The latest Wimbart Investor Report exposes the growing need for improved communication between African startups and investors, especially as the continent faces economic strain and funding declines. Though startups have increased their reporting, investors argue the reports lack essential context for effective decision-making. With 88% of investors relying on these reports for future investments, the quality of data is critical. Founders, however, call for standardization, frustrated by redundant and conflicting investor requests. Aligning these expectations while respecting local market nuances could foster transparency, trust, and better collaboration across Africa’s startup ecosystem.
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African startups are reporting metrics to investors more frequently, but Wimbart’s Investor Report reveals that the reports often fail to provide enough context, frustrating investors who rely on these details to evaluate potential follow-up investments. The disconnect between startups and investors on what data is valuable has become a focal point, with startups calling for a standardized reporting process to avoid redundant and time-consuming reports across multiple investors.
Investors’ reliance on startup data has grown, particularly in the face of a challenging economic environment. Over two-thirds of surveyed investors say they have intensified their focus on portfolio startups’ reports in the past 18 months, concerned about financial sustainability and operational transparency. Furthermore, about 88% said their future investment decisions are influenced by these reports, highlighting the need for a more structured approach to information sharing. As one investor explained, “It allows us to build enough data on the health of the company and enables us to cross-analyze with our own due diligence for follow-up investments.”
Despite agreeing on the importance of reporting, founders and investors seem to be at odds about the types of metrics that should be shared. Startups argue that investors fail to ask for critical metrics like customer acquisition costs (CAC), lifetime value (LTV), customer retention rate, and churn rate, all crucial for understanding long-term viability. They also express frustration at having to produce multiple versions of reports for different investors, some of whom don’t request the right metrics. One founder shared their frustration: “I’d like them to ask for less—we send them plenty, and they are just lazy, asking for it in different forms.”
This communication gap could be a symptom of broader trust issues within the African startup ecosystem, where founders are often wary of sharing confidential information with investors who might have interests in competing companies. Founders emphasize that they need more consistent guidelines from investors. Jessica Hope, CEO of Wimbart, supports this idea: “Investors have to put together a list of requirements for startups straight away, but they should ideally have some standardization because founders with eight or ten investors don’t want to do different reports.”
While standardization of reporting sounds ideal, some investors note the complexities involved in a one-size-fits-all solution. Africa’s diverse tech ecosystem, where challenges and opportunities differ by region, means a balance must be struck. Fintechs in Accra face distinct market dynamics compared to those in Abidjan, for instance. Investors suggest adopting an “80-20 rule,” where 80% of the reporting metrics remain standardized, but 20% allow for flexibility based on local market conditions. This would allow for both consistency and the ability to account for regional peculiarities.
Kola Aina, General Partner at Ventures Platform, stresses the importance of open, consistent communication in building mutual understanding, aligning expectations, and driving effective collaboration. Ventures Platform, with over 50 African startups in its portfolio, is one of many firms recognizing the need for better reporting frameworks to facilitate the flow of information and improve trust between stakeholders.
Interestingly, Wimbart’s survey focused predominantly on pre-seed and seed-stage startups, which underscores the youth of the African startup ecosystem. With over 70% of surveyed companies in these early stages, the journey to Series B and beyond remains elusive for many, as less than 5% of respondents had reached that stage.
As African startups grapple with these challenges, Wimbart, a 10-year-old public relations firm that supports notable African startups like Moove and M-KOPA, continues to play a pivotal role in bridging communication gaps between startups and the public, investors, and media outlets.