Accelerating Startups in Africa: What IFC's Latest Research Reveals
One of the migration's deadliest moments: crossing the river. Like the wildebeest migration, building investment-ready startups means surviving the valley of death—where only the strongest, most investment-ready ventures emerge
Africa's startup ecosystem stands at an inflection point. While global funding contracted sharply, something remarkable happened: median deal values in Africa rose from $1.1M to $1.8M as investors shifted decisively toward quality over quantity. Two groundbreaking IFC reports—"How Business Accelerators Can Boost Startup Growth" and "Venture Capital and the Rise of Africa's Tech Startups"—reveal how accelerators can tilt the game towards successful ventures.
The Accelerator Advantage: Beyond Capital
In emerging markets, where only 1 in 36,800 young firms attracts outside investment (compared to 1 in 1,000 in advanced economies), accelerators can signal quality to investors and help them build a pipeline of high-potential investment targets. Indeed, accelerators serve the dual function of quality filters and capability builders.
Consequently, accelerators not only help founders in their fundraising efficacy, they also help founders scale revenue faster, and attract the right talents to support their accelerated growth. The IFC report highlights one example from Chile: entrepreneurs who barely qualified for acceleration raised three times more capital and doubled their workforce compared to those who barely missed the cut. Meanwhile, those receiving funding alone showed no significant performance difference. The report also emphasizes that the accelerators benefits typically outlast the actual program as participating startups grow sales 2.7 times than comparable firms that did not make the cut.
Another key insight? Funds that combine capital with structured accelerator support slightly outperform seed funds offering capital alone. This isn't just about writing checks—it's about building foundational capabilities that enable startups to use capital effectively. In essence, the most successful accelerators focus on what we call investment readiness: preparing startups not just to attract funding, but to deploy it strategically for sustainable growth.
What Makes Accelerators Effective
IFC's research identifies three key success factors:
Rigorous selection processes that accurately identify high-potential ventures across multiple dimensions—from team characteristics to market timing.
Strong organizational practices for performance tracking, peer learning, networking, mentoring and visibility.
Aligned incentives, particularly when accelerators directly invest in their portfolio companies or when accelerators are sponsored by investors who are keen to identify high-potential startups.
In any case, here's what often gets overlooked: impactful accelerators focus intensively on intangible skills like market understanding and decision-making —particularly knowing when to persist, pivot, or quit. These capabilities often determine long-term success more than product features or initial market positioning. It's about building strong foundations for first-time founders to learn how to build a business, not just a product people want, and deepening investor access and networking opportunities for serial entrepreneurs.
The Structural Challenge in Africa’s ecosystem
Africa's innovation ecosystem faces a fundamental vulnerability: roughly 80% of startup funding comes from foreign investors, making the continent highly susceptible to global economic downturns. This dependency creates cascading effects throughout the accelerator landscape. Therefore, policy efforts to nurture local capital markets and facilitate private equity investment remain crucial for long-term ecosystem health. In the interim, alternative funding instruments—venture debt, redeemable equity, and revenue-based financing—could provide welcome alternatives to traditional equity to help startups scale up.
Foreign investors often view African startups as riskier investments, leading to longer funding cycles and more stringent requirements. The IFC research suggests that overcoming the fragilities of nascent local financial markets requires accelerators to focus on deepening local private-sector connections, building cross-border networks, and connecting local startups with global value chains.
Africa's Untapped Opportunities
The African Venture Capital market is maturing rapidly. Funding remains concentrated in South Africa, Kenya, Egypt and Nigeria with emerging hotspots in Kigali (Rwanda), Accra (Ghana), Addis Ababa (Ethiopia), and Dakar (Senegal). Francophone Africa remains notably underexplored—with only Dakar among emerging centers—representing significant untapped potential.
So far, the market is concentrating on information technology services, fintech, and e-commerce.
Perhaps most striking: agriculture accounts for 20% of Africa's GDP and employs 50% of its workforce, yet agtech remains underfunded despite market potential exceeding $2 billion.
Another opportunity? The digitization of core business functions—accounting, supply chain management, sales pipelines—represents immediate productivity gains for the 600,000 formal firms and 40 million microbusinesses that could leverage digitization to enhance their business performance, improve their margins and monitor their inventory.
Building Tomorrow's Investment-Ready Ventures with J4Change
If we want to see more African startups actually get funded —not just pitch-ready, we need to move beyond surface-level support.
At J4Change, we work with accelerators, and fund managers to bridge the gap between vision and fundability. We go beyond storytelling to build the fundamentals that create stronger post-demo day outcome and lasting portfolio performance.
Ready to improve your founder selection process and portfolio results?
📩 Book a free strategy call here or contact J4Change to discuss how we can accelerate investment readiness in Africa's evolving markets.
REFERENCES
How Business Accelerators Can Boost Startup Growth - Feb 2025. International Finance Corporation, Washington, DC. Report by Santiago Reyes Ortega and David Harrison
Venture Capital and the Rise of Africa's Tech Startups - May 2025. International Finance Corporation, Washington, DC. Report by Laurien Field, Marcio Cruz, Mariana Pereira-López, and David Harrison
