A conversation with Nikolai Barnwell, CEO of PawaPay, sheds light on the often misunderstood world of venture capital in Africa. Discover why the author, a self-proclaimed sceptic, questions the true motivations behind term sheets and what this means for entrepreneurs.
Image: RON
It's probably widely held by now that I'm a venture capital sceptic. Perhaps even a hater. On some readings I get why.
A recent unreleased podcast conversation with Nikolai Barnwell, the Danish CEO of pan-African payments outfit PawaPay, gave me cause to set the record straight. As I put it to him:
"Most people probably think I'm more anti-VC, which I'm not. I'm just pragmatically questioning or sceptical of any [legitimate] asset class poorly [framed and] deployed."
Important distinction.
Barnwell spent over a decade as a programme manager and board member at 88mph, the early Africa-focused seed fund and accelerator that made around 50 investments from 2009, of which Barnwell reckons 47-odd were write-offs.
Betting business BetPawa (formerly Wasere) and online music streaming and download platform Mdundo turned into substantial outcomes.
Peach Payments (which 88mph apparently exited modestly, only for the South African payments company to later find traction post-exit) sits in its own category.
By a fundamentals lens, that ratio would have most LPs in tears. By liberal VC maths, that might juuuuuuust work out.
What Barnwell shared next, with the candour (and humility) of someone who has sat on both sides of the table, is what every African founder chasing a VC term sheet ought to hear:
"The VC at its core is not interested in you succeeding. The VC at its core is interested in you blowing up. And they would rather blow you up failing than you succeeding—if succeeding doesn't mean [you] blowing up... If you can build a business and you can sell it for a million dollars, man, that's a lot of money. That's a fantastic business to build."
Call this Disclaimer One. Hindsight wisdom from someone who watched 88mph's death rate, and the founder-funder incentive mismatch, from the inside.
A few days ago, Dr Ola Brown (founding partner at Lagos-based Healthcap Africa, herself a VC) spoke to that tension from a different angle on X.
She asserts that old-school Nigerian entrepreneurs like Aliko Dangote, Jim Ovia, and Wale Tinubu built ventures in systems where capital came from personal networks, retained earnings and bank debt. The founder personally carried the financial uncertainty.
Venture capital, in her framing, "changed that equation by redistributing risk from the individual to investors."
Her sense is that the venture capital model broadened entrepreneurship to engineers, technologists and professionals who would otherwise remain in employment.
I'd push back, gently, on the implication that this democratisation effect is the default purpose, nature or function of VC as an asset class.
It can be a downstream consequence (sometimes) and a useful narrative (frequently). But it isn’t at all close to being the full embodiment of the thing itself.
As I argued in a previous column on why 'venture capital' in Africa is a misnomer: the moment we layer "democratised, inclusive investment mechanism that everyone deserves access to" onto VC, the label starts doing work the underlying maths does not support.
And the demographics of who actually gets to play (still overwhelmingly a narrow slice of the continent’s entrepreneurship corps) make the inclusivity reading easy to overstate.
What Brown's framing does usefully clarify is the risk-redistribution mechanic. That part is real. The founder profile shift follows from it. Whether the system selects for better outcomes (rather than just different ones) is a separate question, and one Barnwell's PawaPay path speaks to in its own way.
Disclaimer Two is what Barnwell has done with all of this at PawaPay.
The business, he claims, is profitable and self-funded by its founding group, and has deliberately stayed out of the last fintech funding boom even as peers raised at 80x revenue multiples. (Think of the last fintech boom's marquee names.)
His reasoning sits at the structural level:
"When you build up your cost base, you hire people, you get good at certain things that you maybe shouldn't have gotten good at. And then when you start to peel the company away again... you don't have that hard profit-driven filter for what works and what doesn't."
Raise too much. Scale too fast. Miss revenue targets.
Try to scale back. Discover you can't. Watch your best people leave and enter a zombie state where you can’t deliver compellingly on even the basics that made you bankable in the first place.
If, as Barnwell argues, Africa's digital infrastructure sits "somewhere akin to the US in maybe the early mid 90s," forcing a 500% year-on-year growth narrative onto a continent compounding at 20-30% is a category error. The maths simply doesn’t allow for it.
This sits close to Sona Mahendra's emerging Venture Ladder framework, unpacked in her January 2025 hijack of this column.
The VC frame, as classically defined, fits a sliver of what's actually being built on this continent. Forcing it onto everything else breaks the things underneath.
So no, I'm not anti-VC. I simply object to oversimplification, conflation, and unexamined assumptions.
I don’t vibe with fanning the enthusiasm of the founder who picks up a term sheet without grasping which game they have just agreed to play, or celebrating the savvy of the funder who hands one over without flagging the same.
The full conversation with Barnwell drops on the African Tech Roundup Podcast soon.
Andile Masuku is co-founder and executive producer at African Tech Roundup. He serves as executive editor of Future in the Humanities (FITH), powered by the SA–UK Chair in the Digital Humanities at Wits University. Connect and engage with Andile on X (@MasukuAndile) and via LinkedIn.
Andile Masuku is co-founder and executive producer at African Tech Roundup. He serves as executive editor of Future in the Humanities (FITH), powered by the SA–UK Chair in the Digital Humanities at Wits University. Connect and engage with Andile on X (@MasukuAndile) and via LinkedIn.
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