Wimbart: African tech risks future funding on misaligned reporting

A recent report by Wimbart has shed light on the challenges faced by startup founders in Africa when it comes to securing funding and maintaining investor relationships. According to the report, 40 per cent of startup founders feel that investors lack a deep understanding of their business or the market they operate in. On the other hand, 72 per cent of investors have ramped up portfolio reporting requirements over the past 18 months, signaling a shift towards more rigorous due diligence in Africa's tech ecosystem. Jessica Hope, Founder and CEO of Wimbart, emphasized the crucial role of continuous due diligence in attracting and retaining investor support, with a growing emphasis on long-term sustainability and solid financial performance over quick returns. Hope joined CNBC Africa for an in-depth discussion on the findings of the report and its implications for the future of tech funding in Africa. One key point highlighted in the report is the critical role of clear and transparent communication between startup founders and investors. The survey revealed that almost 90 per cent of investors expressed difficulty in providing follow-on funding without regular reporting from their portfolio companies. This underscores the importance of maintaining a steady flow of information to keep investors informed and engaged in the startup's progress. Hope stressed the significance of data-driven narratives supported by trust and collaboration between investors and founders. Another significant finding from the report is the perceived disconnect between startup founders and investors regarding market dynamics. Approximately 40 per cent of surveyed startups felt that investors did not fully grasp the nuances of the markets they were operating in, highlighting a barrier to effective communication and understanding. To bridge this gap, Hope emphasized the need for founders to educate investors about the specific challenges and opportunities in their target markets, be it Nigeria, Kenya, South Africa, or other African regions. The evolving landscape of venture capital funding in Africa was also a focal point of the discussion. Hope noted a shift in investor priorities from rapid growth to sustainable profitability, signaling a more cautious approach to funding. With a leaner funding environment compared to previous years, startups are encouraged to build resilient and scalable businesses while engaging in open dialogue with investors to navigate the challenges of a highly competitive market. In conclusion, Hope highlighted the importance of resilience, adaptability, and transparency in the face of economic uncertainties and market fluctuations. By fostering constructive dialogue, fostering investor trust, and prioritizing long-term growth strategies, African startups can position themselves for success in a rapidly evolving tech ecosystem. As the tech industry continues to expand across the continent, the need for strategic partnerships, effective communication, and shared vision between investors and founders becomes increasingly paramount.