Inspite of the major successes recorded in 2019 by several African startups across the continent of Africa grossing over a billion dollars in venture capital funding, there is still huge concern over the high mortality rate of startups in the continent. This was the findings of a report which gave a bird-eye view of the shutdown rate of African ventures by countries, industries, stage of business and other key parameters pointed out that amid the successes recorded, failures abound, advising on ways to avoid the trap. According to the findings, the shutdown rate for startups on the continent from 2010 to 2018 was 54.20%, tough this looks lower when compared to other jurisdictions like the United States, India and China, but it is high judged from the number of attempts in Africa.
The Report titled The Better Africa is the first of its kind data-oriented report which co launched with GreenTec Capital Africa Foundation and made available for free to readers in digital formats. Using 500 startups out of available database of 4000+ startups in Africa, from market intelligence platform, TheBase, to derive these insights, the sample was chosen randomly via an algorithm which made sure to pick ventures from over 30 countries.
Breaking down the findings of the report according to country demographics, it found that Ethiopia, Rwanda and Ghana experienced the highest number of startup shut downs with Ethiopia at 75%, Rwanda at 75% while Ghana was at 73.91% which is higher than the number of shut downs experienced among the continent’s most prominent tech hubs of Nigeria, Kenya and South Africa. Nigeria witnessed maximum shutdowns at 61.05%, followed by Kenya at 58.73% and South Africa 54.39%. The Report did not did not link reasons for shutdowns with the business ecosystem within the jurisdictions studied but it noted that the sector that faced the highest shutdown rates was social networking companies with over 90% closure rate.
Speaking on the development, Thomas Festerling, CEO and Founder of the GreenTec Capital Africa Foundation said that “as a team, we wanted to gain insight into what hurdles African founders are facing and what the major barriers to success are across the continent. We embrace failure as part of the journey made by any entrepreneur toward reaching their goals, it is a part of the startup lifecycle – if something doesn’t work, we learn from that and improve. After what we have begun to uncover, we look toward increasing the studies’ depth and reach across the continent to gather even more representative figures.
Apart from the above findings, the Report equally uncovered the process to build a successful startup on the continent. The 68-page report featured conversations with nine African founders that would help the ecosystem in decoding the set of practices adopted by these leaders to manoeuvre their business on the continent. The conversations with the startup founders delve into areas such as market need analysis, external funding, talent acquisition and revenue generation among many other topics. These founders come from diverse countries, industries, experience and represent both operative and non-operative companies.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry