Navigating an Existential Crisis in African VC

African venture capital faces a critical juncture, according to Oui Capital’s general partner, Olu Oyinsan. While his firm recently returned its $4 million debut fund—a rare feat during the current cycle—Oyinsan sees this success as less significant than the broader challenges confronting the industry.

Oui Capital’s Fund I generated a 4x return largely thanks to a $150,000 investment in Moniepoint that yielded an $8 million exit when the fintech reached unicorn status. This performance underscores the potential of African tech but also highlights the need for more nuanced approaches.

“Even without Moniepoint, Fund I would have returned twice the fund’s size,” Oyinsan noted, emphasizing that sustainable returns require more than just one outlier success.

Strategic Shifts and Portfolio Focus

Fund II represents a deliberate correction from what Fund I could not do. Check sizes now range up to $750,000 (averaging $400,000-$500,000), with ownership targets increased to 3%-10%.

The portfolio is also shrinking—from around 20 companies in Fund I to an expected 10-11 in Fund II. This reflects a post-mortem finding that small investments often underperformed due to lower conviction and follow-on support.

“We’re now more selective, focusing on businesses where we can truly add value beyond capital,” Oyinsan explained.

The Path Forward for African VC

Oyinsan believes no African seed fund should exceed $50 million in size—a constraint that forces greater selectivity and focus. He also expressed regret over passing on a particular deal early on, highlighting the importance of pattern recognition in venture investing.

The firm’s approach emphasizes deep market understanding rather than formulaic investment decisions. As Oyinsan noted, “We studied the market before developing our thesis and looked for companies that fit it—like Moniepoint, where we recognized a critical need for reliable payment infrastructure.”

Despite recent challenges, Oui Capital remains optimistic about Africa’s tech potential while advocating for industry-wide reforms to ensure long-term sustainability.