At the World Economic Forum in Davos, European Commission president Ursula von der Leyen announced EU Inc: a proposed pan-European corporate structure designed to make it easier for startups to scale across the bloc.
The idea is simple, almost suspiciously so. Instead of re-incorporating every time a startup expands into a new EU country, founders could register once and operate across all 27 member states under a single legal framework — the so-called “28th regime”.
“Too many companies have to look abroad to grow and scale up,” von der Leyen said. “While on paper the market of 450 million Europeans is open, in reality it’s far more complicated. And that acts as a handbrake on growth.”
EU Inc promises a central EU registry, harmonised investment terms and a unified approach to employee stock options. It will sit alongside national corporate regimes, not replace them, but the subtext is clear: Europe would quite like its startups to stop fleeing to Delaware.
For African founders watching from afar, the announcement landed uncomfortably close to home. Europe is trying to solve, with a single legal instrument, a problem African startups have been living with — and exporting themselves to avoid — for over a decade.
The African Startup That Isn’t, Legally Speaking
The offshore incorporation of African startups is no longer controversial; it is procedural. Ask where a fast-growing African fintech is legally based and the answer is rarely Lagos, Nairobi or Cape Town.
Jumia, long marketed as Africa’s first tech unicorn, was incorporated in Germany, headquartered in Dubai, listed in New York, and ran its central tech team from Portugal — while doing business primarily in Nigeria, Kenya, Morocco and Egypt. This global shuffle raised eyebrows during its IPO roadshow, but few were surprised.
The founders, Jeremy Hodara and Sacha Poignonnec, were European. Forgiveness was granted.
Less indulgence has been extended to companies founded wholly by Africans. Flutterwave, one of the continent’s most prominent fintechs, is headquartered in San Francisco. Paystack sold to Stripe via a US corporate structure. Andela long ago ceased to pretend it was legally Kenyan or Nigerian.
This is not anecdotal. According to data from the African Venture Capital and Private Equity Association (AVCA), 21% of all VC deals between 2014 and 2019 went to African startups headquartered outside the continent. More than half of those companies were incorporated in the United States.
That 21% figure matches the share of total VC funding that went to South Africa during the same period. In other words, registering abroad was statistically as effective as being South African — and more effective than being Nigerian (14%), Kenyan (18%), Egyptian (9%) or Ghanaian (3%).
Africa’s funding geography has quietly become a legal one.
Why Founders Flip
The reasons African founders flip into offshore jurisdictions are well-rehearsed, if rarely admitted without defensiveness.
Tax, Treaties and Investor Comfort
Mauritius has become Africa’s preferred offshore compromise: close enough to feel continental, distant enough to reassure investors.
Its appeal is straightforward. A 15% corporate tax rate — the lowest in Africa — generous R&D deductions, five-year tax holidays for selected sectors, no capital gains tax, no withholding tax on dividends, and a dense web of double taxation treaties. Venture funds can be taxed at an effective rate of 3%.
Seychelles and South Africa offer variations on the theme. Outside the continent, the menu widens: Delaware, Nevada, Singapore, the UK, Estonia.
Each offers a different blend of tax efficiency, legal certainty and investor familiarity. None offers symbolism.
Delaware, the Default
Delaware’s appeal to African founders has less to do with taxes — despite persistent myths — and more to do with predictability. Its courts specialise in corporate disputes. Its shareholder protections are well-understood. Its legal documents are investor muscle memory.
But Delaware is optimised for scale, not sympathy. Franchise taxes, compliance costs and the gravitational pull of US legal norms often arrive later, after the champagne from the Series A has gone flat.
As one African founder put it privately: “You don’t move to Delaware because it’s cheap. You move because arguing with US VCs about Nigerian company law is more expensive.”
Europe’s Fragmentation Problem
Europe, for all its capital depth, remains legally fragmented. The UK, Germany, Estonia and Sweden all compete as startup hubs, each with their own tax thresholds, VAT rules and compliance quirks.
EU Inc is an admission that the continent’s single market has been more aspirational than operational — especially for startups. African founders, unsurprisingly, have preferred jurisdictions that don’t require a map, a translator and three law firms to expand.
IP, Valuation and the Paper Company Problem
For startups, intellectual property is the business. Where the IP lives largely determines valuation, investor appetite and legal recourse.
African founders are often advised — sometimes gently, sometimes forcefully — to move IP into a foreign holding company. ARIPO, OAPI and the Madrid System provide continental IP coverage, but enforcement, predictability and investor confidence remain uneven.
The result is a familiar structure: IP in Delaware, operating company in Africa, revenue somewhere in between.
This structure works — until it doesn’t.
The LittleFish Lesson: When the Flip Bites Back
In April 2025, South Africa’s High Court delivered a judgment that should be required reading for any African founder contemplating a Delaware flip.
Davith Kahwa, cofounder of South African fintech LittleFish, sued his cofounder, his company, and its investors — TLcom Capital and Flourish Ventures — alleging oppressive conduct designed to squeeze him out.
He lost.
The judgment details how LittleFish’s IP was transferred to a newly incorporated Delaware entity as part of a $2.5m VC deal. Kahwa’s equity was diluted. His role was reduced to “support”. His remaining shares were placed under a vesting agreement controlled by a board now dominated by investors.
When relations deteriorated, Kahwa sought a compulsory buyout based on the company’s pre-investment valuation. The court refused.
Its reasoning was devastatingly simple:
- South African law could not reach the Delaware holding company.
- Kahwa had signed every agreement.
- A term sheet is not a promise.
- Acquiescence is not oppression.
The court’s message was blunt: legal structure is strategy, not paperwork.
EU Inc, Meet Africa Inc
Europe’s proposed EU Inc is, in effect, an attempt to domesticate its own version of the Delaware flip — to keep companies legally European while allowing them to scale.
Africa has no equivalent.
Instead, it has a patchwork of national regimes, regional treaties, tax incentives and informal workarounds. The result is a steady export of incorporation, IP and governance — often without founders fully understanding what they are trading away.
The irony is hard to miss. Europe is trying to build what African founders have been forced to outsource.
The Bottom Line
Offshore incorporation is not a moral failing. It is a rational response to fragmented markets, investor bias and legal uncertainty.
But it is not neutral.
Where a startup is incorporated determines:
- Which courts hear disputes
- Which laws protect founders
- Where IP value accrues
- Who has leverage when things go wrong
As the LittleFish case shows, these choices echo long after the funding announcement.
EU Inc suggests that even Europe now recognises that legal fragmentation quietly kills ambition. Africa, meanwhile, continues to treat incorporation as an administrative afterthought — until it becomes an existential one.
The question is no longer whether African startups should flip to Delaware.
It is whether Africa can ever offer a credible reason not to.
