African tech startups received close to $5 billion in investment in 2021, a record which should point at great potential and achieve better growth with the right approach. Regardless of how foreign venture capital chooses to go about business, growing sustainable unicorns needs a more collaborative approach.
Investors Should Study the Continent and Culture
Africa is a diverse continent with 54 countries that have different cultures and business environments. What works in one country or region might not work in another. Despite the number of startups sprouting all over the continent, venture capitalists should be aware of the unique subcultures and how they can be adapted to improve adoption of services and customized to scale. This will produce a collaborative approach that keeps startups in business long enough to attract even bigger funding.
Prioritize Essential Services
At this point, the most useful technology is one that can assist the greatest number of people in accomplishing their most pressing tasks. That is where the money should go. Funds are essential in feeding fintech platforms, a sector which has seen high returns through the sheer rise of cross-border and e-commerce payments. People need tech that enhances their daily routine, is affordable, and is easy to use.
Learn How Africa Interacts with Itself and the World
It will be presumptuous to define the African consumer without conducting extensive research into how its 1 billion people live and interact with one another and the rest of the world. Mobile money was successful because Africa had a common problem in that industry, but restrictions are changing how the service is being accessed across the continent.
Knowledge over Money
With all the money that has come in, only three unicorns currently exist in the continent, meaning there is a lot more that is needed. Where venture capitalists seek investment, they should also actively seek to collaborate and share information that transforms local ideas into solutions that help locals thrive and find their place in the global market.
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