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I was reading a copy of Eric Ries's new book, Incorruptible, this weekend and one story in there got me thinking. In December 1975, the founder of FedMart walked into a board meeting. His company was doing $350 million in annual sales. He had built it from a single warehouse in San Diego into one of America's most innovative retail chains. By the end of that meeting, he had been voted out by his investors. That night, someone changed the locks on his office doors.

Most of the fundraising advice available to African founders is about getting the money in. How to pitch, how to structure the raise, how to survive the due diligence process. Very little of it is about what you have agreed to once the wire lands. On this continent, where a $500K cheque can come with board seats, veto rights, and approval thresholds that give a single investor leverage over your next set of decisions, the terms you accept at pre-seed stage can quietly determine what is possible in the future.

Here is what to look at before you sign.    

The FedMart board did not turn hostile overnight. Sol Price had spent years accumulating investors whose incentives were misaligned with the company he was trying to build. Public market shareholders wanted faster expansion and higher margins. Price wanted the opposite. By the time it came to a vote, he was already outnumbered. The board composition that seemed workable at year two was now a structural trap by year seven.

African founders often treat board seat allocation as a negotiating afterthought, something to agree to quickly once the valuation is settled. But who sits on your board determines what conversations are even possible when things get hard. A seat granted to a pre-seed fund with a three-year fund life and a struggling portfolio looks very different at your first institutional funding round.

💡 Action Step: Ask the investor how many of their current portfolio companies have had to return capital or take a bridge. Ask which of their other portfolio companies has the investor been on their boards and try to speak with those founders. It will tell you more about the investors than what they told you during term sheet negotiations.

Most early-stage term sheets in African markets include protective provisions that require investor consent for a range of decisions: new hires above a certain salary, debt facilities, any follow-on fundraising, sometimes even key customer contracts above a defined value. Individually, each provision sounds reasonable. Collectively, they can hand a minority investor an effective veto over your operating rhythm.

💡 Action Step: Take your draft term sheet and mark every clause that begins with "requires investor approval" or "requires board consent." Then calculate, honestly, how many operational decisions in the last six months would have triggered those clauses. If the number is above five, negotiate the thresholds upward or the consent list narrower before you sign.   

Eric Ries argues in Incorruptible that what destroyed FedMart was a structural misalignment of incentives between founders and investors. The investors who voted Sol Price out were not irrational. From inside their particular set of incentives, they were doing exactly what their own stakeholders expected of them. That is what makes it tircky. The clearest signal of how an investor will behave at your board table is how they have behaved at someone else's. Look at their Africa portfolio specifically. A fund that has led one or two deals on the continent may have limited experience with the specific dynamics here: the longer sales cycles in enterprise deals, the working capital intensity of distribution businesses in markets like Nigeria or Kenya, the regulatory timelines that compress runway in ways that no financial model fully captures.

💡 Action Step: During DD, ask the investor to walk you through a portfolio company that missed its targets for reasons outside the founder's control. Listen for whether they describe the situation as a failure to manage or as a structural challenge they navigated together. The language they use about other founders is the language they will eventually use about you.  

The advice in this issue is more than investor relations. It is about what kind of company you are building and whether the structure you put in place at the beginning will still serve that goal three years from now. Sol Price did not lose FedMart because he was a poor negotiator or a naive founder. He lost it because the governance architecture of the company he built was not strong enough to carry the weight of the mission he had for it. Ries calls this gravity, that is the systemic forces that pull even mission-driven organisations toward extraction over time. The book is worth your weekend. The force is real whether you are running a San Diego warehouse retailer in 1975 or a Lagos B2B fintech in 2026.

If this issue made you think about a term sheet you already signed, forward it to another founder who is at the negotiating stage right now. They need this more than you do.

And if you have been through a difficult investor dynamic on the continent, I would genuinely like to hear about it. Reply and tell me what you wish you had known.

That's all for today. As always, thank you for being an engaged reader. Let me know your thoughts on this issue. I read all your emails.

Until next time,

Jasiel

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The information contained in this newsletter is intended for discussion purposes only. This newsletter contains the current, good faith opinions of the author but not necessarily those of Accion Impact Management, LLC (“AIM”). The newsletter is meant for educational purposes only and should not be considered as investment advice or a recommendation of any type.  The documents may contain forward-looking statements.  These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements.  Any forward-looking statements speak only as of the date they are made and AIM assumes no duty to and does not undertake to update forward-looking statements. This newsletter is not an offer or a solicitation for the sale of a security nor shall there be any sale of a security in any jurisdiction where such offer, solicitation or sale would be unlawful. An investment with AIM involves a degree of risk, and may only be made pursuant to the respective offering documents and organizational materials governing such investment.