In November, the closure of the ARM Labs Lagos Techstars Accelerator sent ripples through Nigeria’s tech ecosystem. The program, launched in 2022 as a collaboration between Nigerian asset management firm ARM and global accelerator Techstars, had promised to nurture startups with up to $120,000 in funding per venture, alongside significant non-financial benefits. Yet, just two years later, the doors have closed, leaving questions about the sustainability of corporate venture capital (CVC) initiatives in Africa.

The Lagos Techstars Accelerator supported two cohorts comprising over 24 startups, including promising ventures like Surge Africa, Press One Africa, and CDCare. Despite this, Techstars’ Global Chief Brand and Communications Officer, Matthew Grossman, confirmed the partnership’s termination, citing a strategic shift. While Techstars will maintain its investments in these startups, the third cohort, which began earlier this year, will not continue.

ARM Labs, operating as the fintech-focused arm of ARM, aimed to drive innovation within Nigeria’s financial services industry. The program’s ambition mirrored the broader vision of ARM, which manages assets worth approximately ₦1.6 trillion (about $2 billion). However, its lifecycle mirrored a troubling trend across African corporate venture capital, where lofty ambitions often succumb to market realities.

ARM Labs is not alone in its abrupt exit. Last year, Naspers Foundry, a $100 million CVC fund by Africa’s largest tech company, Naspers, wound down after deploying just half of its allocated capital. Launched in 2019, the Foundry aimed to back South African startups addressing societal needs through Series A and B funding. But by 2023, its operations ceased as Naspers reoriented its focus globally via Prosus Ventures.

Capitec Bank’s Imvelo Ventures, which had invested over $11 million in South African startups, has equally gone dormant. Though once celebrated for its support of local businesses, the fund has faded quietly, echoing a recurring issue: African CVCs struggle to endure beyond initial cycles.

These short lifespans of African corporate venture capital (CVC) initiatives are mostly dictated by shifting market dynamics and transient investment strategies. Between 2020 and 2022, South African banks, for instance, increased their equity investments in startups, chasing high returns in a bullish market. Today, these same institutions have pivoted towards credit facilities, reflecting the constant ‘mood swing’ and risk-averse sentiment prevailing in the global venture capital ecosystem, particularly in Africa.

As investor interest grows in emerging fields like climate tech, some institutions have further redirected their focus. Rand Merchant Bank (RMB), for instance, recently invested in Koko, a local climate tech company, in order to align with Africa’s broader climate financing goals, such as the Nairobi Declaration. However, such niche pivots do little to address the overarching challenge of sustaining CVC initiatives. 

Structural Challenges

Experts argue that many African CVC arms falter because of their approach. Instead of complementing traditional venture capital funds, some attempt to compete directly, which often proves unsustainable. “We’ve seen some CVCs that, instead of complementing what other VCs are doing in the market, try to compete, and often they don’t last long,” says Martin Karanja, Director at the GSMA Innovation Fund.

Bureaucratic inertia within parent companies can also hinder the agility needed for CVC success. Unlike standalone VCs, CVCs tied to large corporations may be bogged down by internal processes, delaying decision-making and diminishing returns. “If it’s bogged down by the parent company’s bureaucracy, it won’t succeed,” Karanja says.

In most cases, the survival of African CVCs depends on aligning their strategies with well-defined goals. Alex Fenn, technology and innovation lead at Sibanye-Stillwater, notes that successful CVCs prioritize optimizing core business outcomes over purely financial returns. “The first step is to do things for the right reasons, understand those reasons, and stay true to the objective without deviating,” says Fenn.

Again, hiring specialized talent is crucial. CVCs often require individuals with venture capital expertise rather than traditional corporate managers. “It’s not a product; it’s a strategy,” Karanja emphasizes. Without the right people steering the ship, Karanja notes, CVCs risk becoming another failed experiment.

For corporate venture capital to thrive in Africa, it must therefore embrace a long-term vision. This includes clearer mandates, realistic expectations, and a willingness to adapt. While the global downturn has undoubtedly strained financial ecosystems, the lifecycle problem of African CVCs is as much about internal missteps as external pressures.

ARM Labs, Naspers Foundry, and Imvelo Ventures illustrate a shared narrative of promise and peril. Their stories highlight the importance of learning from past failures to build more resilient models. As Africa’s tech landscape evolves, so too must the mechanisms designed to support it. Whether African CVCs can break free from their short lifecycles remains an open question, but the lessons are clear: success requires more than ambition — it demands strategic precision and adaptability.