idea that African investors lack the ambition to back bold projects is hardly new. But it has gained renewed traction in recent years as global venture capital norms have shifted and capital has become more selective. And while the criticism is not entirely unfounded — there are, by many accounts, investors who are overly conservative or who apply private equity principles to the venture capital asset class — it tells only part of the story.

Founders routinely describe being turned away for building in unproven markets or operating in sectors where they lack prior professional experience. Yet investors argue that these rejections cannot be separated from the realities of the environments in which they operate.

Fisayo Durojaye, Ge...