Wimbart, an award-winning PR agency specialising in business and technology sectors across Africa, has released its second annual report titled “Startup Performance Reporting in Africa: Aligning Startup and Investor Expectations.”
Details
The report, which aims to gain a comprehensive understanding of investor-startup reporting dynamics, has revealed that while reporting frequency has improved, many startup founders 40% still feel that investors don’t fully understand their business or market.
This disconnect creates ongoing challenges for investor confidence and highlights a gap between what founders report and what investors find valuable.
By The Numbers
According to Partech Africa, funding on the continent has sharply declined, with total investments in 2023 falling by 46%. Considering the challenging market conditions, the report’s findings revealed that the majority of investors 72% have had to intensify portfolio reporting requirements over the last 18 months, placing a stronger emphasis on sustainability metrics as their primary KPI.
With nearly two-thirds of investors using past reporting to guide future investment decisions, maintaining consistent and detailed communication is more imperative than ever for founders to secure support in this current funding environment.
Digging Deeper
Wimbart’s investor relations report is the first pan-African study to identify the pain points in investor relations communications and propose an optimised approach for African startups to adopt.
Building on last year’s findings – which found that 71% of African tech investors would not consider follow-on investments if portfolio companies failed to provide consistent updates – this year’s edition brings a significant shift by surveying startup founders for the first time, providing a more balanced view of investor-startup relationships.
Highlighting areas where both parties align on the benefits of consistent reporting and its potential impact, among the founders who met the increased reporting requirements, a majority 61% received direct support or intervention from their investors. While extensive reporting can be demanding, it has created opportunities for access to critical resources, such as funding, strategic guidance, and operational support.
Report Recommendations
Supported by key partners, including Ventures Platform, TLP Advisory, TechCabal, AfriLabs, and London African Network, Wimbart’s report reveals a critical communication gap. While most investors 83% believe they have clearly communicated their reporting requirements, only two-thirds of founders feel the expectations are understood.
To address these gaps, the report outlines key recommendations to improve investor-startup relationships, including:
- Investors to communicate reporting requirements, cadence and expectations to founders; provide templates to help founders meet reporting expectations.
- Startups to avoid vanity metrics and focus on meaningful metrics such as customer acquisition cost [CAC], lifetime value [LTV], and customer retention rate to demonstrate a deeper understanding of the business.
- Both parties must maintain an open line of communication to give nuance to the data and build the trust needed to build businesses together.
What They’re Saying
Speaking on the report, Jessica Hope, Founder and CEO at Wimbart, says, “This year’s report takes a step forward by incorporating the voices of startup founders, opening up the dialogue. One thing is clear from our 2024 survey: continuous due diligence in Africa’s tech ecosystem is intensifying, with investors prioritising long-term sustainability and solid financial performance over quick returns.
The reality is that in today’s tough fundraising environment, startup founders cannot afford to overlook clear and consistent reporting – it’s not just beneficial but essential. By keeping the lines of communication open and transparent, startups can build and maintain the trust and support they need from their investors. Without this, access to funding and all-important network support may become increasingly hard to access.”
Commenting further, Kola Aina, Founding Partner at Ventures Platform, says, “In Africa’s dynamic startup ecosystem, local investors have a unique advantage in bridging the gap between investors and founders – our presence in the market enables us to provide hands-on, tailored support that goes beyond capital, and our willingness to collaborate without overbearing interference fosters stronger partnerships. As the report reveals, open and consistent communication is key to building mutual understanding, aligning expectations, and driving effective collaboration.
This approach can be cultivated through regular dialogue, a Socratic approach to providing strategic guidance when necessary, and a commitment to protecting founders’ interests. By adopting this communication style, both investors and founders can work and win together. Founders who master this will be empowered with the support and resources they need to scale, benefiting from investors’ experience locally and from supporting multiple startups.”
Anna Ekeledo, Executive Director, AfriLabs, adds “Effective communication between startups and investors is key to fostering trust and securing the resources needed for growth. The findings in this report highlight the pressing need for standardised reporting frameworks, which will not only address the concerns raised by founders but also provide investors with the clear, consistent data they require to make informed decisions. At AfriLabs, we are committed to promoting transparency and sustainability across the African tech ecosystem, ensuring that both startups and investors can thrive together in today’s challenging market environment.”
The full report can be downloaded for free here.
