Africa is a reservoir of technological, social and environmental innovation. At least that is what observers are saying. As entrepreneurship fever has taken hold of the African continent, a real challenge has arisen: how to identify future leaders? How do financial institutions determine which start-ups to fund? And above all, how can we increase the visibility of these African “start-ups” on this highly competitive market?
In the African region, a younger and younger population wants to start a business. While the job market looks bleak, the desire to start one’s own business is, on the other hand, booming. Indeed, according to sources, 50% of young people under the age of 18 would like to become entrepreneurs. This growing desire, however, faces a harsh reality: lack of funding. However, it would seem that this issue is particularly relevant to the African region. In fact, a study by Partech Venture shows that $15.72 billion was invested in US start-ups over one quarter. At the same time, only €370 million was granted to African start-ups in 2016.
Increasing the visibility of African start-ups
We are thus faced with a paradox: a strong potential for business creation while investment is too timid. Is it a lack of resources? According to Christian Kamayou, founder of MyAfricanStartUp, this is more due to the lack of visibility. Difficult to identify or simply not known, these future business leaders have difficulty being identified. What would be the solutions to increase their visibility, or even their notoriety and allow them to find financing? All is not lost for these innovative start-ups, which can build a relationship of trust with potential investors.
Lack of communication about innovations
In a majority of African countries, there is a real craze for start-up competitions. Although this is a good way to gain visibility, the lack of a communication strategy remains a problem. Entrepreneurs do not necessarily master all the tools and methods. On the other hand, media coverage is poor compared to the United States or Europe.
Earning the trust of investors and finding a business angel
How can this be overcome? Christian Kamayou proposes two solutions. First, make a pre-selection among these young nuggets. Indeed, the introduction of standardized criteria could create a feeling of confidence among potential investors. Business angels, for example, invest part of their own money in the capital of projects with high growth potential. It turns out that they are more interested in Africa than ever. One example is Tony Elumelu. The wealthy Nigerian entrepreneur has endowed his foundation with $100 million to encourage 10,000 young Africans to start their own businesses.
Set up an ecosystem to accompany young talent towards investors
This would aim to support these young people in the creation of their start-up through fundraising. This year, the HEC incubator is hosting an African start-up at “Station F” in Paris, the largest start-up campus in the world. A sufficient number of incubators is essential to guide these young talents towards investors and to create a culture of entrepreneurship. This would be another step towards success for these future leaders who dream of launching their start-up.
Labelling start-ups to attract investors
Once visibility is addressed, risks should be limited and conditions of trust created. For this, it is important to put in place “control” mechanisms. Yes, the road to fame requires credibility in the start-up, but also in the ecosystem. This is the only way potential investors can measure the ratio of risk to return on investment. It is then possible to designate a trusted third party who would set up a quality control of the start-ups at all levels. This first evaluation with start-ups would allow us to examine some financial elements but also at the management level.
