Imagine a world where African startups can more easily attract investment and grow into global powerhouses. That’s the promise of a groundbreaking new initiative: Africa’s first-ever Exit Index. But what exactly is an exit index, and why is it such a big deal for the continent’s burgeoning tech scene?
The index, unveiled at the recent Africa Prosperity Summit hosted by Ventures Platform, aims to inject much-needed liquidity into Africa’s private capital ecosystem. Think of it as a report card for investors, showing which companies are successfully ‘exiting’ – meaning they’re either being acquired by larger firms or going public through an IPO. This provides crucial data for future investment decisions. The summit itself, themed “Growing the Pie: Building the Pathways for Liquidity, Scale, and Enduring Returns”, gathered key players – investors, entrepreneurs, and policymakers – to tackle the challenges of scaling businesses and securing sustainable returns.
Michael Famoroti, Head of Research at Stears, presented the Exit Index as a “continuously updated, publicly accessible resource.” Its primary function is to benchmark exit performance, giving investors and policymakers the actionable insights they need to make smart decisions about where to put their money. It’s about guiding strategic deployment of capital for sustainable investment and effective policymaking. In other words, it helps everyone make informed bets on Africa’s future.
The summit wasn’t just about the index, though. High-level discussions also focused on the persistent liquidity challenges facing African businesses, the systemic barriers hindering their growth, and strategies for scaling companies across the continent. Executives from prominent organizations like the Nigerian Exchange Group (Temi Popoola), Moniepoint (Tosin Eniolorunda), British International Investment (Chirantan Patnaik), and Norrsken22 (Lexi Novitske) delved into the nitty-gritty of policy, regulatory hurdles, and operational constraints, including those pesky FX restrictions and capital controls.
Kola Aina, Founding Partner at Ventures Platform, put it bluntly: “Africa stands at a pivotal moment where liquidity (not just capital) is the defining lever for scale.” He emphasized that closing the continent’s liquidity gap – a gap fueled by limited exit pathways and underdeveloped acquisition and listing markets – demands a multi-pronged approach. This includes building acquisition-ready companies, encouraging greater corporate participation in exits, strengthening listing readiness, and innovating Africa-specific liquidity mechanisms capable of driving long-term, continent-wide prosperity. It’s not just about getting the money in, it’s about creating an environment where that money can grow and multiply.
But here’s where it gets controversial… Some argue that focusing solely on exits can create a short-term, profit-driven mentality that might not be in the best long-term interests of African businesses or the continent as a whole. Is it possible that this focus could lead to less emphasis on building truly sustainable and impactful companies?
Chirantan Patnaik offered a data-driven perspective on capital flows within Africa’s innovation ecosystem, pinpointing who’s investing, what limited partners (LPs) are looking for, and how fund managers need to adapt. He drew comparisons between Africa, Latin America, and India, highlighting similarities in market maturation, exit pathways, and fund dynamics, thereby contextualizing Africa’s challenges within a global growth narrative. This benchmarking helps to understand where Africa stands in its development journey.
Dotun Olowoporoku, Managing Partner at Ventures Platform, stressed the importance of collaboration and trusted intelligence in unlocking liquidity and scale. “The next frontier for Africa will not only be about attracting capital but also about earning it through transparency, resilience, and consistent performance,” he said.
The summit also explored alternative investment instruments, such as venture debt, blended finance, and revenue-based financing, as potential avenues for African companies to achieve cross-border scale. A key takeaway was the need for a reliable measure of exit performance to guide investment decisions – a need that the African Exit Index directly addresses.
During a fireside chat, Olowoporoku and Eniolorunda shared insights on scaling African companies to billion-dollar valuations. They agreed that sustainable growth in Africa requires a delicate balance: ambition tempered with discipline, bold vision coupled with operational excellence, ecosystems built on trust, and the leveraging of local insights to create profitable, resilient, and scalable businesses.
And this is the part most people miss: the Africa Prosperity Summit is not just a talking shop. It’s a platform for translating high-level conversations into concrete strategies and actionable intelligence, all geared towards fostering scalable, long-term prosperity.
The summit was supported by notable sponsors and collaborators including G. Elias, Aluko & Oyebode, Iron Capital, Google for Startups Accelerator Africa, AVCA, Algebra Ventures, Miva University, Novastar, Wimbart, 7 Generations Institute, and TLP Advisory.
Now, consider this: Will the African Exit Index truly level the playing field for African startups, or will it primarily benefit larger, more established players? Will it encourage more responsible and sustainable investment, or simply fuel a race for quick returns? What other metrics should be considered alongside exit performance to ensure the long-term health and growth of Africa’s innovation ecosystem? Share your thoughts in the comments below!