African corporates urged to buy startups to unlock VC exits
FSD Africa is backing S2E Africa to encourage African corporates to acquire startups, aiming to create a local exit route for venture capital. Currently, foreign acquirers' share of exits has fallen from 56% in 2020 to 33% in 2025, while secondary sales rose to a record 23% of exits last year. Pula, an agricultural insurer active in 13 African countries, illustrates the model: after adding a data service that now earns seven-figure revenue with a 50% margin and 300% yearly growth, it is using profits from its $20 million Series B to buy startups with at least $500k in revenue. S2E Africa helps firms like Pula build M&A capacity and identify targets. If more African companies follow suit, investors could recover capital faster, redeploy into new funds, and accelerate the startup cycle. Despite rising M&A activity - 67 deals across Africa in 2025, up 72% from 2024 - most transactions are internal recycling, such as Flutterwave acquiring Mono, underscoring the lack of a broad corporate buyer base.