As a follow-up to its maiden Wimbart Investor Communications Report, Wimbart, a PR agency focused on African startups, has released a 2024 edition.
In the 2024 inaugural report based on a survey of investors in the African startup ecosystem only, Wimbart revealed that most investors surveyed [71.4%] would not consider follow-on investments if their portfolio companies consistently failed to update them.
REPORT | Total Investments in African Fintech Startups Declined by 52% in 2023
Among the reasons given for the downturn in the report include inflation, depreciation of several African currencies, and global supply chain disruptions.https://t.co/t0yhfSn2g4 @AVCA_Africa pic.twitter.com/i7gHjL25al
— BitKE (@BitcoinKE) April 18, 2024
In 2024, Wimbart extended the survey to startups to get a more comprehensive view and the results suggest ‘trust issues’ between investors and startups.
“A small but not insignificant percentage of surveyed founders [12%] stated that ‘confidentiality concerns’ were among the most significant barriers to sharing investor updates; this might reflect the very small and interconnected nature of the African tech ecosystem,” said the report.
“Furthermore, almost half of startups [40%] went on record to say that they didn’t feel their investors understood their business and market enough to value their reporting metrics and data submission. So, there is a perceived disconnect between knowledge and understanding.”
Still, 60% of startups interviewed said that investor reporting had led to a positive intervention for them.
Between the two reports, Wimbart says that when it came to the question of whether the quality of a startup’s reporting significantly shapes an investor’s impression/perception of its leadership and management, the sentiment remained the same:
88.9% of investors judge a startup by the quality of the reporting; essentially, it is the ultimate litmus test.
The report also notes a difference in investors’ priorities between 2023 and 2024 in the KPIs they prioritised in their reporting.
In 2023, the primary KPI for investors was ‘financial reporting.’ In contrast, in 2024, ‘sustainability’ took the lead, with 29.4% of investors marking it as their primary KPI relegating ‘financial reporting’ to second place, with 22.2% confirming it as their main KPI.
The primary reasons for doubling down on reporting requirements were:
- Concerns about financial stability and sustainability of portfolio companies
- Need for greater transparency and accountability
- Enhanced performance monitoring and risk management
Similar to the trends in 2023, investors in 2024 continue to expect more from their portfolio companies.
A blame game has emerged, with 27.8% citing a ‘lack of focus in reports shared,’ and 16.7% pointing to a ‘lack of action and accountability from founders,’ the report said.
Additionally, anecdotal insights such as the tendency to only share positive news were also mentioned. Notably, 60% of investors identified founders as the primary obstacle to receiving feedback.
Moreover, just over half (52.9%) of investors either strongly agree or agree that they are ‘getting the full picture of a startup’s performance’ through the company’s reporting.
Click here to access the full 2024 Startups Performance Reporting in Africa Report.
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