Hello and welcome to FYI
In our very first post, we present an answer to the central theme of the Global Entrepreneurship Week (GEW) of November 2014.
How to multiply investments in African Start-ups
The GEW meetups were organised as part of VC4Africa’s celebration of African entrepreneurship. Hailed as Africa’s largest start-up event, the networking meetings were held in 40 cities across the world; from Abidjan, Dar es Salaam and Nairobi, to Helsinki, Nuremberg and Seattle. In Abuja, the conversation focused on the importance of collaboration, the pursuit of early traction and encouragement of sustainable networks of entrepreneurs and investors.
Collaboration remains one of the most important buzzwords of the 21st Century. Across fields as diverse as construction, conflict resolution and international aid, it’s changing the way we find solutions to emerging problems. No surprise then, that African entrepreneurs are finding theirs through easily identifiable clusters that allow early exchange of knowledge, skills and ideas. The rapid growth of incubation centers and shared working spaces across the continent, and the fact that our meetup held in one, can only continue to encourage investments.
Traction is gained through early testing of a minimum viable product or service. Simply put, it presents a picture of what or who your customer is, how many potential ones currently exist, what they think of your product and whether or not they’re willing to pay for it. And its role as proof of product acceptance and viability in the decisions of equity investors has been critical to the success or failure of many an African start-up to secure investments. The pursuit of early traction can therefore only encourage greater investments.
The role of networks of entrepreneurs and investors towards driving investments in African start-ups cannot be over-emphasized. If the success of VC4Africa is anything to go by, an important space exists. But we believe these spaces can be more effectively filled through sustainable, local networks. Talk of a proposed Abuja Angel Investor Network (to be unveiled this year) generated excitement among the entrepreneurs. Investisseurs & Partenaires (I&P) is already providing these options in Niger and Burkina Faso, and has challenged investment teams across Africa to join their expansion project.
Finally, the importance of the knowledge of funding options to African entrepreneurs cannot be neglected. 21st century business owners, regardless of company size or demography, face a constant battle to find the right balance between debt and equity. And if African start-ups want to attract and retain the right kind of investments, this knowledge can only be beneficial.
Abubakar Abdullahi is Managing Principal at The Front Office NG. He tweets @ab_bakr
Editor’s Note: A version of this article first appeared in The Business Hub on 14th January 2015.