The African tech ecosystem is entering a more discerning phase, moving beyond its early “honeymoon” years of rapid growth and hype.

Investors are increasingly scrutinizing the quality of startups and the experience, vision, and capabilities of founders.

The focus has shifted from mere fundraising to evaluating whether ventures solve real problems and whether founders possess the operational skills and long-term perspective required for sustainable growth.

Lagos-based venture firm Microtraction has been at the forefront of this shift.

Known for backing early-stage startups like LemFi, Cowrywise, Honeycoin, and PaidHR, the firm emphasizes founder quality above all, particularly at the pre-seed stage where historical data is scarce.

Investment Analyst Offiong Isyah notes a decline in the quality of local talent, driven in part by decentralization of knowledge-sharing events and emigration of Nigerian graduates seeking opportunities abroad.

To counter this, Microtraction actively identifies high-potential founders early, including through its Microtraction Nurture Programme.

With over 70 investments to date, Microtraction looks for founders who are resourceful, intellectually curious, customer-focused, capital-efficient, and possess strong domain expertise or unique insights.

Beyond funding, the firm fosters collaboration via monthly town halls and strategic connections with investors to support long-term growth.

Unlike other venture firms that have expanded into later funding rounds, Microtraction remains dedicated to pre-seed investments.

Its $10 million second fund issues checks between $20,000 and $100,000 to startups valued between $1.4 million and $2 million.

Investment Principal Ato Bentsi-Enchill emphasizes the firm’s mission: to be the “partner of choice for early-stage founders,” helping them establish strong fundamentals before scaling.

Despite competition from larger funds pushing higher valuations, Microtraction has sharpened its value proposition and built flexibility into its capital structure, including over 30 startup founders as limited partners in its second fund.

Economic challenges, particularly currency devaluations across Africa from 2022 to 2024, have accelerated the need for startups to generate revenue in dollars and adopt a global-first approach.

While fintech continues to dominate funding, Isyah stresses the importance of diversifying into “permissionless markets” and sectors less dependent on regulation.

Microtraction now targets financial services, on-chain technologies, the creator economy, and fragmented commerce, leveraging networks and partnerships — including with NVIDIA — to give African founders global exposure.

Ultimately, the success of these strategies depends on founder talent.

Microtraction deliberately seeks individuals with long-term vision, deep market insight, and robust distribution capabilities, asking, as Isyah puts it:

“Why is three years from now going to be too late?” This approach reflects a maturation of Africa’s tech ecosystem, moving toward sustainable and globally competitive ventures.