Seventy-one percent of technology investors in Africa would be reluctant to invest further in a startup that does not furnish regular reporting updates, a new report says.
The report, titled ‘Start-Up Performance Reporting in Africa: What Do Investors Want to Know?,’ highlights the vital importance of founders within the African tech ecosystem prioritizing communication with their current investor base as a means to secure long-term funding.
As per the study shared with BitKE and conducted by Wimbart, a leading PR agency specializing in tech start-ups across Africa and other emerging markets, 29% of startup investors revealed that they did not receive regular reports from the companies in their portfolio, coming as the Africa tech ecosystem continued to grow in terms of VC funding.
Total funding secured by African tech startups by year 2016-2022
The study had participation from over 90% of the respondents, which included venture capitalists, angel investors, accelerators, and incubators from various regions across the continent.
“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,” said Jessica Hope, founder and CEO at Wimbart.
Some of the key issues identified about founder communication in Africa include:
- Lack of clarity and focus
- Vague performance metrics
- Absence of actionable insights
- Selective reporting
- Inconsistent reporting timelines
Hope continued,
“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 and 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 to 10 years.”
Wimbart, established in 2015, has offered assistance to more than 120 African-focused startups, scaleups, and investors. It proudly counts prestigious names among its clients, including:
- Andela
- TLcom
- Wasoko
- Piggyvest
- Sparkle
- Moove
Despite the growing entrepreneurial drive in Africa, maintaining effective communication with investors continues to be a significant challenge. The report underscores the crucial importance of founders being deliberate in their accountability to existing investors by offering regular and valuable updates.
Read / Download the full Wimbart report here.
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