Investor-founder disconnect poses major threat to African tech funding
Investor-founder disconnect has been picked as a major threat to African tech funding.
Wimbart, a PR agency specialising in tech and startup sectors across Africa and emerging markets, revealed this in its latest report.
Wimbart, based in London, disclosed that 71 per cent of African tech investors will not invest follow-on funding in a start-up failing to provide them with regular reporting updates.
Titled: ‘Start-up Performance Reporting in Africa: What do investors want to know?’, the report’s findings underscore the significant and timely need for founders across the ecosystem to reprioritise communication efforts with their existing investor base to support their long-term funding requirements.
According to the report, 29 per cent of start-up investors stated they did not receive periodic reports from their portfolio companies. These findings are made especially more pertinent for founders considering when asked whether the quality of start-up reporting was a significant factor in shaping perceptions of leadership, the average rating provided was 8.5 out of 10. Consistency and reliability were also ranked as the most important features for investors during the reporting process.
Wimbart’s inaugural investor relations report, “Start-up Performance Reporting in Africa,” explores the potential of consolidated investor reporting in boosting investor confidence and ongoing support in African technology startups. With over 90 per cent of the report’s respondents comprising venture capitalists, angel investors, accelerators and incubators from across the continent, it is the first pan-African study to identify the pain points in investor relations communications and propose an optimised approach for African startups to adopt.
Amidst a global downturn in investments whereby macro-economic conditions have forced a 50 per cent year-on-year decline in fundraising success for startups per this report, Wimbart’s investor relations pan-African report is a timely resource for understanding investors’ expectations in start-up performance reporting on the continent.
Speaking on the report, Founder and CEO at Wimbart, Jessica Hope, said: ‘Over the last decade, we’ve worked alongside a wide variety of stakeholders from across Africa’s tech space, providing us with a unique and holistic insight into the gaps throughout the ecosystem. In recent years, we’ve become increasingly familiar with anecdotal intelligence on the lack of consistent investor communications and with our growing network of VCs, DFIs and early-stage investors, we strongly believed it was the ideal time to accurately capture the problem and contextualise the narrative.
“The resounding conclusion from our research is that in light of the current funding climate, founders simply cannot afford to neglect consistent engagement with current & potential investors. Now more than ever, there is a huge need for clear, regular and standardised updates to investors so they can not only accurately assess the health of their portfolio companies during this critical period, but sustain the upward trend in funding we’ve experienced over the last 5 – 10 years.”
Launched in 2015, Wimbart has supported over 120 African-focused start-ups, scaleups and investors with high-profile names including Andela, TLcom, Wasoko, Piggyvest, Sparkle and Moove, producing hyper-targeted, relevant and meaningful media and communications campaigns.
Commenting further, Founding Partner at Ventures Platform, Kola Aina, said: “In venture capital, investing in transparency is paramount, and consistent reporting is a sign of accountability. When start-ups regularly share their progress, challenges, and achievements, they are demonstrating a genuine commitment to transparency with investors. This reporting is also critical to keeping investors engaged and excited to help the company navigate challenges. In Africa especially, this credibility can serve as a crucial differentiator for investors seeking the most promising companies.”
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