African Startups: Finding the Right Investor Fit

Sponsored by

SDS 036: African Startups: Finding the Right Investor Fit

Hey! thank you for reading issue 036 of Startup Definition Sunday (SDS).

SDS is the only newsletter that is redefining support for Africa's emerging founders. Every other Sunday, we cut through the fundraising and ecosystem noise to bring actionable insights to 1K+ emerging founders.

(P.S. I'll never sell your information, ever)

Thanks to the folks at The Rundown AI for sponsoring today’s issue:

The Rundown is the world’s fastest-growing AI newsletter, with over 500,000+ readers staying up-to-date with the latest AI news and learning how to apply it.

Our research team spends all day learning what’s new in AI, then distills the most important developments into one free email every morning.

If you’d like to sponsor future issues of SDS, here’s a simple way to do it.

When we say data is scarce in Africa, it cuts across many areas.

Most founders initially assume the impact of poor data is limited to researching the market size of their solution. But, as an early-stage investor, I have seen firsthand the challenges founders face when it comes to finding investors.

I wish there was some magic I could conjure to make the process easier.

But with today's issue, I want to share with you 3 things my portfolio companies do to find the right investors that you can begin to do right away:

Research investor profiles: When it comes to fundraising, your understanding of the investor landscape in your industry is crucial. Not every investor clearly publishes their investment focus on their website. Instead, look for investors who have a track record of investing in similar businesses. You don't have to spend a fortune on platforms like Crunchbase or Pitchbook. Africa the Big Deal's database provides a general list of investors across industries in Africa at an affordable price. If you're specifically looking for fintech-focused investors in Africa, Afridigest HQ's Fintech Review is an excellent starting point. Both options cost a fraction of more global databases.

Target investors based on stage and goals: Not all investment opportunities are suitable for all investors. Assess your startup's stage of development and find investors who have previously invested in startups at a similar stage. If you're seeking more than just capital, prioritize investors who can contribute strategic value. Researching investor profiles, alone, might not give you a clear idea of stage or goals fit. After creating a list of potential investors from databases, reach out to founders they have previously invested in. This will give you a better sense of whether the investor is right for your stage and goals.

Chemistry matters: Founder and investor relationships are long-term partnerships that can span multiple years. Establishing a good rapport and chemistry between founders and investors is vital for a fruitful partnership. While I understand that founders often lack the time to build personal connections given the number of investors they pitch to, the negative impact of having an ill-suited investor on your cap table is often underestimated..

Now, let me share my two pesewas:

Finding the right investor is not just about the money. It's about finding a partner who believes in your vision, understands your industry, and can support your growth. By researching investor profiles, considering industry suitability, stage alignment, and chemistry, you'll be well on your way to finding the perfect investor for your African startup.

If you or someone you know should be receiving 2024 issues in their inbox, consider joining SDS so you don't miss exclusive sections in future editions.

If you only read one thing this week, read this...

Why is it worth your time? Well, for one, I wrote it 😉. But more importantly, this article provides a deep dive into the unique challenges and growth potential within Kenya, Nigeria, and South Africa's payment ecosystems. Early-stage founders targeting the African digital payments space can gain valuable insights into the areas we're investing in at Accion Venture Lab.

That's all for today. As always, thank you for being an engaged reader.

I'll catch up with you in two weeks with more actionable insights.

Jasiel

Whenever you are ready, there are 3 ways I can help you:

  1. Review your deck for investment: It takes less than 5 minutes to complete.

  2. Improve your investor updates using these two templates.

  3. Promote your brand to 1000+ early-stage and aspiring founders by sponsoring this newsletter.

What'd you think of today's edition?

Login or Subscribe to participate in polls.

Reply

or to participate.