Uganda’s startup ecosystem is maturing. There is more capital flowing in from private equity (PE), venture capital (VC), and development finance institutions (DFIs).
The once-nascent innovation scene is now witnessing landmark investments, scaling ventures—and increasingly, high-stakes exits.
Over the past decade, East Africa has attracted more than USD6.4 billion in private equity (PE) and venture capital (VC) investments.
As such, Uganda’s share is rising steadily from under 10% in 2013 to nearly 20% by 2023.
Once overshadowed by Kenya, Uganda is now second only to Nairobi in regional deal flow, consistently capturing between 15–20% of all transactions.
The momentum has only accelerated.
In Q1 2025 alone, East Africa recorded USD295 million in PE/VC investments, up 15% from a year earlier.
Uganda accounted for USD62 million (21%), its highest quarterly share yet, led by deals in financial services (35%), energy (25%), and agriculture (20%).
But this influx of capital has come with tension: conflict, mistrust, and broken relationships between founders and investors.
At the centre of these tensions is what some analysts are calling “Founder Syndrome.”
It is where founders struggle to relinquish control, resist governance structures, or push back against investor exit strategies.
For many Ugandan founders, letting go is not just emotional—it is strategic anxiety.
According to the Harvard Business Review, for many founders, letting go means thinking of mortality and challenging the founder’s sense of identity.
“We’ve built something from nothing, often scrapping together resources, hustling in a market that sometimes doesn’t even understand the idea yet,” says Solomon Kitumba, founder of Swip2Pay.
Investors, however, see structure as protection.
Governance frameworks, financial transparency, and clear reporting lines reduce risk.
Without them, investors worry that an exit or scale-up could be derailed by a founder unwilling to loosen their grip.
Governance breakdowns, unrealistic expectations, and emotional attachment to the venture are real risks.
The founder’s dilemma
Uganda’s entrepreneurship culture is young and highly personality-driven.
Founders often see their companies as personal legacies—extensions of their hustle, risk-taking, and identity.
While this attachment fuels resilience in the early days, it becomes a liability once institutional investors arrive.
For bootstrapping entrepreneurs, formal systems feel like shackles.
Kitumba explains: “If I create a rule, I’ll have to follow it too, and that might slow me down or limit my control.”
That fear of losing agility often clashes with the reality that scaling requires discipline.
Leonard Businge of EAVCA believes cultural attitudes make this conflict sharper in Uganda.
Founders often expect investors to act like benevolent patrons rather than partners with governance obligations.
“Sometimes, it is a case of the founder not wanting to meet their end of the bargain,” he explains.
“Shifting goalposts once an exit sets into motion can stem from disappointment over company valuation.”
Grace Munyirwa, who built Vine Pharmaceuticals, described this dilemma starkly in his April 2025 interview.
“Many founders enter deals blindly, only to regret them later. PE funding is not just about money; it comes with governance changes, exit strategies, and performance pressures.”
His reflection highlights a truth often glossed over: founders must evolve from hustlers to corporate leaders, or they risk being consumed by the very capital they seek.
Exits under pressure
Nothing reveals Founder Syndrome more than exits—the moment when investors demand returns, and founders are asked to relinquish influence.
Uganda has a long history of tense exits.
The Biyinzika Poultry International case remains a notorious example.
What began as a Ugandan–Danish partnership collapsed into litigation and reputational damage.
The dispute revolved around share transfers, land sales, and mistrust, culminating in a 2021 Court of Appeal ruling that ordered restitution and exposed glaring governance weaknesses.
The case demonstrates how exits can be derailed by poor corporate structuring, regulatory unpredictability, and founder resistance.
For global investors, such episodes raise red flags about Uganda’s investment climate.
Grace Munyirwa’s Vine Pharmaceuticals story echoes these challenges.
In 2012, Vine received USD1 million from the Africa Health Fund.
When the fund was absorbed by Abraaj Capital, the terms shifted dramatically.
Abraaj pushed for rapid expansion, urging Vine to open new stores and even consider acquisitions in Kenya and Rwanda.
“They called us to Nairobi, telling us to dream big… But by the time I realised the funding was never coming, Vine Pharmaceuticals was overextended, struggling to meet obligations. Stores had to be shut down. Lawsuits piled up,” Munyirwa recalled.
Abraaj’s collapse in 2018 left Vine entangled in debt and stranded without alternatives.
The episode underscores a critical lesson: exits and investor transitions must be planned from the outset.
Without clear agreements and governance buffers, founders are at the mercy of forces beyond their control.
Hard lessons in equity
Equity financing is seductive: no collateral, large sums, global credibility. But the hidden costs are steep.
Allan Rwakatungu of Xente admits equity nearly cost him his company.
“We went in for equity but did not quite understand how it works, such as the ease of getting diluted. With that, we lost the company.”
Munyirwa’s experience adds another layer: forex volatility.
Vine’s USD1 million injection looked manageable in 2012 when the dollar was UGX 2,450. By 2017, it was UGX 3,715. “UGX versus USD remains a huge risk,” he warned.
“Negotiate for better exit terms from day one. Typically, they expect 2.5x at exit. I would negotiate down to 1.7x or 1.8x to leave room for fluctuations.”
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Amanda Ayebare, AutoXpress CFO: Balancing Survival and Growth in the Adventurous SME LandscapeSuch lessons matter in Uganda, where the shilling depreciates steadily and founders often lack forex hedging tools.
Without anticipating these realities, many see their balance sheets unravel despite headline investments.
Governance gaps in a growing market
Uganda’s legal and corporate frameworks have not kept pace with PE/VC growth.
Many SMEs lack Articles of Association that regulate share transfers, investor rights, and exit options.
Boards, when they exist, are often founder-controlled.
The Biyinzika dispute revealed how poorly drafted governance documents can undermine investors and founders alike.
Meanwhile, accelerators such as The Innovation Village or Growth Africa expose founders to governance concepts, but these interventions remain limited compared to the volume of capital flowing in.
Reflecting on his journey, Munyirwa admitted: “If I were to do it again, I would have a proper board—three knowledgeable, trustworthy people—to guide investment decisions.”
His hindsight reinforces what investors already know: governance is not a checkbox, but the foundation for survival.
Businge of EAVCA agrees.
“Governance breakdowns, unrealistic expectations, and emotional attachment to the venture are real risks,” he said, warning that Uganda’s strong deal flow could be undermined if governance gaps persist.
The cost of clinging too tightly
Founders often equate expansion with success.
But as Munyirwa’s Vine story shows, growth for growth’s sake can be disastrous.
Pressured by Abraaj to scale, Vine opened outlets in far-flung towns with limited demand.
“With most of these investors, you are obliged to expand immediately into far-flung towns, where there is simply no sufficient demand,” he recalled.
Looking back, he admitted he would have been better off smaller and more focused.
“I might be smaller, but happier. Instead of having 20+ branches, maybe I would have 3 or 6 and drive my second-hand SUV and take my children to school without stress.”
His caution resonates widely. Ugandan founders often conflate ambition with overextension.
But premature growth, without systems and demand, often leads to closures, debt, and reputational loss.
Kitumba frames it differently: “Letting go isn’t abandoning your vision; it’s protecting it at scale. The change starts with mindset change.”
The real measure of a founder is not how much they hold, but how well they build institutions that can stand without them.
The psychological toll
The financial and legal aspects of Founder Syndrome are visible. The psychological costs are often hidden.
Anthony Natif of Guardian Health once described founding as “a very lonely, emotionally debilitating experience.”
The weight of responsibility, investor expectations, and personal attachment can push founders into burnout.
Munyirwa confirmed this dimension: “Founders often struggle with the loss of autonomy and the pressure to meet investor expectations.
This can create immense stress, leading to burnout and strained relationships within the company.”
Mental health support is rarely discussed in Uganda’s startup ecosystem, yet it is central to sustainability.
Founders under pressure often make rash decisions—overexpansion, unsustainable borrowing, or impulsive exits—that undermine long-term growth.
Balanced perspectives
Despite the scars, Munyirwa remains pragmatic.
“There is nowhere in Uganda where you can obtain a million dollars without collateral. Even with some drawbacks, PE can be a better alternative—if you have the right governance structures in place,” he said.
This balanced perspective is crucial.
Private equity and venture capital are not inherently destructive.
They are tools—powerful when used with foresight, damaging when pursued blindly.
For founders, the challenge is preparation: building governance structures, negotiating realistic terms, and pacing growth.
For investors, the obligation is empathy and flexibility—recognising Uganda’s unique cultural, legal, and financial context.
Founders evolving into CEOs—or stepping aside
As Uganda’s capital flows deepen, the demand for professional leadership intensifies. Founders cannot remain jacks-of-all-trades.
They must evolve into CEOs with strategy, delegation, and team-building skills—or step aside.
Kitumba believes in founder evolution: “The right accelerator makes a founder understand: control is not zero-sum. Structured control can still let me protect my vision.”
Rwakatungu offers the alternative path.
Governance reforms enabled him to step down from the CEO position at Xente while remaining on the board.
“For many businesses, the founder is the one who holds the business. But with proper structures, we knew that even with our departure, business would continue.”
Both routes point to the same outcome: institutions must outlive their founders.
That is the mark of maturity in any ecosystem.
Learning to let go
Uganda’s startup ecosystem is at a crossroads.
With USD60–70 million in quarterly investments, the stakes are higher than ever.
Yet the dangers of Founder Syndrome—poor governance, premature expansion, resistance to exits—remain entrenched.
The lessons are clear:
- Plan exits from day one.
- Hedge forex risk and negotiate realistic returns.
- Build governance frameworks early.
- Avoid reckless expansion.
- Protect founder’s well-being.
Above all, founders must accept that control is not the prize. The prize is building institutions that endure.
Grace Munyirwa’s reflections from April 2025 encapsulate this paradox.
“Be prepared. Understand the risks. And most importantly, never let the allure of big money cloud your financial prudence,” he said.
For Uganda, the test will be whether its founders embrace these lessons—or repeat the mistakes that have already cost the ecosystem dearly.
