At the 21st Annual Africa Venture Capital Association (AVCA) Conference, West African venture capitalists emphasized that dollar-based financing is no longer a sustainable model for startups operating in Nigeria and across the region. The rising instability of local currencies, especially the naira, has made returns on dollar-denominated investments increasingly unattractive. This shift in perspective marks a significant pivot from the traditional reliance on foreign currency funding in African venture ecosystems.
Gbenga Hassan, managing partner at Argentil Capital Management, stressed the need for a strategic shift toward local currency-based investments. He argued that startups generating revenue in naira should also be capitalized in naira to prevent losses caused by currency depreciation. Hassan noted that a fund raised in naira has the potential to deliver tenfold returns within a few years, unlike dollar-based funds which often underperform due to exchange rate risks.
Hassan also called for increased participation from domestic investors, asserting that sustainable growth in the startup ecosystem requires more homegrown funding sources. This local involvement, he said, would allow startups to remain resilient amid economic shocks and reduce overdependence on foreign venture capital. His remarks reflect a broader sentiment that long-term value creation in the region is better supported by financing models aligned with local economic realities.
Echoing these views, Yewande Adewusi, Chief Operating Officer at Alitheia Capital, noted that currency volatility in West Africa typically occurs in predictable cycles, roughly every six to eight years. She emphasized that raising funds in local currency can provide a natural hedge against such economic fluctuations, thereby safeguarding both startups and their investors from unpredictable losses.
The discussions at AVCA 2025 underscore a growing consensus among African venture capitalists: to truly empower West African startups, the region must prioritize local capital and currency alignment. As the continent’s tech and innovation sectors continue to mature, stakeholders are rethinking traditional funding strategies to ensure they are both profitable and resilient in a volatile macroeconomic landscape.
Source: Business day