Pula and S2E want to solve Africa’s startup problem with British aid money

African tech startups face challenges in returning capital to investors within their typical seven to ten-year lifecycle due to a lack of exit opportunities. Kevin Simmons, principal for catalytic investments at FSD Africa, observed this issue while working at an early-stage African venture capital firm. He noted that some investors have turned to secondary sales to resolve the problem, but foreign acquirers have become less active in the market.

To address this, FSD Africa is backing S2E Africa, a consultancy led by Pulkit Srivastava, which helps African companies acquire startups. S2E Africa identifies suitable companies, assesses targets, and facilitates M&A deals. Pula, an agricultural insurance company operating in 13 African governments, is one of S2E's clients, weighing a potential exit through a stock market listing or trade sale.

The company has recently expanded its services from selling insurance to governments to providing data services to businesses, which now generates significant revenue. Pula aims to acquire startups with at least $500,000 in revenue and products in demand by various industries. If the partnership between FSD and S2E proves successful, it could help address the lack of exits in Africa's startup ecosystem, enabling investors to redeploy capital more quickly and the overall cycle of startup investing to accelerate.