Founders Factory Africa recently presented a live version of The African Pre-seed Podcast, featuring Rology CFO Jason Musyoka, Seedstars Co-founder Bruce Nsereko-Lule, and Senga Technologies CEO June Odongo. Amid a significant decline in African startup funding in 2023, the podcast addressed the importance of judiciously selecting investors in the evolving funding landscape of 2024.
The panel emphasized the shifting priorities of investors, who now prioritize fundamentals and sustainability over mere potential, due to the changing cost of capital. Investors are now keen on clear roadmaps with achievable milestones and contingency plans. Startups are urged to focus on building sustainable, profitable businesses rather than chasing rapid growth.
Discerning investor selection remains crucial for founders, who must adapt to changing investor expectations. While international investors may have deeper pockets, local investors possess contextual understanding and networks within local environments. Founders are encouraged to align their business goals with their investment strategy and carefully consider the quality and flexibility of potential investors.
In the midst of these considerations, founders are advised to evaluate term sheets carefully, choosing those with the least dilution for greater flexibility. The importance of recalibrating and working with available resources is emphasized, and founders are encouraged to embrace smaller investments when aligned with their business framework.
Planning for exits in Africa may also undergo a transformation as more startups prioritize sustainable growth over accelerated expansion. Local exit opportunities are deemed viable, and the contextualization of venture capital to the local market is expected to drive a shift in the types of businesses local players are interested in acquiring. Ultimately, the panel highlights the significance of strategic investor selection and adaptable fundraising strategies in the evolving funding landscape of 2024.
