A new report by Wimbart has indicated that the existing disconnect between founders of tech startups and investors, where nearly one-third of startup investors do not receive periodic reports from their portfolio companies will pose a major threat to tech funding in Africa.
The report believes that the quality of startup reporting is deemed a “significant factor” in shaping perceptions of leadership. Thus, Wimbart’s inaugural investor relations report calls for a renewed focus on investor-founder communications.
Tagged “Startup Performance Reporting in Africa: What do investors want to know?”, the report revealed that 71 percent of African tech investors will not invest follow-on funding in a startup failing to provide them with regular reporting updates.
This revelation underscores the significant and timely need for founders across the ecosystem to reprioritise communication efforts with their existing investor base to support their long-term funding requirements.
According to the report, 29% of startup investors stated they did not receive periodic reports from their portfolio companies. These findings are made especially more pertinent for founders considering when asked whether the quality of startup reporting was a significant factor in shaping perceptions of leadership, the average rating provided was 8.5 out of 10. Consistency and reliability were also ranked as the most important features for investors during the reporting process.
Commenting on the report, Jessica Hope, Founder and CEO at Wimbart, noted that the resounding conclusion from the research is that in light of the current funding climate, founders simply cannot afford to neglect consistent engagement with current & potential investors.
“Now more than ever, there is a huge need for clear, regular and standardised updates to investors so they can not only accurately assess the health of their portfolio companies during this critical period, but sustain the upward trend in funding that has been experienced over the last 5 – 10 years,” she said.
Startup Performance Reporting in Africa explores the potential of consolidated investor reporting in boosting investor confidence and ongoing support in African technology startups. With over 90 percent of the report’s respondents comprising venture capitalists, angel investors, accelerators and incubators from across the continent, it is the first pan-African study to identify the pain points in investor relations communications and propose an optimised approach for African startups to adopt. Amidst a global downturn in investments whereby macro-economic conditions have forced a 50 percent year-on-year decline in fundraising success for startups per this report, Wimbart’s investor relations pan-African report is a timely resource for understanding investors’ expectations in startup performance reporting on the continent.
