Unlocking Growth: The Strategic Role of Corporate Venture Capital in Africa’s Startup Ecosystem

Corporate venture capital (CVC) is emerging as a transformative force in Africa’s startup landscape, offering a dual advantage: it boosts the capital inflow to startups while accelerating innovation within large corporations. This synergy is widely recognized, with over 70% of African investors endorsing the potential of CVC to reshape the continent’s entrepreneurial ecosystem.

Championing Local Innovation: Insights from Abdulyekeen Abdulazeez of Wema Bank

Abdulyekeen Abdulazeez, Innovation Venture Manager at Wema Bank-a Nigerian financial institution valued at $552 million-exemplifies this approach. With prior experience at Ventures Platform and Lagos Angel Network, Abdulazeez now spearheads Wema Bank’s efforts to nurture and invest in early-stage startups.

“Corporates possess a unique advantage because they intimately understand the local market dynamics, operational challenges, and the nuances of building businesses in Africa,” Abdulazeez shared with TechCabal. “Many have weathered decades of economic fluctuations, regulatory shifts, and infrastructural limitations, making their experience invaluable to startups.”

Wema Bank’s Strategic Support Beyond Capital

At Wema Bank, the focus extends beyond mere funding. The bank actively supports startups in achieving product-market fit by granting access to its digital infrastructure, including wallet and payout APIs, and connecting them with its extensive customer base and partners.

“Startups gain immediate credibility and operational capabilities that would typically take years to develop independently,” Abdulazeez explained. “Our digital platforms enable them to integrate seamlessly and accelerate their go-to-market timelines.”

Wema Bank adopts a sector-agnostic investment strategy, often backing startups that compete with its traditional banking services. With an average investment of $40,000, the bank views these startups not as competitors but as essential collaborators in driving innovation.

From Founder to Investor: Abdulazeez’s Dual Perspective

Beyond his role at Wema Bank, Abdulazeez co-founded Ule Homes, a Lagos-based rent-financing startup born from a shared challenge in housing finance during his postgraduate studies. This dual experience enriches his understanding of both startup needs and corporate investment strategies.

Defining Wema Bank’s Corporate Venture Capital Mandate

Wema Bank’s CVC mandate prioritizes strategic value creation over pure financial returns. The bank offers startups access to its proprietary infrastructure, such as AlatPay’s wallet and payout APIs-solutions that rival Paystack in speed and cost-efficiency.

“We often become early adopters of the startups’ products, integrating their solutions into our operations,” Abdulazeez noted. “This symbiotic relationship benefits startups with market validation and operational support, while the bank enhances its innovation ecosystem.”

A cornerstone of this strategy is the Hackaholics initiative, an accelerator program that has supported over 100 startups, including notable successes like TeamApt (now Moniepoint), Plumter, Feegor, MyItura, and Build Africa.

Capitalizing on Nigeria’s Financial Innovation Landscape

Rather than viewing Nigeria’s financial sector as lacking, Wema Bank sees vast opportunities fueled by agile startups and a regulatory environment conducive to experimentation. This has inspired the bank to focus on providing startups with critical assets such as market access, infrastructure, and operational support to expedite their growth.

Emerging Fintech Frontiers: The Future of Payments

Abdulazeez is particularly enthusiastic about innovations in contactless payments, including tap-to-pay and phone-to-pay technologies. With Africa’s mobile penetration exceeding 50% and AI adoption on the rise, these fintech segments are poised for explosive growth.

Wema Bank’s partnership with GoTap, a fintech startup revolutionizing tap-to-pay solutions, exemplifies this focus. GoTap’s participation in the bank’s accelerator program has demonstrated promising progress and scalability.

Adapting Investment Criteria Amid Nigeria’s Macroeconomic Shifts

The current economic climate, marked by elevated interest rates and evolving regulations, has refined Wema Bank’s investment lens. Startups must now exhibit robust fundamentals, clear unit economics, and rapid paths to sustainability to be considered “venture-backable.”

“We prioritize ventures that show resilience, capital efficiency, and the ability to tailor solutions to Nigeria’s unique market conditions,” Abdulazeez said. “Examples include startups hedging against foreign exchange risks, diversifying revenue streams, or leveraging technology to cut costs.”

Institutional Alignment: The Backbone of Investment Decisions

Investment approvals at Wema Bank are driven by a unified vision from senior leadership rather than individual incentives. The bank’s pioneering spirit is evident in its launch of ALAT, Nigeria’s first fully digital bank, underscoring a deep-rooted commitment to innovation.

“Our management team’s endorsement is systemic, empowering us to execute strategies that support early-stage innovators without bureaucratic delays,” Abdulazeez emphasized.

Seamless Collaboration Across Teams

The CVC unit operates within Wema Bank’s Innovation Division, closely collaborating with product, digital, and innovation teams. This integration ensures that startups benefit from cohesive support and that innovations align with the bank’s broader objectives.

“Our innovation lab, ideaxlab, led by Solomon Ayodele, is a hub where many digital products are developed, reflecting how embedded innovation is in our culture,” Abdulazeez explained.

Measuring Success: Beyond Financial Metrics

Success is gauged by the tangible value startups derive from Wema Bank’s resources, including their speed to market, product-market fit progress, and API adoption rates. For the bank, success translates into a richer innovation pipeline and deeper insights into evolving customer needs.

The Underrated Power of Net Promoter Score (NPS)

Among various performance indicators, Abdulazeez highlights the Net Promoter Score as a critical yet often overlooked metric. NPS offers a clear window into customer satisfaction, loyalty, and the likelihood of organic growth through referrals-key factors for sustainable startup success.

Streamlined Investment Process: From Discovery to Decision

Startups are sourced through Hackaholics, industry events, and referrals before entering the ideaxlab accelerator. Here, Wema Bank works closely with founders to refine their business models and identify tailored support mechanisms.

“Our approval process is efficient, backed by a clear mandate from leadership, allowing us to move swiftly without unnecessary hurdles,” Abdulazeez noted.

Minimizing Bureaucracy to Empower Startups

While some bureaucracy is unavoidable in a large institution, Wema Bank intentionally minimizes red tape to maintain agility. Abdulazeez’s dual experience as a founder and investor informs this approach, ensuring startups receive prompt and frictionless support.

Successful Integration Models with Portfolio Companies

Startups that integrate directly with Wema Bank’s infrastructure-such as wallet and payout APIs-tend to achieve the most impactful outcomes. In some cases, the bank becomes an early adopter of their technologies, fostering mutual growth and innovation.

Investment Without Mandatory Partnerships

While formal integration is not a prerequisite, most startups naturally align with Wema Bank’s platforms, creating organic collaboration opportunities that preserve their independence and innovative spirit.

Strategic Interest Beyond Fintech

Wema Bank actively explores startups in sectors like climate and energy, identity verification, data infrastructure, cybersecurity, AI, agent networks, and mobility. The focus remains on ventures that can complement the bank’s services and add ecosystem-wide value.

Identifying the Primary Threat to Nigerian Startups

According to Abdulazeez, weak governance-rooted in the founding team’s cohesion and management capabilities-is the leading cause of startup failure in Nigeria. While regulatory challenges, poor unit economics, and market adoption issues are significant, they often stem from governance weaknesses.

“Strong founding teams can navigate regulatory shifts and economic pressures, but fractured leadership often leads to collapse,” he explained. Due diligence thus heavily emphasizes assessing founders’ ability to govern effectively, manage crises, and attract talent-factors that ultimately determine a startup’s survival and growth.