Africa's Next Unicorns to Emerge From SMEs and Creative Sectors, VCs Say
Venture capital is pivoting away from traditional fintech towards locally-rooted solutions in financial inclusion, the creative economy and SMEs as funding becomes more selective.
Africa’s next billion-dollar companies will emerge from financial inclusion, the creative economy, sports and small and medium-sized enterprises, according to investors and executives at the latest UBA Business Series in Lagos. The quarterly event, hosted by United Bank for Africa, gathered entrepreneurs and investors to discuss how technology and consumer insights are shaping the continent's high-growth businesses. The consensus marks a notable shift away from traditional fintech as the primary hunting ground for venture capital.
As venture funding becomes more selective across the continent, capital is increasingly targeting startups that address everyday local challenges rather than import global business models. Panellists agreed that financial inclusion remains a massive untapped opportunity, with millions still lacking affordable banking and credit. However, investors are now widening their scope to sectors that directly serve broader population needs.
Femi Aluko, co-founder and chief executive of Chowdeck, pointed to data analytics as the foundation for this locally-driven growth. He noted that his company launched its Chowstore product after identifying specific purchasing patterns on its existing delivery platform. “Customers constantly tell you what they need. If you listen carefully, they will show you what to build next,” he said.
Beyond traditional services, panellists highlighted the creative economy as a prime sector for producing globally competitive companies. Rapper and entrepreneur M.I Abaga argued that artificial intelligence should be viewed as a tool for market expansion rather than an industry threat. “Technology has always been part of creativity. AI gives African creators the opportunity to compete globally, solve bigger problems and build businesses that serve international markets,” he said.
For venture capitalists deploying this capital, founder resilience is outweighing the polish of pitch presentations. Ashim Egunjobi, venture capitalist and co-founder of Octerra Capital, noted that successful investing now hinges on identifying entrepreneurs who deeply understand their customers and can adapt to shifting market conditions.
Media entrepreneur Adaora Mbelu, who moderated the discussion, summed up the new investment thesis. “Building is not reserved for the smartest person in the room. It is about being observant enough to understand people, behaviour and context. The greatest opportunities often emerge from paying attention to what others overlook,” she said.
