More deals, less cash: Africa’s exit problem

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There is a saying you have probably heard since childhood: an apple a day keeps the doctor away. Applied to Africa’s technology ecosystem, the “apple” is the exit, an acquisition, IPO, or liquidity event that returns cash to investors.

The “doctor” is the slow death of the ecosystem, when capital dries up as investors lose confidence in its ability to produce returns. A healthy exit returns money to investors, who recycle that capital back into new startups.

However, today’s reality is different because there are more bad apples than good ones.

The ecosystem is producing more exits than ever, but these are not returning the one thing investors need, cash. The concern is that if investors encounter too many poor outcomes, they stop trusting both the exits and the ecosystem.

To understand what a good outcome looks like, consider October 2020. Stripe’s acquisition of Paystack for over $200 million, about 20x total funding, in cash and stock, remains one of the most consequential exits in African tech. It brought early liquidity to investors.

Paystack’s investors received cash and stock in a deal that delivered real returns. Early backers like Kola Aina of Ventures Platform and Maya Horgan Famodu of Ingressive Capital validated the market, raised new funds, and helped start a cycle of capital that supported growth in Nigeria and across Africa.

Y Combinator invested $125,000 in Paystack for 7% equity and received about $14 million. As the first Nigerian startup in Y Combinator to deliver venture-scale returns, Paystack increased the accelerator’s appetite for African startups, a trend that has since slowed.

Compare that with exits in 2025 and 2026. The 67 mergers and acquisitions recorded in 2025, a 72% increase year-on-year, are structurally different. They are higher in volume but not in value. Most were all-stock transactions where no cash changed hands. Investors received equity in the acquirer, valued at numbers that may not hold when sold.

Flutterwave’s acquisition of Mono in January 2026 was an all-stock deal valued between $25 million and $40 million. Mono had raised $17.5 million, including a $15 million Series A in October 2021 led by Tiger Global. TechCrunch reported that early backers saw paper returns of up to 20x, and Mono’s CEO said the deal value exceeded total capital raised.

This may look like a success, but the returns exist in Flutterwave equity. Investors must find a buyer and accept typical discounts in secondary sales. Flutterwave’s last official valuation of $3 billion was set in February 2022. Secondary transactions in 2023 reportedly priced it at $1.5 to $1.6 billion, a discount of more than 50%.

If Flutterwave’s value is closer to $1.5 billion, the Mono deal may be worth $12.5 million to $20 million. A 20x return becomes closer to 10x, and even that is not distributable. It is equity in a private company with no clear exit timeline. Investors have moved from one illiquid position to another.

This is not a good outcome because profits cannot yet be returned to investors or redeployed.

Moniepoint’s acquisition of Orda’s Nigerian operations in March 2026 shows a similar pattern. Orda raised $4.5 million and did not reach Series A. It had 1,075 restaurants on its platform, with pricing from ₦1,000 ($0.73) to ₦20,000 ($14.5) per month. Payments and credit were expected to drive growth but did not materialise.

The deal terms were not disclosed. In African tech, undisclosed terms often suggest weak outcomes. Orda’s investors, including Quona Capital, FinTech Collective, Lofty Inc., Norrsken, and Enza Capital, deployed $4.5 million. If the acquisition price was at or below that figure, returns are minimal.

A fund that invested $500,000 could receive the same amount or less after four years, with no compensation for time. This results in a negative internal rate of return. Typical VC targets range from 20% to 40% annually. Such outcomes do not influence reinvestment decisions.

For Moniepoint, the deal is strategically attractive. Nigerians spend about ₦8 billion daily at restaurants through its terminals. Embedding software into this flow gives visibility into revenues, not just payments, and can improve credit decisions.

But strategic value for the acquirer does not translate into financial returns for investors. Investor outcomes determine whether new capital flows into startups.

The issue is not a lack of exits but many exits that do not recycle capital. When deals are paid in stock, investors cannot write new cheques because they hold shares in private companies that may take years to become liquid. In practical terms, the exit is deferred.

This matters in an ecosystem where about 80% of VC funding comes from foreign investors. These investors answer to limited partners such as pension funds and endowments, who measure performance in cash returns, not paper gains. A $50 million all-stock deal does not demonstrate that the market works or generate capital for reinvestment.

Ido Sum, a former TLcom Capital partner, wrote in November 2025 that the median outcome for the next decade will likely be a $50 million to $250 million trade sale, not a $5 billion IPO. The form of that exit matters as much as the size. A $100 million cash acquisition delivers more value than a $300 million all-stock deal.

All-stock deals are not inherently bad because in many cases, they are the only option because most VC-backed companies do not hold large cash reserves. Consolidation is also necessary in a young ecosystem.

Flutterwave’s acquisition of Mono strengthens its product offering. Moniepoint’s move into restaurant software expands its position.

But the financial outcomes for investors remain weak. If the ecosystem records hundreds of exits but returns little cash, the headline numbers are misleading.

What would change this? More realistic pricing. More participation from buyers with cash, such as banks and telcos. South Africa’s ecosystem benefits from this type of liquidity.

Without cash exits, returns remain locked. That slows reinvestment and weakens the pipeline of new startups.

Muktar Oladunmade

Senior Reporter, TechCabal

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