African VC Investment Wey Fit Make You MARA (Translation - crazy investment story) Once a startup fails after raising capital in Africa, there is always an uproar because the ripple effect is felt throughout the market. This was evident with the recent collapse of a company that burned through $16 million within 3 years (madness), reinforcing my belief that Africans should lead investments in Africa. Data underscores this perspective. According to Partech Africa, African startups raised $5.2 billion in 2021, with African-led ventures often outperforming their counterparts. Companies like Paystack, PiggyVest, Flutterwave, and Chowdeck have demonstrated remarkable success. Paystack, for instance, was acquired by Stripe for $200 million, and Flutterwave has reached a valuation of over $3 billion. Chowdeck's rapid growth within a year is another testament to the power of local leadership. The importance of African-led startup investing lies in the deep understanding of the local market. Brands like Chowdeck have scaled rapidly because, in times of financial scarcity, people prioritize essential needs like food so it makes sense to invest in one that drives that. Similarly, fashion-based brands have expanded to international markets by catering to the demand for African-inspired clothing. Foreign investors often chase the next shiny product, but that approach doesn't work in this part of the world. Africa's growth potential is immense, but it requires a nuanced understanding that foreign investors often lack. The value-based system of startups doesn't apply here; in Africa, companies that generate revenue are the true leaders. This is why the richest man in Africa is a commodity trader. A few years ago, there were significant challenges with the adoption of online payments, and efforts are still ongoing to increase adoption in various regions. So investing $16 million in a blockchain startup might not be the best move without understanding these local dynamics especially one with little to no checks in place. This is why I am excited about what we are building—leading from the front to ensure that the right African startups receive the support they need to scale across the continent and achieve global impact. #Africaninvesting #startupstories #startup
Oghenetega Nanu
5mo
Great thoughts boss!!!, my main concern now is "what are we building?"
Technical Business Analyst - Domain ( Finance, Insurance, Travel, IT consulting, Health & Retail) AWS & Azure Cloud engineering Enthusiast
5moThis is so true, I recently concluded a research on a VC funding and startup failure in Nigeria. 2018 to 2024( Why funded startups fail). There's so much to unpack for founder's and investors. While the African market is untapped, success in it lies more in understanding the dynamics of the local markets coupled with the experience of the founders in the respective industry. In as much as so many pitch decks are so visually appealing and convincing, some of these factors are overlooked by foreign investors. A saying goes " There is a gap in the market doesn't mean there is a market in the gap"