Let's Remove the "Charitable" Blindfold from Africa's Startups

How often have you walked out of a startup pitch session feeling like you were being asked for a donation instead of an investment? African startup founders are operating in an environment where capital is limited. And because of this, founders are forced to tailor their pitch decks to whatever funding is available.

Today, a fintech startup is pitching a direct-to-consumer disruption model to VCs that cuts out the banks; tomorrow, it's pitching its collaborative white-label rural customer acquisition platform to banks; the next day, it's pitching to development funds its financial inclusion platform that bypasses bank accounts.

So many startups, hoping to stay alive, are chasing grants and tailoring their narratives to appeal to donor sentiments. While short-term donor funds may give some good juice to a struggling startup, these funds can easily create dependence.

Startup founders chasing grants can easily slide into grant ambulance chasers instead of value creators. Grants are great for cushioning startups to build for complex and high-risk markets. However, this derisking can easily slide into high dependency, where the founder is always looking for ways to create more feel-good stories that are far removed from the solid business model that the company needs to pursue.

The availability of "free" money has kept many startups artificially alive without proving market value. A business that survives on grants has yet to find its product-market fit (PMF), and PMF is the stuff scalability is made of.

The grant craze in startups is deeply rooted in Africa's charity culture, where donor money traditionally funds critical services. This culture has shaped how startups in Africa raise and behave around capital. So many pitch decks approach investors like donors rather than partners seeking a return. The result is an ecosystem where "impact stories" often outweigh profitability, scalability, or basic customer demand. And while telling and creating stories of social good is important, it's not enough to build a business that can stand independently.

The grant/charity mindset can hold the startup ecosystem back in several ways. First, it distorts the reality of doing business in Africa. Entrepreneurs shielded by grants don't learn to navigate the complexities of real markets where core fundamentals such as pricing strategies and customer retention, among others, are pursued and valued. Instead, they focus on survival by meeting grant reporting requirements.

Second, the grant/charity mindset creates skepticism among serious investors. Venture capitalists (VCs) often look at African startups cautiously, fearing that these businesses will only achieve competitiveness with charity/donor assistance. We must present growth-ready businesses rather than survival operations to see more VC money flow into Africa.

I am not saying grants are a bad thing. Grants can support startups, especially in industries with long maturation periods or high upfront costs. But the goal of any grant in business should be to derisk for growth, not prolong survival. If a company still needs handholding years after its inception, it's a red flag, not a proof of concept.

The African startup ecosystem needs to create a clear boundary between impact-driven, low-return startups that need special treatment to survive and growth-minded, high-return startups that can compete globally, respond to market demands, and scale rapidly. This means challenging founders to build strong business models that stand up to the scrutiny of market economies. Let customers choose which business dies or survives, not donor/grant pockets. We need to know which companies have the internal ability to compete and which ones need some soft cushion and handholding to serve the greater good.

Investors shouldn't be hoodwinked to think they found a moat when all they found was donor money creating artificial growth.