Written by Katharina Dalka, Founder & CEO StellarOne
I am part of the mentor program at Africa Fintech Forum and also get to speak to a lot of start-ups in Western Africa in general. Many of them seek investment (all from Seed to Series A).
When compared to more mature industries like infrastructure and raw materials, investing in tech in Africa is quite new. Hence, the technology sector still faces certain hurdles even though it is a market full of opportunities. I would like to share some potentially powerful ways to make tech investments in Western Africa more attractive to investors:
1/ The Regulatory Framework
Any private investor wishes for a stable regulatory framework. Ideally, this framework should comply with the following needs and not be subject to political changes.
allowing do a straight forward initial investment
a protection during the investment period
an easy exit with the least foreign exchange risk possible
Some countries have put in place instances that support investments, like the Ghana Investment promotion center (GIPC) or the Nigeria Investment Promotion Act.
2/ Legal Formalisation
An investor wants a clear company structure to invest in. My mentees often have a company that provides a good solution/service in a relevant market but is not legally “formalized enough” in regards to company status, working contracts, etc. to attract investors.
3/ Financial Literacy
Investments are about trust - both financial and human. As a mentor, I often find myself in front of start-ups with great ideas that don’t focus enough on business or financial planning. Given all the online resources that are available, I always strongly encourage them to increase their financial literacy.
Tech companies - more specifically start-ups - have a limited influence on the legal framework a state provides, however, many opportunities exist to help in formalizing their business and get their financials in order. The last two points are especially effective in helping make companies more attractive to investors.
We are StellarOne, seasoned strategic and investment professionals based in London.
Focused on the technology sector, we advise investors and tech companies on all aspects of potential investment opportunities, from the viability of strategy and business plans, to the financial aspects of the investment on offer.