The venture capital misnomer that complicates Africa's investment narrative

A RECENT Afridigest LinkedIn post citing Anil Atmaramani's championing of venture capital (VC) firm Antler's refreshed approach to venture investing in Africa raises important questions.

- ANDILE MASUKU

Atmaramani is a partner at the organisation, and his call to "rethink the mould" by backing everything from tech-enabled innovations to working capital loans and day-zero founders sounds admirable, but blurs distinctions that may ultimately hurt the clarity of discourse around funding in African markets.

Definition disconnect

The hard truth? Venture capital, by its classic global definition accounting for hyper-growth, hyper-scale and super-fast outsized returns simply does not exist as a genuine asset class in Africa. When we layer on calls for VC to be a democratised, inclusive investment mechanism that everyone "deserves" access to (which I genuinely wish it would be), it becomes an even more problematic misnomer, noble intentions notwithstanding.

We need to differentiate funds using the VC label primarily to land limited partner (LP) investments that would not otherwise flow to them from authentic VC activity.

While many African VC proponents would attribute the low allocation of global VC funding to Africa (no more than 2% by even the most generous estimates) to systemic challenges and faulty investor perceptions, the unvarnished reality indicates that most international venture capitalists simply don't even consider the continent, arguably because the asset class as strictly defined doesn't truly operate here.

Label vs reality

The problem isn't Atmaramani's intentions or Antler's broader investment strategy.

Rather, it's the insistence on calling what they're doing "venture capital" when it deviates so substantially from what VC represents globally.

This ambiguity perpetuates unrealistic expectations that ripple through the ecosystem - from LPs to fund managers to founders.