While global tech buzz surrounds artificial intelligence (AI) unicorns and software scale-ups, Karabo Makete, Investment Principal at AIONS Ventures, is channeling capital into technology-driven businesses that solve Africa’s real problems. At AIONS (a venture builder and seed fund manager), the mandate is to back technology-enabled companies across industries, not just the latest “shiny” software. “We love tech, we advocate for it,” Makete explains, “But sprinkling AI in everything doesn’t make it a billion-rand company. We need to solve real problems for real people.” In practice, AIONS focuses on startups where digital tools are layered onto solid business models.
“We still need to build the engine room before we start automating it,” she says.
For Makete, investments for sectors like manufacturing, construction, and logistics aren't outdated, they're overdue. In a continent still navigating its own industrial revolution, these are critical sectors which will enable future innovation. While digital startups may attract headlines, she argues that factories, warehouses and transport corridors behind them will determine whether Africa’s economies rise or stall.
The Industrial Gap: Why Africa Still Needs Manufacturing
South Africa’s industrial economy paints a sobering picture. According to Statistics South Africa (Stats SA), manufacturing outputdecreased by 2.2% in March 2025 compared to February. Quarter-on-quarter figures paint a similarly stark picture, with a 2.3% contraction in the first quarter of 2025. Key sectors such as chemicals, food and beverage, motor vehicles, and plastic products all recorded negative growth.
These figures are more than just economic signals, they highlight a fundamental issue. In Africa, digital transformation alone cannot deliver lasting economic value without a strong industrial foundation. For Makete, these trends reaffirm that industrial investment is not just relevant, it’s essential.
“No matter how advanced technology gets, no matter how advanced AI becomes, because of the state of our development, there's still a level of industrialisation that needs to be done. We need to develop to a certain extent which can then allow us to really utilise the advanced technologies,” explained Makete.
Why Tech-Only Thinking Doesn’t Work in African Markets
In much of the Western venture world (Silicon Valley), the model is clear: scale first, monetise later. But this model rarely works in African markets. Limited liquidity, fluctuating consumer purchasing power, and infrastructure challenges make the Western VC playbook ill-suited to African realities.
Makete is clear that this is not about rejecting technology. Rather, it’s about reframing its role. There is, of course, a middle ground where you can leverage technologies to solve real-world problems,” she says. “But I do feel that there’s still a gap that needs to be closed. It's not sustainable for everyone to just focus on tech and AI.”
For her, technology should be viewed as a layer, not the foundation. Solutions such as smart logistics systems, digital quality control tools for factories, or predictive maintenance software in construction have their place but only if they’re supporting a robust industrial ecosystem.
In essence, Africa’s tech future needs to be built from the ground up, literally.
Impact Capital in Africa: Where the Money Isn’t Going
Despite an increasing flow of impact-focused capital into Africa, many industrial ventures still struggle to access funding. There are a range of systemic challenges holding back the impact investment sector from fulfilling its potential.
Lack of standardised measurement framework for impact investing
Negative perceptions from investors that impact investments cannot yield market-related returns
A shortage of investment-ready businesses in traditional sectors
As a result, capital often flows toward ‘safer’ tech startups, even when more meaningful opportunities exist in sectors such as construction, logistics, and agro-processing.
“There’s a lot of money in South Africa and Africa—it’s just not being put in the right spaces,” says Makete. “It’s not being used properly. But if it were to go to the right people, it would enable us to really equip early-stage ventures.”
For founders, while AI and software startups appear more glamorous and are often more appealing to young entrepreneurs, industrial sectors offer more stable markets, less saturated competition, and the satisfaction of providing critical infrastructure and services.
Yet founders in these spaces face significant challenges from limited infrastructure to a lack of support services and talent pools tailored to industrial business models.
The Aions Approach: Building Real-World Startups
Aions is stepping into this gap with a hands-on model tailored to the realities of African markets. Unlike traditional VC firms that invest passively, Aions actively builds ventures, providing early-stage capital along with strategic guidance, operational support and growth mentorship.
“We don’t limit ourselves to tech startups,” says Makete. “We back businesses that solve real problems, locally and globally with the potential to scale across borders.”
The goal is to support ventures that can create impact within South Africa, while also possessing the potential for international expansion. But Karabo empahasises that the solution itself isn’t enough, the founder’s mindset matters just as much.
“Some startups want to raise money just because there’s money to be raised. But they don’t have a very detailed or granular plan on how they’re going to utilise those funds to grow the company,” she notes.
What Aions Looks for in a Startup
As the lead on due diligence, Makete plays a key role in evaluating investment prospects. Her criteria goes far beyond pitch decks and product demos.
Startups must demonstrate:
Comprehensive financial projections
Clearly defined compliance structures
Detailed historical financial data (revenues, costs, expenditures)
Realistic, evidence-based growth forecasts
While Aions doesn’t demand audited financials from very early-stage businesses, it does require basic record-keeping. “We understand that not all early-stage businesses have formal records,” Makete says. “But documenting your journey - even if informally - helps us understand where the business has come from and where it’s going.”
This disciplined approach is part of Aions’ broader effort to professionalise the early-stage investment landscape. It’s about preparing startups for sustainable, long-term growth, not just helping them raise their next round.
Sector-Specific Funding: A Smarter VC Approach
Looking ahead, Makete hopes to see a shift towards a more coordinated, sector-specific investment strategy in South Africa’s startup ecosystem.
“If we could have a more holistic sort of approach, even if it's industry-specific to what the current needs of the industry are, what the funding gaps are and then pull funds to address those gaps. That would be a big difference,” she says.
She also advocates for better information sharing between stakeholders in the ecosystem, from investors and accelerators to government and academia. Entrepreneurs, she argues, need access to more than just capital.
“Small businesses need to be given knowledge on what the economic and social needs of the country are, so they can better supply and address them,” she explains.
By aligning funding, skills development, and policy incentives with real economic priorities, South Africa can build a startup ecosystem that’s not only vibrant, but truly transformative.
A New Investment Ethos for Africa
Makete’s message is clear: Africa’s economic future won’t be built solely on software and platforms. It will require concrete, steel, factories and freight, alongside the tech that supports them.
The next generation of African unicorns, she believes, may not be headquartered in gleaming office towers, but in industrial parks and logistics hubs. And the investors who back them will need to think beyond hype, towards impact, infrastructure, and inclusion.
It’s a vision that challenges conventional VC methods. But it’s also one that’s deeply grounded in the continent’s realities, and full of promise for those bold enough to act.
Lungile is the Digital Editor for Startup.Africa, with a knack for storytelling, technology and innovative ideas. Working with Startup.Africa, she takes simple ideas and turns them into amazing stories.
Lungile Msomi
