African startup finance has been identified as being seriously threatened by investor-founder distance.
In its most recent research, Wimbart, a PR firm that specializes in the tech and startup sectors in Africa and emerging markets, disclosed this.
According to London-based Wimbart, 71% of African tech investors will not grant follow-on capital to a start-up if they do not receive regular reporting updates.
The report’s findings, titled “Start-up Performance Reporting in Africa: What do investors want to know?,” highlight the urgent need for founders throughout the ecosystem to reprioritize communication with their current investor base in order to meet their long-term funding needs.
The study found that 29% of startup investors said they didn’t get regular updates from the companies in their portfolio. These findings are especially important for founders because the average response when asked if the standard of start-up reporting had a major impact on how people perceived leadership was 8.5 out of 10. Additionally, consistency and dependability were named as the top qualities for investors during the reporting process.
“Start-up Performance Reporting in Africa,” Wimbart’s first investor relations research, examines how unified investor reporting could increase investor confidence and continuous support for African technology entrepreneurs. It is the first pan-African study to identify the pain points in investor relations communications and propose an optimized approach for African startups to adopt, with over 90% of the report’s respondents including venture capitalists, angel investors, accelerators, and incubators from across the continent.
Wimbart’s Pan-African Investor Relations Report is a timely resource for understanding investors’ expectations in start-up performance reporting on the continent, which is experiencing a macroeconomic downturn that has forced a 50% year-over-year decline in fundraising success for startups, according to this report.
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 contextualize 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 standardized 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.”
Since its launch in 2015, Wimbart has supported more than 120 African-focused start-ups, scaleups, and investors, working with well-known brands like Andela, TLcom, Wasoko, Piggyvest, Sparkle, and Moove to create campaigns for media and communications that are highly targeted, pertinent, and impactful.
Kola Aina, the founding partner of Ventures Platform, added the following: “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.”
