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Stumbling Blocks for the Growth of African Startups

Viktoria Ventures, Stephen Gugu, GSMA Ecosystem Accelerator, Martin Karanja
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The recently concluded Africa Tech Summits in Kigali brought together 430 delegates from 29 countries across the continent.  During a hot debate session on International vs. African involvement, panelist took two different angles.  Even though there is a steady flow of findings, African startups still have several challenges which require urgent attention.

According to the founder and director of Viktoria Ventures, Stephen Gugu, the main challenge is foreign investors.  He pointed out that there are large proportions of foreign investors funding their startups in Africa. He also added that the situation where startups receive funding but are not owned by Africans is an area that needs to critical attention.  Moreover, Gugu noted that Africa investment market is still in its early stages as compared to the western markets. The way out should be co-investment instead of facing out foreign investment in the region.  He gave instances where indigenous investors spend most of their capital in real-estates than in startups.  It is beneficial to incorporate ‘new money’ from co-investment make startups grow in Africa.

The senior market engagement manager at the GSMA Ecosystem Accelerator, Martin Karanja said that the ‘waiting round’ hinders startups growth.  He explained that African startups wait for foreign funds for long which delay their operations. He recommended that initial capital should come from indigenous investors who understand well the African context.  Karanja critiqued the ideology that there is limited funding in the indigenous markets. He pointed out how people frame their proposition since it often matters.

In a concluding remark, panelist agreed that startups support need to be improved to gain competitiveness in the world market.

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Written by Denis Opudo

Am an engineer who's a tech blogger, hit me up on [email protected] and we base our discussion on technology in Africa and the rest of the world.
Denis the Tech guru

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