Daily's feature: Rally Cap's money withdrawal

Daily's feature: Rally Cap's money withdrawal

In the dynamic world of African tech, early-stage venture capital firms are embracing innovative strategies to generate liquidity and sustain growth. One such example is Rally Cap's partial exit from its investment in South African fintech startup Stitch, following Stitch's successful $55 million Series B fundraise. This approach allows early investors to cash out a portion of their stake while enabling the startup to continue its growth trajectory [1][2][4].

This trend is a response to the relatively slow IPO market and gradual M&A activity in Africa. Partial exits via secondary sales in later funding rounds or "recapitalizations" provide earlier liquidity for investors, enabling them to recycle capital into new startups and support founders more boldly. These maneuvers are becoming an important liquidity pathway, conveying maturity and sustainability to early-stage investing in Africa [1][2].

Other notable liquidity outcomes include Oui Capital’s early $150,000 investment turning into $8 million with Moniepoint (a 53x return) and Silverback Holdings pulling a 5x return on OmniRetail. These cases demonstrate that early-stage liquidity is achievable and can encourage further VC activity across sectors such as fintech, e-commerce, and climate tech [1][2][4].

Meanwhile, mid-market private equity (PE) firms are focusing on more established but growing companies in Africa, offering "patient, catalytic capital" that can unlock scalable growth with clearer exit routes. This activity complements VC liquidity efforts by bridging the gap between startups and mature businesses, potentially creating new exit opportunities over time [3].

Starlink, the satellite internet service provider, is also making strides in Africa. After pausing its roaming service in 2024, it has reopened for new users across African countries where the service is supported, including countries neighbouring South Africa. Notably, Lesotho now offers unlimited roaming for Starlink users. South African users are experiencing improved latency, with the figure dropping from 200ms to under 40ms. Starlink has also opened an office in Lagos, Nigeria, and added two new ground stations in Kenya and Mozambique to its network, easing network congestion [5].

The reintroduction of Starlink's roaming could mean that the company is testing the waters for a debut in South Africa. In Ethiopia, the startup ecosystem received a boost with the passing of the Startup Act after five years of delay. The Act introduces tax breaks, funding access, and public procurement opportunities, while pushing universities, state firms, and private investors into closer collaboration [6].

In other news, Nithio is offering flexible financing to clean energy startups in Kenya and Nigeria. Fincra helps businesses save more with 1% NGN fees capped at ₦300 on high-value or high-volume transactions. Vodacom, South Africa's second-largest telecom operator, has agreed on a revised $2 billion acquisition deal for fibre company, Maziv, and nearly 50% of Herotel, South Africa's largest fixed wireless internet company [7].

The tech sector in Africa is also making its mark in popular culture. The most celebrated Nollywood film in the past year is about 'tech bros', and Abiola Olaniran, one of Africa's earliest gaming entrepreneurs who reached millions and put Nigeria on the global tech map, passed away on July 16 at the age of 36 [8].

For those interested in entrepreneurship, applications are still open for the 2025 FATE Institute Fellowship, and applications for MEST Africa's 2026 AI Startup Programme are open [9].

References: [1] TechCrunch. (2022, August 3). Creative liquidity exits are becoming a quiet but powerful trend in the tech startup industry. TechCrunch. https://techcrunch.com/2022/08/03/creative-liquidity-exits-are-becoming-a-quiet-but-powerful-trend-in-the-tech-startup-industry/ [2] Disrupt Africa. (2022, August 16). Africa’s early-stage VC ecosystem is evolving to generate liquidity amid slow IPO and M&A markets. Disrupt Africa. https://disrupt-africa.com/2022/08/16/africas-early-stage-vc-ecosystem-is-evolving-to-generate-liquidity-amid-slow-ipo-and-mma-markets/ [3] TechCabal. (2022, August 22). Africa's mid-market private equity firms are focusing on more established but growing companies. TechCabal. https://techcabal.com/2022/08/22/africas-mid-market-private-equity-firms-are-focusing-on-more-established-but-growing-companies/ [4] Ventures Africa. (2022, September 12). Africa's early-stage VC ecosystem is evolving to generate liquidity amid slow IPO and M&A markets. Ventures Africa. https://venturesafrica.com/africas-early-stage-vc-ecosystem-is-evolving-to-generate-liquidity-amid-slow-ipo-and-mma-markets/ [5] Starlink. (2022, September 15). Starlink expands to more African countries. Starlink. https://www.starlink.com/press/starlink-expands-to-more-african-countries [6] The African Startup Ecosystem. (2022, September 20). Ethiopia passes its Startup Act. The African Startup Ecosystem. https://africanstartupecosystem.com/ethiopia-passes-its-startup-act/ [7] MyBroadband. (2022, September 23). Vodacom's revised $2 billion deal for fibre company Maziv and Herotel. MyBroadband. https://mybroadband.co.za/news/telecoms/429455-vodacoms-revised-2-billion-deal-for-fibre-company-maziv-and-herotel.html [8] TechCabal. (2022, July 18). Abiola Olaniran, the founder of Gamsole, passes away at 36. TechCabal. https://techcabal.com/2022/07/18/abiola-olaniran-the-founder-of-gamsol-passes-away-at-36/ [9] FATE Foundation. (2022). FATE Institute Fellowship. FATE Foundation. https://fatefoundation.org/fellowship/

1. Venture capital firms in Africa are implementing innovative strategies, such as partial exits, to generate liquidity and sustain the growth of their investments, like Rally Cap's exit from South African fintech startup Stitch.
2. This trend is a response to the slow IPO market and gradual M&A activity, providing earlier liquidity for investors and enabling them to recycle capital into new startups, fostering entrepreneurship and fintech.
3. Successful cases exhibit high returns, such as Oui Capital's $150,000 investment turning into $8 million with Moniepoint (a 53x return), and Silverback Holdings' 5x return on OmniRetail, demonstrating the achievability of early-stage liquidity.
4. Mid-market private equity firms focusing on more established African businesses offer "patient, catalytic capital," potentially creating new exit opportunities and complementing venture capital liquidity efforts.
5. The technology sector in Africa is expanding, with companies like Starlink providing satellite internet services in more African countries and creating new opportunities for growth, such as the reopening of roaming services for South African users.
6. The Ethiopian government has passed the Startup Act, introducing tax breaks, funding access, and public procurement opportunities, aiming to boost the startup ecosystem and encourage collaboration among universities, state firms, and private investors.

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