OP-ED: Awkward Investment Realities—The case for backing 'boring' business in Africa
As African tech investments plateau, Balloon Ventures' $14 million SME portfolio reveals an uncomfortable truth: 'boring' traditional businesses might be outperforming venture-backed startups in real economic impact.
In a recent LinkedIn exchange, Jasiel Martin-Odoom of Accion Venture Lab made an elegant observation about non-consensus investing. He cited Oui Capital's successful returning of their $4 million debut fund on the back of a bet on fintech Moniepoint, which raised $110 million in funding at a billion dollar valuation in their Series C round.
When pressed on the distinction between VC risk-taking and gambling, Martin-Odoom noted that it lies in governance and portfolio support—the real work that transforms risk into value. Yet, we're witnessing a concerning trend: the frequent, misleading portrayal of VC investing as being as rational and predictable as, say, private equity, while simultaneously being sold as one of the most commercially lucrative and impactful forms of investing available in African markets.
This dual oversimplification does a disservice to entrepreneurs, operators, and investors alike. What's notably absent from this seductive narrative is comprehensive open source data supporting these ambitious claims about both returns and impact.
Partech’s 2024 Africa Tech Venture Capital Report shows that Africa's VC market is nearly flat at $3.2 billion in 2024. While some celebrate this ‘stabilisation’ after 2023's steep drop, we must ask: how much of this capital is genuinely aligned with classic VC asset class outcomes versus being driven by wishful optimism or opportunistic alternative deployment?
Boring, but beautiful
Enter Joshua Bicknell, co-founder of Balloon Ventures, who's building what he calls "the first financial institution dedicated to good jobs" in East Africa. Their approach—focusing on offering "boring" brick-and-mortar SMEs between $10,000 and $200,000 loans bundled with 6 months of business support—offers a fascinating counterpoint to the tech-first narrative dominating African early-stage venture discourse.
With a modest $14+ million loan book, Balloon Ventures' portfolio businesses generate about $201 million in annual turnover—roughly 8% of Eastern Uganda's GDP and 0.5% of the country’s total. Bicknell admits that it’s both indicative of how underreported GDP figures are, and demonstrative of the outsized impact of traditional SMEs that are often overlooked in favour of "innovative and shiny" tech ventures.
Impact arithmetic
The reality? Most of the businesses Balloon backs in East Africa operate primarily in cash, with limited digital adoption. "If you're not figuring out a way of understanding cash flows and underwriting this cash," Bicknell argues, "you're missing such a huge segment of the market." While everyone's "obsessed with technology because it's a really cheap way to scale," the majority of consumers just aren't there yet.
Furthermore, Bicknell challenges the prevalent narrative that you can simultaneously maximise both financial returns and social impact. Using impact investment firm Acumen's over two decades long experience in deploying over $260 million as an example, he notes that they achieved an approximately 90% return—losing 10 cents on every dollar invested while, by many measures, creating significant real-world impact. Incidentally, Bicknell doesn’t view this as failure, but rather, just the way it is.
His impromtu restaurant serviette scratchings on current market rate expectations—often 15% in dollars plus 10% foreign exchange effects—demonstrates how unbridled lending rates typically rise to levels most SMEs simply can't afford with their slim margins. It's a mathematical impossibility that no amount of "impact washing" can solve.
Rethinking returns
The solution appears to lie somewhere between the false dichotomy of pure profit-seeking VC and grant-dependent impact investment. It requires new asset classes (like the boring SME business one Balloon Ventures is pioneering), appropriate return expectations and honest conversations about trade-offs.

For young people contemplating VC-backed entrepreneurship or careers in VC, the message is clear: understand the asset class before being drawn to it like moths to a flame. For investors, it's about matching capital to realistic outcomes rather than forcing borrowed templates onto fundamentally different market realities.
For impact investors of all stripes backing various forms of African entrepreneurship, the path forward isn't necessarily about choosing between impact and commercial success, but rather about creating appropriate vehicles for different value creation cocktails. This might sometimes mean accepting lower financial returns for greater social impact. At other times, where the market permits, it could mean prioritising pure profit to ensure sustained prosperity.
Ultimately, Africa's economic future won't be built solely on tech unicorns or impact investments, but on a diverse ecosystem of businesses—boring and exciting, tech-enabled and traditional—each backed by appropriate forms of capital with realistic expectations.
Editorial Note: A version of this opinion editorial was first published by Business Report on 28 January 2025.