Sona's Field Notes #01: The VC Question That Won't Let Founders in Africa Rest
In the debut edition of her monthly email, venture builder-turned-founder Sona Mahendra confronts a common VC question African founders dread.
Hello Founders, Investors and Ecosystem Builders,
I'm Sona Mahendra, and following the lively reception of my recent hijack of Andile Masuku's TechTides Africa column at African Tech Roundup, I'm launching this monthly email in collaboration with the platform.
After working both sides—from founder to venture builder at 54 Collective, and now back to founding an alternative healthcare financing venture—I've gained perspectives worth reflecting on publicly on a regular basis.
In these Field Notes, I'll unpack observations that straddle the founder-funder divide, always with an eye towards practical applications. There's also tons I'm learning, unlearning, relearning as I stress-test widely held assumptions, popular wisdom and live personal hypotheses about startup success in Africa. My aim isn't to position myself as an oracle with perfect foresight, but rather to share candid analysis you can actually use, regardless of where you sit in our ecosystem.
While I'll be speaking to both builders and backers in these notes, today's reflection comes primarily from the founder perspective—addressing a question so many of us have faced.
If you read my recent article on African Tech's Next Big Challenge—Matching venture capital to realistic outcomes, you'll recognise this as an evolution of that thinking. There, I argued that misaligned funding models are stalling wins in our ecosystem. Today, I'm diving deeper into what that means for founders specifically.
"But is it VC-backable, tho?"
This question haunts founders.
I get it. This statement is generally used as a blunt tool by VCs to reject founders—vague enough to shut down conversation, yet specific enough to sting deeply.
The fact is, not all technology businesses are created equal. Different technologies solve different needs—from life-altering healthcare innovations to mundane productivity tools—and based on the constraints of the markets they operate in, have fundamentally different growth ceilings.
Beyond this, we're witnessing the natural evolution of software markets, mostly driven by the S-curve nature of innovation cycles. The initial gold rush has settled into defined territories, each with its own rules. Most software categories now have established players and diminishing white space, meaning fewer winner-takes-all opportunities. Most of us aren't creating entirely new markets—we're carving out niches within existing ones.
Hence, I think we need to flip the script entirely. Instead of obsessing over VC-backability (a question that flattens all nuance), we should rather ask: "What kind of technology businesses can and should exist in this market/sector?" This shifts from a binary yes/no to a spectrum of possibilities.
This is my long winded way of saying: Not all technology businesses are automatically going to be VC-backable, returning 100x. However, there are plenty of opportunities that exist across the startup spectrum that funders and founders can realistically actively pursue.
The Venture Ladder: A framework for technology investing
Earlier in the year, I found myself scribbling furiously in a notebook, trying to make sense of conflicting patterns I was seeing in the ecosystem. That late-night exercise eventually evolved into this 'ladder' framework—a way to visualise five distinct levels of technology businesses, each with its own growth profile and funding needs:
Level 1: Micro lifestyle software businesses
Level 2: Sustainable, profitable businesses with modest growth
Level 3: High-potential startups - Exit for at least $100m or double down to pursue unicorn status
Level 4: Pure VC startups - Exist to only pursue unicorn status either through invention (e.g. climate tech) or blitzscaling (e.g. social media startups)
Level 5: Silicon Valley science fiction (e.g. space travel)
Andile Masuku
This is simply how I frame things. You might already have your own framework. That's fine. What matters more than the specific taxonomy is developing a clear-eyed view of what's actually possible in our markets—not what is widely believed to be possible, or what we wish were possible, but what the concrete realities of African economies (and broader software markets) will sustain.
Why this framework matters
This clarity matters profoundly for two key stakeholders:
- For founders: Your starting point shapes everything that follows. If you're genuinely building for hypergrowth, you need to begin with a large total addessable market (TAM)—there's simply no way around this mathematical reality. But if you're solving a specific problem for a defined audience and context, you don't necessarily. Embracing that specificity from day one liberates you from chasing unsuitable funding pathways.
- For funders: This framework offers a map to the full landscape of opportunity. The obsession with outliers has blinded many to where the consistent returns actually come from. Remember: the vast majority of tech success stories weren't unicorns, but rather sub $100 million exits from companies that raised modest amounts of strategic capital and prioritised capital efficiency. These ought to be the bedrock and flagship of a healthy startup ecosystem, not the occasional billion-dollar headline.
Market-driven spins on VC
The deeper I've dug into this topic, the more fascinated I've become with funders that have thoughtfully aligned their investment thesis to reflect the different technology opportunities in the market.
Here are some who stand out for me:
- Knife Capital – A Cape Town-based growth-stage investor focusing specifically on 'gazelles' with clear paths to exit
- Secha Capital – South African firm embracing the unglamorous but profitable work of digitising 'boring' sectors like agribusiness
- Unconventional Capital – A $30 million fund offering revenue-based financing for early-stage African businesses
- The Calm Fund – US-based investors who've recognised the value in backing businesses intent on dominating specific niches rather than entire categories
- Long Run Capital – American funders providing strategic capital specifically designed to help tech businesses reach meaningful exit values
This year, I'm excited to see more founders and funders ask the hard questions around venture investing in Africa and identify more ways we can drive and realise successes. Make no mistake: the continent remains rich with technology opportunities.
However, we need to embrace a more market-driven approach. This means resisting the gravitational pull of default thinking (the intoxicating "100x or bust" mindset), recognising the full spectrum of valuable businesses we can build here, and organising ourselves accordingly. Only then can we construct ventures and, consequently, an entrepreneurial ecosystem resilient enough to weather economic storms and dynamic enough to produce consistent wins—not just occasional unicorns.
Looking ahead
Next month, I'll explore how founders can determine which level of the ladder their business truly fits—and what funding strategies make sense for each. If you've got comments or questions about today's piece, reach me at sona@aria-africa.com.
Until next month, cheers!
Sona