Long before Africa’s venture capital (VC) ecosystem became as visible as it is today, Ido Sum was already helping shape it. As one of the earliest employees and a partner at TLcom Capital, an Africa-focused venture firm managing over $250 million, Sum spent 14 years investing across the continent and helping define the firm’s strategy from its London office.
During that time, he led investments in several African startups and served on the boards of four companies: Zone, a blockchain-powered payments infrastructure provider; uLesson, a Nigerian edtech platform; Littlefish, a South African fintech; and Ilara Health, a Kenyan startup expanding access to affordable diagnostics.
In September 2025, Sum announced that he was leaving TLcom after 14 years at the firm. Two months later, he published a widely circulated essay arguing that Africa’s VC industry is not broken despite the scarcity of large, repeatable exits, but simply earlier than many investors are willing to admit.
While Sum does not shy away from the truth that if African tech investors can’t systematically return capital, the venture cycle will break and the industry will eventually fold, he places the continent’s VC ecosystem at a comparable stage to the U.S. in the 1970s and 1980s, Israel in the 1980s and 1990s, Europe in the late 1990s, or India in the early 2000s—markets that only matured after decades of iteration.
Sum argued that these ecosystems matured through decades of repetition, deep pools of capital, non-equity financing, a funnel that allowed progression, domestic acquirers, and a growing base of experienced operators.
Africa, by contrast, remains in what he calls “Act One” with a thinner startup funnel, smaller and largely local exits, limited institutional scaffolding, and a talent bench still under development.
The mistake, Sum argues, is pretending otherwise. Africa’s venture industry, he says, needs to stop behaving like it is in “Act Three” and instead design funds, strategies, and expectations that reflect current realities while deliberately building toward the next chapter.
In our conversation, Sum expands on these ideas, unpacking the distortions created by impact-heavy capital, the risks of funding everything with equity—over-dilution and inflated valuations—and why capital efficiency matters even more in fragmented markets with limited exit options.
This interview has been edited for length and clarity.
You worked at TLcom for well over a decade. Why now—after leaving TLcom—did you decide to write this piece about Africa’s VC ecosystem? Was there a specific deal, conversation, or experience that made you sit down and write it?
It was a collection of many conversations and interactions over the years, and also trying to reflect. Before that, it’s important to state that people who were close to me and worked with me had heard a lot of this before. I presented parts of this data at Oxford, where I gave a lecture in a course for managers within the African tech ecosystem. I’ve shared parts of this internally before and in conversations with people. So most of it wasn’t a surprise to people who have worked closely with me. I just had the time now—time I didn’t have before—to sit down, think it through, substantiate some things that were previously more intuition-based, and put them together.
It was half for myself, but also with the hope that, on a good day, it would strike a conversation. I’m not saying my view is the right or only view. I just felt this needed to be voiced and put somewhere as a reference so we can have a conversation about it.
If you had to compress the entire essay into one sentence—advice for founders and VCs—what would you say?
Think independently and challenge your thinking with data.
That doesn’t mean you shouldn’t be aspirational or ambitious, but my advice is to think independently and integrate data into your thesis-building.
What’s your bar for a fund being good in Africa?
The same bar as everywhere else. Return a lot of money.
You say VC is a very simple business—you take $1 from LPs and return $3. In your experience, has that been realistic for Africa, given currency devaluation, how early the ecosystem is, and systemic challenges?
Of course, the one and three are oversimplified. But there are a few simple truths about the business. Historically, venture capital has been a pretty poor asset class globally—not just in Africa. The top-performing funds are outliers, but at an industry level, returns have struggled. I don’t assume the average return of African VC will be 3x—it’s not that anywhere in the world, and it won’t be here.
But we do need several outlier funds that can hit or exceed that at scale. Returning five times a million dollars is very different from returning five times fifty or five hundred million. Success, to me, is having a few funds that show global-level returns on meaningful amounts of capital. Without that, attracting global capital will remain hard. It’s a chicken-and-egg problem, but if we can’t show returns at scale, it’ll be extremely hard to attract non-concessionary capital.
I agree it’s a chicken-and-egg problem. There have been signs of returns, but mostly via secondaries. How do isolated returns become more widespread, and can secondaries deliver that at scale?
There’s a scale issue. Returning a high multiple on a small amount is very different from doing so on a large amount. For 5x $50k, someone needs to pay you $250k. To 5x $5 million, someone needs to pay you $25 million. That’s a massive difference.
We’ve seen reasonable secondary returns on small invested amounts, not systematically on large ones. To see that, you need large growth rounds in the hundreds of millions, where tens of millions can come off the table. We’re not systematic there yet.
Much of the capital comes from DFIs with impact mandates. Does that reduce accountability around returns?
It’s not an accountability issue. None of us would be here without DFIs—they were the first money in. Intuitively, they’re probably 70–75% of the capital in the ecosystem. That matters.
But it often creates friction. DFIs push money to be spent in ways that aren’t always optimal for financial value creation. There’s tension between what the money requires and what would generate the best returns. That’s not blame—it’s what DFIs are designed to do. But as long as they dominate the capital stack, this friction remains.
The question is whether we can grow a more commercial capital base. And the only way to do that is with scaled returns.
You compare Africa to the US, Israel, Europe, and India at earlier stages. What does that timeline imply for Africa?
Ecosystems are built on trust and repeatability. Those were built elsewhere through capital-efficient companies. Early funds had high ownership, modest cheque sizes, and modest exits. They repeated that cycle. We sometimes compare ourselves to what those ecosystems look like now, rather than how they looked five or ten years in. That’s misleading. Africa has 54 fragmented markets, unlike the US or India. Expecting the same outcomes immediately ignores that reality.
We need stepping-stone exits—tens of millions, some hundreds—before expecting realized billion-dollar outcomes. No ecosystem skipped that phase.
In the essay, you say over-dilution happens because everything is equity. Funds want 15–25% ownership. How does that work for founders?
I’m not saying that’s the right ownership level in all cases. It depends on the round and context. But if we could mix working capital and equity, things could look different.
Imagine a company raising $5 million, where $3 million is working capital. If it’s all equity, you price at a higher valuation and increase dilution. If you could split it—$2 million equity, $3 million working capital—you could de-risk part of the capital, price better, and avoid overpricing early. Right now, everything being equity pushes risk and valuation up.
What three metrics do you expect to trend positively over the next 5–10 years?
More exits in the tens of millions, some in the low hundreds, with capital-efficient businesses. More systematic M&A, initially mostly in-continent. That cadence builds trust. International M&A may come later.
Given balance-sheet differences, how viable is in-continent M&A for highly valued startups?
If no one on the continent can buy you for a billion dollars, and you raise tens or hundreds of millions, you shrink your buyer universe. Every valuation increase reduces potential acquirers.
Founders must ask: Who am I building value for? If it’s public markets or international buyers, that’s fine—but they’re fewer. If it’s local buyers, the sizing and funding strategy must reflect that reality.
Fintech has taken 70–75% of African tech funding. Does that distort the ecosystem?
Fintech was seen as easier to exit—clear revenue models, transactional nature. But many fintechs sit on top of existing rails, limiting pricing power. Building parallel rails requires massive capital and scale. Replicability across markets is hard due to regulation and currencies. But fintech isn’t a fundamental problem—it’s a necessary layer. You need payments to enable other sectors.
If in-continent acquisitions are key, how should founders build with that in mind?
Relationships with buyers are critical. These aren’t formal processes. Power often sits with owners, not executives. Acquisitions come from long-term trust and partnerships, not three-month decisions. If you’re building for international buyers, you need deliberate market access, relationships, and value propositions. Buyers won’t discover you by accident.
Is there anything you want to add?
This isn’t the truth—it’s a view at a point in time, based on data and nearly 20 years of experience. Disagreement is healthy. Open, honest debate will help us become better founders, investors, and an ecosystem.
What unfair advantages does Africa have globally?
I don’t have a perfect answer. Energy and natural resources are areas where more value can be created—not just extraction. Energy innovation is promising, especially given grid challenges. We lack clear global research excellence centers. That’s something governments and public money could focus on—but it’s a decades-long effort.
