EXCLUSIVE: Africa’s tech ecosystem needs a strong local capital market for sustainable growth

The ecosystem is still feeling the pressure this year, dealing with macroeconomic instability, slow GDP growth, inflation, geopolitical tensions, and climate issues.

Despite all these challenges, Africa continues to be a hub of opportunity, still attracting the interest of investors like Satoshi Shinada, Co-founder and Director of Kepple Africa Ventures Inc.

Since 2019, Shinada has backed over 50 startups, including Moniepoint, Moove, and Shuttlers, across West and North Africa, bridging key gaps and fueling innovation in some of the continent’s most vibrant markets.

In this exclusive interview with Business Insider Africa, on the sidelines of the Africa Prosperity Summit, Shinada talks about Africa’s venture capital landscape, how it compares to other regions, and his philosophy on investing in African startups.

BI: Can you describe the venture capital landscape in Africa and how it compares to other emerging markets you have invested in?

Shinada: What sets the African VC ecosystem apart is its huge dependence on development finance institutions (DFIs) from Europe. These DFIs typically have dual objectives, achieving a development agenda, such as job creation, and generating financial returns.

While financial returns matter, the development impact often takes precedence. This dynamic is quite distinct from markets like Southeast Asia or India, where DFIs play a less prominent role. This reliance on DFIs has shaped the startup and VC ecosystem in Africa, for better or worse.

To unlock Africa’s growth potential, we need to broaden where the money comes from. Look at India, they can fund startups locally and even exit through IPOs in their stock market because their domestic capital market is vibrant and active.

Similarly, Saudi Arabia’s startup ecosystem, which began evolving after Africa already has several IPOs because of their well-structured capital markets.

Africa needs both, a strong local capital market and a more diverse flow of external funding. If Africa were funded by more varied sources, it would have the freedom to grow in ways that are uniquely suited to its context, rather than being shaped by external benchmarks.

At Kepple Africa Ventures, this is something we are actively working on. We are bringing in capital from Japanese corporates and Asian strategic investors to diversify the funding pool.

Through our joint venture with Veload Capital, we are also tapping into a local investor network, our LPs include Sterling Bank, a Nigerian bank, and even a local family office. By doing this, we hope to help create a more resilient and inclusive VC ecosystem that truly serves Africa’s potential.

BI: What led to the founding of Kepple Africa Ventures, and what is your core investment strategy when engaging with African startups?

Shinada: We are fairly sector-agnostic in our approach, but at the core of what we do is a desire to address Africa’s most pressing pain points. The truth is, that GDP per capita across the continent is not as high as in other regions. This means there is little room for people to spend on services or products that aren’t essential.

Businesses must focus on offering solutions that meet real, urgent needs. If people do not see the value, they won’t pay. And if they do not pay, a business can’t grow. That is why, for us, the key question is always, how quickly can a business monetize by solving the critical challenges faced by its market?

This philosophy drives the way we think about Africa’s economic ecosystem. At its foundation is what we call the social layer. This refers to the infrastructure that allows other businesses to thrive. Payment systems, public transportation networks, supply chain management, and communication infrastructure are just a few examples.

The next layer is the “business layer,” which focuses on empowering businesses. Right now, consumer spending power in Africa is still relatively low, so targeting businesses makes the most sense.

When consumers can’t spend much, the solution lies in bringing prices down. But, for prices to drop, businesses must become more efficient and productive.

Finally, there is the “individual layer,” which is all about embracing the new ways people live and work, thanks to technology. With the growing penetration of the internet and mobile phones, we are seeing several new entertainment businesses like in the gaming sector, music, and films.

When you combine these three layers, the social, business, and individual layers, you unlock immense economic potential. That is how we truly tap into Africa’s opportunities.

BI: What are the most important qualities you look for in startups before deciding to invest in them?

Shinada: I think it all starts with founders having a big vision. Without a big vision, your achievements will never surpass your goals. Even if a business model looks promising if the founder’s vision is small, the business can only grow so much—it’s limited by the size of that vision.

Of course, having a solid business model and a clear plan to monetize quickly is crucial. But the real game-changer is ambition. A big goal can push boundaries and make things possible. For venture capital, this is non-negotiable.

We’re in a high-risk, high-reward space. Most of our investments might not succeed, so we rely on a few to achieve exponential growth. Think about what Moniepoint has done in our portfolio or Moove, these are companies that had the vision and scale to grow exponentially.

Another thing founders need to understand is that they shouldn’t shy away from being operationally heavy. In Africa, technology alone doesn’t solve problems. It needs to be tightly integrated into operations. The environment here is unique—smartphone penetration is high, which is great, but it doesn’t necessarily mean people are tech-savvy or able to navigate complex systems.

That’s why tech needs to be as simple and intuitive as possible, especially in chaotic operational contexts. Take MoniePoint as an example. Their business model has a robust tech layer, but it’s also deeply rooted in operations.

They’ve built a strong structure to manage agents spread across the country, which is no small feat. It’s operationally intense, but that’s what makes it work.

When it comes to sectors, we might be nearing a saturation point in payments, at least for now. But that’s just one part of the ecosystem. There’s still so much potential for founders who are ready to dream big, adapt their operations, and simplify tech for real-world impact. That’s where the future lies.