This article is based on a conversation from Voices & Visions, a podcast produced through a partnership between Tutto Passa Agency and TechCabal, which explores the people and ideas shaping Africa’s innovation economy.

One of the strangest realities of African business is that finding someone to invest $10 million can sometimes be easier than finding someone willing to write a cheque for $50,000. This is according to Francis Nasionba, founder of Nairobi-based investment advisory firm Raising Capital. 

It sounds counterintuitive because smaller investments should, in theory, carry less risk. Small African companies are seeking modest capital to buy another production line, open a new branch, hire five more people, or digitise operations. They are not looking for $10 million, but may be seeking $100,000. 

Paradoxically, Nasionba argues, that may be the hardest cheque to raise in African business today.

“The value of death in fundraising in Africa is anyone raising between a million dollars and $3 million,” says Nasionba in a recorded conversation on Voices & Visions, a podcast backed by Tutto Passa Agency and TechCabal.

“If you’re raising below $50,000, there are many different sources of capital—grants, family, friends, banks. But once you start going above that, especially above half a million dollars, it shrinks significantly.”

The contradiction exposes a deeper flaw in how capital is allocated across the continent. Africa has become successful at attracting global investment capital. Venture funds, private equity firms, development finance institutions, and impact investors oversee billions of dollars earmarked for African businesses. 

Institutional investors

But those pools of capital have largely evolved to fund venture-scale opportunities or projects large enough to justify institutional attention.

Nasionba’s firm sits between entrepreneurs seeking capital and investors seeking opportunities. In theory, those two groups should complement each other. But that is not usually the case; they talk past one another. 

His conclusion is not that Africa lacks capital.

It is that the continent has become remarkably good at financing the two extremes of business while neglecting everything in between. 

A market trader can borrow a few hundred dollars from a digital lender. A venture-backed startup can raise millions of dollars from international investors. But the manufacturer trying to expand production or the healthcare company opening clinics discovers there is no obvious home for businesses that have graduated beyond survival but have not yet reached institutional scale.

Economists have long described this as the “missing middle”. But hearing it from someone who spends every day matching businesses with investors reveals something more fundamental. The problem is that the economics of investing discourage exactly the kind of financing that growing businesses need.

“If I’m to raise a fund, I need to invest in maybe five to ten businesses at most,” Nasionba says. “If I’m investing half a million dollars, I’m looking at a $5 million fund. A $5 million fund doesn’t make fund economics.”

Due diligence takes weeks regardless of the deal size. Portfolio companies demand board meetings, reporting requirements, and strategic advice, whether they receive half a million dollars or twenty times as much.

This means that large cheques simply justify the effort better. The result is an investment market that naturally drifts upwards, leaving thousands of businesses stranded in the middle.

But Nasionba does not blame the investors.

Fundraising is not a success

One of the biggest misconceptions in African business, he argues, is that raising capital has become synonymous with building a company. Somewhere between accelerator programmes, pitch competitions, and billion-dollar valuations, fundraising acquired a status it was never meant to have. 

Capital has become a measure of success, and that misunderstanding has consequences.

His firm declines roughly nine out of every ten companies that approach it. Surprisingly, the reason is rarely the absence of investors.

“They think because they have an idea and access to money,” he says. “No. You don’t have a business model. You don’t know what you’re selling. You don’t know who you’re selling to.”

It is an uncomfortable observation because it challenges one of the dominant narratives surrounding African entrepreneurship. In the past decade, the ecosystem has largely argued that capital is one of the biggest constraints. Nasionba sees it differently; he believes that readiness is the major constraint. 

He believes that the companies that survive are the ones that gradually stop revolving around their founders and fundraising.

“We have a joke in the office,” he says. “You should not play Jesus.”

His point is less theological than managerial. Too many entrepreneurs insist that every decision passes through them. They remain chief executive, head of sales, finance director, and operations manager long after the business has outgrown that model. In doing so, they create companies that cannot exist without them.

Perhaps it is why the only business book he consistently recommends to first-time founders is Built to Sell by John Warrillow. The lesson from the book, he says, is frequently misunderstood. The objective is not to build a company for sale, but one that can survive its founder.

Obsession with unicorns

It also explains why he is sceptical of Africa’s enduring obsession with unicorns, privately held companies valued at more than $1 billion. The continent has produced about 10 unicorns, including Flutterwave, OPay, Wave, Andela, and Chipper Cash; most of them are fintech companies.

“Not every business is going to be a unicorn,” he says. “Forget even billion-dollar valuations. Not every business is going to be valued at $100 million… It doesn’t have to. It’s okay.”

For much of the past decade, Africa’s tech ecosystem has celebrated exceptional companies. The harder task may be building ordinary ones extraordinarily well.

According to Nansionba, the businesses most likely to transform African economies may not be those capable of raising $10 million. They may simply be the ones that finally manage to find their first $50,000.

Listen to the full podcast on Spotify.

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