A significant disconnect between African tech startups and their investors is raising concerns about the future of funding in the sector, according to a new report. The report, released by Wimbart, a leading PR agency specializing in Africa’s business and technology sectors, reveals that 40% of startup founders feel investors don’t fully understand their businesses or the markets they operate in, leading to communication challenges that may hinder investor confidence.
The report, titled “Startup Performance Reporting in Africa: Aligning Startup and Investor Expectations,” sheds light on the growing complexities in investor-startup relations, especially around reporting requirements. In the past 18 months, 72% of investors have increased their reporting demands, with a greater focus on sustainability as a key performance indicator (KPI). However, the disconnect between what founders report and what investors find valuable is posing significant challenges.
Jessica Hope, founder and CEO of Wimbart, highlighted the importance of maintaining clear and consistent communication in today’s challenging funding landscape. “In today’s tough fundraising environment, startup founders cannot afford to overlook clear and consistent reporting – it’s not just beneficial but essential. Startups need to be transparent and open in their communication to build trust with investors. Without this, securing funding and crucial network support will become even harder,” she said.
The report also found that despite most investors (83%) believing they have clearly communicated their reporting expectations, only two-thirds of founders feel those expectations are well understood. This gap is particularly concerning given that nearly two-thirds of investors use past reports to guide future investment decisions.
With funding becoming increasingly tied to performance metrics, Wimbart’s report suggests that startup founders must focus on more meaningful data, such as customer acquisition costs (CAC), lifetime value (LTV), and customer retention rates. The report also advises that investors should provide clearer reporting templates to founders and ensure that their expectations are communicated in a way that aligns with the startups’ realities.
Wimbart’s research underscores the need for open dialogue between investors and startups to ensure both parties are aligned on critical business goals. Without this alignment, the growing pressure on startups to meet heightened reporting demands could threaten their ability to attract the funding needed for growth.
The report, supported by key partners including Ventures Platform, TLP Advisory, AfriLabs, and TechCabal, also offers practical recommendations to bridge the communication gap between investors and startups, urging both sides to maintain open lines of communication and prioritize transparency.
With investor expectations becoming more stringent, the report serves as a timely reminder that startups must adapt to survive in a funding environment that increasingly rewards long-term sustainability over quick returns.
For further insights, the full report is available for free download.
