• Latest News

    Wednesday, August 25, 2021

    Why African Tech Startups Fail And How To Mitigate Risk

    Technological Start-ups in Africa are innovative about providing solutions to challenges that exist in Africa. However with these solutions come several bottlenecks which eventually create a barrier to the survival and sustainability of the business.

    There are several factors that contribute to the failure of start-ups in Africa and the ability to learn from these failures would support a new way of thinking to help mitigate these risks.

    In this piece, I would be sharing risk factors from working with no fewer than 100 companies in the technological, FMCG, retail, agro, fashion, events, confectionary and manufacturing in providing consultancy services and some of the patterns I found led to the business failure.

    Huge Injection of Capital Without Traction

    Generating and implementing an idea has to go through several stages of design thinking to ascertain the viability of such a product before it is released into the marketplace based on the feedback from prospective end users.

    The fact that some early stage entrepreneurs have already built a name in the ecosystem can easily make them access funding even when an idea is still just an idea that has not been properly researched. But because entrepreneurs sometimes are also very emotionally attached to an idea, sometimes they can make several assumptions without considering the facts and then begin to seek capital inflow to kick-start this idea. Traction is important because it signifies growth, and growth could be seen in the form of demand which eventually leads to cash-flow. Investing in an idea is too risky and even more risky for an early stage entrepreneur with limited experience and exposure.

    In order to ensure an idea would scale, it is important to employ design thinking to limit assumptions.

    Not Working With the Right Team

    Not Working with the right team has huge consequences in itself. A start-up should have one core, and it must have the ability to execute with the team. Because most start-ups bootstrap at their early stage, they tend to work with whoever is available and not necessarily the skilled and competent professionals who would hit the ground running and deliver the required expectations. I remember working in a pharmaceutical start-up where mislabeling of medications occurred because the professional involved was not aware of the procedures as a pharmacist would. This could have been a huge mistake if it was unnoticed until it reached the retailer, who did checks and found out.

    The right time would limit the time a task is expected to be done. Start-ups should never play down on experience, proficiency and competence. In fact, it is necessary to develop specific in-house procedures for hiring that suits the company’s culture.

    • Blogger Comments
    • Facebook Comments


    Item Reviewed: Why African Tech Startups Fail And How To Mitigate Risk Rating: 5 Reviewed By: BrandIconImage
    Scroll to Top