gT4rH

too far that money is being thrown at everything that moves. Are there amazing startups in
Africa that deserve funding and are not getting it?
Let’s try the other side: Kauffman foundation told me to be cautious of a certain big start-up
initiative focused on Africa. I was confused. Why? Surely any efforts to help start-ups in
Africa should be welcomed? A staff member told me “Do you think African start-ups are
ready for that kind of exposure- one start-up can ruin the entire market when the ecosystem
is still not ready yet”
This story made me pause and I started to understand- it reminded me of another story of a
gentleman who wanted to take some start-ups from Kenya to Silicon Valley on an investor
road show, take equity cut of each start-up plus the start-ups must pay for their entire travel
expenses to come to Silicon Valley. When we quizzed this person further, he had no
Linkedin profile or online presence whatsoever and he didn’t even mention any reputable
investors he’d be introducing these start-ups to. Had he even been to Africa? Should we
have made this arrangement happen? I think not and we did not. The Kenyan start-ups may
show up to Silicon Valley, deplete valuable cash they might not have and meet investors
who are not even reputable but probably have never set foot in Africa! And then when
inevitable disaster strikes, the word will go round that Kenya or African start-ups are terrible
(ruining it for others in future)! Worst of all the start-ups would have wasted time vs
building out their start-up.
I have also heard of the rich African elder making a $100k investment in a friend or relative’s
start-up and the start-up totally failing or that person is engaged in multiple start-ups or
projects and fails. Now this elder person will never invest in technology start-ups again-
firmly deciding it’s better to invest in real estate to support the future of his or her family.
Sometimes if the money comes too easy, it makes a start-up clumsy- this is true even of
Silicon Valley, it just happens at a bigger scale with bigger burnouts. But from failure also
comes a sharpening of the saw and the market learns to allocate capital just a little bit
better and take on less risk next time.
So what’s the moral of the story? There are clearly market inefficiencies in the start-up
funding process outside of Silicon Valley and especially in Africa. Fund Managers/Venture