Being a technology-driven company does not automatically mean such a firm is attractive for investment, investors and investment analysts said on Wednesday at the BusinessDay Africa Business Convention.
Acknowledging that the ecosystem for companies looking to raise cash has significantly improved, especially for those in the tech space, the investment experts said fundamentals like the corporate governance of the company- entrepreneur and the team, the company’s understanding of its business and the market it operates, scalability and business models are key in attracting growth capital.
Having invested in 161 startups globally, Platform Capital’s Partner & Group Head, Investments, Ponmile Osibo said the investment company usually looks out for the founders. This is because it believes that the business is only as good as the entrepreneur and the team that is scaling the startup.
“Business modules evolve, technology evolves, market, business and consumers evolve but a good entrepreneur would be able to identify these and go after this and be able to also adjust to the market opportunity,” Osibo said.
Explaining that a good business module is not the overall determinant for picking a company for investment, Osibo said this is due to the fact that the business model can change. “For example, the outbreak of COVID-19, the business had to change their model whether they wanted it or not.”
According to him, the company believes fundamentally in commerce- what people are buying, what they are selling. “If you can identify that and ride on that and show us that you understand then there is a lot of interest.”
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“Those are fundamentals and everything else is on the back of that. Technology is an enabler, except you are investing in cutting-edge research, it is an enabler.”
Pointing at Africa’s creative industry- movies, afrobeat, and fashion, Ojoma Ochai Partner, Creative Economy Practice, Co-Creation Hubis said the industry is gaining ground around the continent and the globe but it is not attracting the much-deserved value.
“If you think about the film industry, for example, the person that owns the streaming platforms is making a lot more than the content creator. So, what we are looking at is how to invest in the startups that are designing solutions that can help deliver those values,” Ochai said.
One of the fundamental things the startups that can help deliver the value needed, is understanding their business and the market they operate in.
“Technology is an enabler. If you don’t understand how the fashion industry works then you cannot really apply technology to address either a business supply chain or a value chain weakness,” she said, adding that startups need to be investor ready.
