How African start-ups can sustain investments flows

African start-ups have been experiencing a surge in investor funding in recent years, but a critical factor that could sustain this trend is effective investor communication. A recent report by Wimbart highlighted that 29% of investors do not receive periodic reports from their portfolio companies, indicating a significant gap in communication. Jessica Hope, Founder and CEO of Wimbart, emphasized the importance of start-ups engaging with their investors to keep them informed and engaged. The report also pointed out that the African tech ecosystem is at a pivotal inflection point, where it needs to separate hype from tangible results. The funding for the ecosystem has seen a reduction of about 50% year-on-year, signaling a shift towards a more grounded approach to business building and scaling, focusing on profitability rather than just the next fundraise. In terms of specific pain points in the current reporting process, the report identified issues such as selective reporting, vague metrics, absence of actionable insights, and inconsistent reporting timelines. These challenges can impact investors' perceptions of the leadership team of portfolio companies and erode trust. Quality reporting was highlighted as a key factor in shaping investors' trust in their portfolio companies. To address these challenges and improve investor relations, the report recommended that start-ups adopt a standardized format for investor reports, highlight both successes and challenges, and select relevant key performance indicators (KPIs) for measurement. Consistent and regular communication was also emphasized as a crucial element in maintaining a strong relationship with investors. Looking ahead, the outlook for the African tech ecosystem may be more humble and conservative compared to previous years due to the reduction in investment. However, this shift has driven companies to focus on financial sustainability and profitability, fostering a culture of business building and scaling rather than a relentless pursuit of fundraising. Overall, effective investor communication stands out as a key theme in the success of African start-ups. By prioritizing transparent and consistent reporting, start-ups can build trust, engage investors, and navigate the evolving landscape of the African tech ecosystem.