You quickly understand African economic realities when trying to raise money either as an entrepreneur or investor. One thing I will never forget while trying to raise an African fund was talking to very rich Africans and realizing that most of their returns were outside Africa.
Telling them to bring it back and invest in an asset class they didn't know and in a place without data sounded quite ridiculous. The reason they made money in Africa wasn't because they knew Africa well, it was because they were lucky. One told me lightning won't strike twice.
This is the fundamental flaw of most of our startup investment models. Without local skin in the game, it is not a long-term play. Local funds with foreign LPs who are here for a short time before they bounce are not the solution. Ideally, the best LPs should be local corporates.
Local corporations are struggling themselves. Government policies are uncertain. They have seen the other side of growth in Africa and it is not pretty. I honestly think that we are largely delusional about African tech. Growth won't come if we don't put the right pieces in place
There are so many unknowns in Africa and that is not really a good thing. You can't plan for growth in markets that you don't know or understand fully well. This is why the first venture investments should have been in academia and research. The base of the pipeline.
Without Stanford or Harvard, most of American startup tech growth would have not happened. It is easy for them to look for shortcuts now because the base has been built. We don't even have a base and yet we want to build shortcuts. Short-term tech training isn't enough.
We need a deeper understanding of markets by people who have devoted their lives to doing just that. People who are researching and will keep researching everything. The only research happening now is funded by DFIs and NGOs. The private sector is missing. Wealthy Africans gone.
In the next decade or two, we are going to wake up and realize that most of the data about Africa is owned by people outside Africa and we now have to pay them to access it. Most of the investments from outside today are for long-term data ownership and not the immediate returns.
If we are smart, we should start building up people who will not only help to gather this data but can build new things upon it. If we are training people in tech, we should immediately start placing them in research and data-gathering roles.
The future is going to be AI-driven and AI needs data. African data is the last frontier but we don't even get it yet. We are training people to work abroad and bring remittances when we are sitting on top of a goldmine. Local startups don't even get it yet too, they are tools.
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