In a recent report by Wimbart, it was highlighted that there is a disconnect between African startups and investors regarding how startup progress is communicated, which could hinder future fundraising efforts. Although startups are providing more metrics to investors, the information lacks context, making it challenging for investors to grasp the business’s performance fully.
For Africa’s funding situation to improve, it is crucial to address this issue as 88% of investors rely on investor reports to make investment decisions. The quality of reporting significantly influences how investors evaluate a startup. Investors emphasized the importance of these reports in understanding a company’s health and making follow-up investment decisions.
The report revealed that there is a discrepancy between founders and investors on the type of information that should be shared, indicating a need for clearer communication to align expectations. Founders feel that a standardized reporting approach should be adopted, as investors often fail to request vital metrics like customer acquisition cost and retention rates.
The lack of trust between founders and investors also contributes to the communication gap, with concerns that confidential information could be shared. Establishing a standardized reporting template could help bridge this gap, although it should allow for flexibility to accommodate the diverse tech landscape across Africa.
Open and consistent communication was highlighted as essential by Kola Aina, a general partner at Ventures Platform, emphasizing the importance of mutual understanding and effective collaboration. The survey conducted by Wimbart focused mainly on startups and investors in the pre-seed and seed stages, underscoring the youth of Africa’s startup ecosystem. This emphasizes the need for improved communication and reporting practices to foster growth and success within the African tech industry.