One of Africa’s major online hotel booking platform Jovago has identified venture capital and government policies as critical for the improvement of the success rate of startups in West Africa.
According to Jovago, entrepreneurs across the markets in West Africa do not receive early-stage tech venture capital funds and for the few who do receive these funds, they fail to obtain later-stage growth capital when needed.
“In leading markets like Kenya and Nigeria, entrepreneurs usually succeed in raising the first $100,000 from external investors, but raising subsequent funds becomes an arduous task. As a result, they give up their business after a few years because as they are discouraged by the struggles attached to maintaining operations as well as navigating the brutal reality of founding a company,” Jovago said.
The platform also described most government policies in West Africa as unfavourable to startups.
“For instance, there are no policies that allow founders to capitalize on global trends,” Jovago stated, while urging governments in the region to amend sub-clauses in certain policies in favor of startups.
It also noted the challenges posed by internet penetration and infrastructural obstacles which are noticeable in the estimated percentage of population connected or with access to the Internet. This according to Jovago is sublimely low, implying that the region has low internet penetration and so, user base is already quite limited from the onset of developing a startup.
“West Africa’s tech sector lags in terms of prominence and investment, it needs better and cheaper internet access and broader adoption of smartphones. Infrastructural and power deficiencies also play major roles here. Internet-backed technology startups will only develop successfully and kindle economies across West Africa when the right structures are in place,” Jovago said.
Other challenges are operating and marketing models – most startups in West Africa do not know how to fully utilize their operating and marketing models as they cannot properly brand and advertise their products to compete with already established brands. This directly affects their sales and thus their revenues; and the market and integrity.
“In general, understanding the challenges faced by start-ups in West Africa is crucial as these challenges are not problems but rather opportunities to do more and ensure a higher rate of success for West African startups,” Jovago concluded.