South Africa's planned removal from the African Growth and Opportunity Act is sending ripples well beyond the country's export sector. Startups and tech entrepreneurs, who have no direct stake in the trade preference programme, are now asking a harder question: will America's sharpening frustration with Pretoria quietly cool the appetite of US venture capital investors?
The concern is not far-fetched. The United States remained the largest source of foreign venture investors into African startups in 2024, according to the African Private Capital Association. American firms have already written meaningful cheques into South African companies. In 2022, Andreessen Horowitz led a $20 million Series A extension into South African gaming startup Carry1st, the kind of deal founders here are hoping to keep seeing.
Jeff Miller, CEO of Grovest Investment Holdings, a South African investment and venture capital firm, says the diplomatic fallout does not need to trigger formal restrictions to do real damage. "My assessment is that the first effect would likely be greater selectivity and slower decisions, as a result of negative sentiment that the withdrawal of AGOA brings with it," he told TechCabal this week.
Miller points out that US investors already weigh a country's political climate, capital flow conditions, rule of law, and regulatory red tape before committing. He adds that Black Economic Empowerment requirements can present additional complexity for foreign backers. "Uncertainty about these pathways," he said, "can make an otherwise attractive investment harder to approve."
No formal restrictions on tech investment exist yet, but sentiment moves faster than policy. For South African founders already navigating a tough global fundraising environment, the question is whether the diplomatic temperature between Pretoria and Washington has already started to shift the mood in boardrooms thousands of miles away.
Originally published by TechCabal.