According to a recent research report ‘VC4A Venture Finance in Africa‘ released by Venture Capital for Africa (VC4A), a strong team of founders is the key driver of startup success in Africa. VC4A is a network-building organisation with 50,000+ member community in 159 countries, including 1.000+ investors.
The 2017 research sought to understand the critical success factors for African startups and the key ingredients that determine why one venture outperforms its peers. Data was collected from 1866 ventures from 41 African countries and 111 Africa-focused investors from 39 countries around the world.
Key outcomes of the research
Strong team of founders
A key outcome from this year’s research on African startups was the identification of their unique traits relative to the startups’ level of commercial performance. And although many factors go into building a company, analysis of the data makes clear that a strong team of founders is the key driver of venture success in Africa. Many investors consider this as the main thing they look for, but now the data also shows that the right team of founders makes the difference, and is the single most unique characteristic across the companies making commercial progress.
By analyzing two data samples of 100 ventures in more detail, i.e.: ‘emerging’ and ‘established’ ventures, the research team found correlations that help to understand the venture’s ability to be successful. The success of the ‘established’ ventures can be explained by the composition of the founding team based on size, education, gender and age.
Gender balance
As described above, gender balance can further explain venture success, as the founding teams of successful ventures are more likely to include male and female founders. It is noteworthy that 46% of these ventures include a female founder in their team. Exclusively female teams run 9% of the startups.
Among the countries with 20 or more ventures participating in the survey, Uganda and Kenya have the highest female participation. For Uganda, 57% of the ventures include a female founder where for Kenya the number is only slightly lower at 55%. South Africa has the lowest female participation rate at 33%. Nevertheless, these percentages of female founders far outpace averages recorded in more established startup hubs like New York or San Francisco.
“We are truly entering a new stage of startup growth on the continent. Not only has the number of startups continued to grow at an impressive rate, they are increasingly successful at scaling into sustainable enterprises well-positioned for growth. With the right team in place, we are seeing a growing number of companies break rank. I’m sure we will witness many new success stories hitting the headlines as a result” – Ben White, CEO VC4A
The ‘VC4A Venture Finance in Africa’ report captures the performance of early stage, high growth ventures from Africa and the activity of early stage investors. The insights are broken down across several indicators: job creation, performance, investments, investor interest, ecosystem players and drivers of success.
This is the fourth consecutive time VC4A has endeavored in this annual research.
Here is a link to access the summary version of the report or upgrade to access the full results for only $79,99
