· 6 min read
“There is about $180 billion dedicated for African venture capital and private equity… sitting in bank accounts… not being deployed as they have promised.”
Context and challenge — what I found on the ground
Private equity, start-ups, emerging markets. These words are everywhere, yet the operating reality remains opaque, and sometimes compromised, as the Abraaj saga reminded the world (Clark and Louch, 2021). In my work across what I call future markets, I have tried to move beyond panel talk into practice. That is why I went to Kenya to ask, what is blocking capital from meeting makers, and how to fix it.
Nick’s answer starts with lived experience. After seven years in investment banking and a year trying to steady a venture in affordable, sustainable housing, he ran into silence from the very firms that trumpet Africa:
“I spoke to probably about 30 or 40 private equity funds… the product we were doing was kind of a no-brainer… but most of the PE firms were not very interested… doors shut very quickly with no response.”
Behind the silence sits a structural preference for large cheques and short clocks, the inverse of what African company-building often requires.
“There are only 13 stock exchanges in Africa… nearly $2 trillion in exits that have not taken place that should have.”
However one debates the exact figures, the mismatch of incentives and time horizons is real. My contention is that the fix is design, not rhetoric.
Pumapa’s solution: open, liquid, patient
Pumapa challenges the “initiates-only” rules of private markets with three practical moves. Versions of this are now surfacing even in established markets (Oliver, 2022), but Pumapa pushes the logic further and lowers the cheques much more.
1. Open the funnel.
Lower the minimums so domestic professionals and diaspora can participate without blowing up governance.
“What if one were to bring it down to $1,000… it means a lot more people can play… and you have a lot more investment capital flowing towards the start-ups.”
Pumapa’s early investor base is roughly half overseas first-timers and half local — with a declared aim to grow the local share and seed a home-grown investor culture.
2. Design liquidity.
Do not force founders into five- to seven-year exits in markets where the public window is narrow. Build an orderly secondary mechanism instead.
“People can stay in as long or as short as they want… as long as there are other buyers willing to purchase those shares.”
3. Select for grit and govern well.
Back companies solving basic needs such as food, housing, health, where compounding accrues over time. Then select for grit in Angela Duckworth’s sense (passion, perseverance, purpose) and hard-wire cap-table hygiene from day one (Duckworth, 2016).
“We look for companies supporting the bottom of the pyramid… and we fundamentally decide based on the founders… grit is one of the things we predominantly look for.”
Patience over performative speed
The central argument is temporal. Short-termism looks safe on the surface, but misses the compounding curve.
“Short term returns are not safe… if we are constantly rushing a founder and pushing them to exit… we encourage less growth.”
This matters in contexts where, as Mwai notes, African founders are expected to “deliver 10 times the value on one tenth the budget” while peers elsewhere receive the inverse.
Mini case — Forest Foods and the economics of regeneration
To test the thesis, I asked for specifics. Mwai highlighted Forest Foods, a Kenyan venture practising syntropic agroforestry, layered systems that mimic forests to produce food, timber and ecosystem services on the same plot, a concept popularised by Ernst Götsch in Brazil. For a visual introduction see Life in Syntropy (2015).
“They are building farming solutions that mimic natural forests… after about four years, they no longer have to irrigate… water tables start getting restored… soils have higher carbon content… and it is more profitable than traditional farming.”
Two investment implications follow. First, time profile: cash flows improve sharply after the establishment phase, exactly when many funds push for exit. Second, risk profile: diversified outputs and climate resilience lower volatility versus monoculture systems. Crucially, Forest Foods plans to teach others, pushing value beyond a single farm.
Does it work?
Pumapa has invested in ten companies. Three are profitable; two have failed; the rest trend towards profitability. Mwai frames this as the normal power-law reality:
“Think about it as a collection… invest in maybe five start-ups a year… you only really need a handful to do extremely well… you just need one.”
The critics — and a counter-design
On my podcast The Samuele Tini Show, some guests warn that democratising private markets invites noise and risk. Hundreds of small investors, they argue, is a management nightmare. Pumapa’s counter is to change the information flow and the investor experience:
“We are merely a shopkeeper… providing products on the shelves for people to make their choices.”
In practice that means plain-language disclosures, diligence packs, portfolio-level updates and a transparent secondary to recycle capital without clipping upside. It is a retail-accessible front end with professional discipline behind it.
Lessons for founders (from the trenches)
• Guard the cap table. Early over-dilution to inactive partners kills governance. Keep founder control; use vesting; leave space for future investors, advisers and key hires.
• Scale with discipline. Fixed costs, headcount and office trappings should lag revenue. “I have seen firms raise $30 million and collapse; they needed maybe $5 million to pull off their plan.”
• Choose the mission you can endure. Grit beats fashion.
“Failure is just a lesson. Quitting is when it actually stops… Do not fear failure. Fear quitting.”
What leaders can apply now
• Play the long game. Design vehicles that can hold through non-linear growth phases.
• Engineer liquidity; do not force exits. A rules-based secondary framework lets some recycle capital while others keep compounding.
• Back fundamentals. Food systems, affordable housing and accessible health are not a trade; they are the next two decades of African growth.
The road ahead
Pumapa’s five-year target is a vibrant marketplace where entrepreneurs, investors and even other funds find capital, exits and local know-how. The ten-year ambition: 100 start-ups stewarded , plus turnarounds for older, system-critical firms that slipped due to succession or management gaps. The underlying bet is clear: democratisation plus patience can be a competitive edge in African private markets.
“We can build an ecosystem that encourages local investment for local firms… more inclusive… a vibrant marketplace.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
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References and further reading
• Clark, S. and Louch, W. (2021). The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale. (Abraaj case context).
• Duckworth, A. (2016). Grit: Why Passion and Resilience are the Secrets to Success.
• Oliver, J. (2022). Time for retail investors to go into private equity? https://www.ft.com/content/8875aed5-ebb7-466c-ad6e-287a22eecd0e
• Life in Syntropy (2015), documentary on syntropic agroforestry. Available at: https://www.youtube.com/watch?v=gSPNRu4ZPvE
• For Nick interview, listen on Spotify or Apple Podcasts The Samuele Tini Show https://open.spotify.com/show/67tIU1Yrc2rgwXpnfAQVRL
