2024 was a transformative year for African startups, marked by significant successes and sobering challenges. From financial crises to inspiring resilience, the year provided vital lessons for startups across the continent. Here are the most critical insights:
1. Investor Relationships Are Crucial, but Losing Control of the Startup’s Vision Could Be Brutal
The collapse of iProcure, which entered administration, echoes the similar fate of 54gene. Both cases highlight the risks of over-reliance on investor-driven growth at the expense of sustainable business practices. Startups must strike a balance between leveraging investor capital and maintaining a clear, independent vision to avoid unsustainable trajectories.
2. Strategic Understanding Is Key for Geographic Expansion
The struggles of Copia Global and SWVL illustrate the complexities of scaling into new markets. Both companies faced challenges in navigating local market dynamics, emphasizing the need for robust market research and tailored strategies for each region. SWVL particularly had to divest almost all of its geographically-inspired acquisitions.
3. Regulatory Hurdles Are Non-Negotiable
The regulatory environment remains a significant obstacle for startups. Binance and Meta’s struggles in Nigeria, coupled with fintech hurdles such as the suspension of TapTap and other fintech and crypto licenses in Ghana and South Africa, underline the importance of regulatory compliance. Nigerian fintechs are still adapting to stringent Central Bank guidelines while startups in Tunisia may face even harder task raising funds following recent refusal by the country’s parliament to green-light foreign currency accounts. These demonstrate the importance of proactive regulatory engagement.
4. Strong Local Networks Could be Life-Saving
Nigerian startups have shown remarkable resilience, often leveraging partnerships to weather storms. A new report this year tracks this trend and how it is helping to create formidable ecosystems that can withstand external pressures.
5. Financial Sustainability Must Be a Priority
MaxAB’s approach towards prioritizing profitability over gross merchandise volume after merging with Wasoko demonstrates a focus on long-term financial health. Meanwhile, financial instability forced companies like SWVL, MarketForce, and Copia Global to make tough decisions, showing that raising capital is only part of the equation; efficient operational management is equally crucial.
6. Adapt Quickly to Economic Realities
Africa’s macroeconomic challenges, such as high inflation and currency devaluation in Nigeria and Egypt, have tested startups’ resilience. Breadfast, a non-fintech player, adapted effectively by tailoring its offerings to market needs, proving that agility is essential in turbulent times. South American fintech dLocal has also proved that rethinking participation in emerging markets during tough times could be the difference between life and death. The startup successfully pivoted focus from key Nigerian market. Jumia also abandoned operations in South Africa and Tunisia.
7. Use Technology and Scale to Explore Adjacent Opportunities
Egypt’s Fawry exemplifies the power of leveraging technology to diversify offerings. By entering the insurance market and issuing over 700,000 digital policies, Fawry demonstrated how startups can tap into adjacent sectors to create new revenue streams.
8. A Strong Team and Cohesive Culture Are Essential
The collapse of Pivo, a promising Nigerian digital bank, shows the importance of internal harmony. Founder conflicts and a lack of cohesive culture can undermine even the most promising ventures, highlighting the need for alignment within teams.
9. Africa Must Chart Its Own Path
As Y Combinator and other global investors scale back their focus on emerging markets, African startups may need to rely more on local ecosystem builders and support systems, such as Accelerate Africa, Co-creation HUB (CcHub), Flat6Labs, Baobab Network, MEST Africa, Mstudio, Flat6Labs, 212 Founders, among others. This shift emphasizes the importance of fostering indigenous support systems to sustain growth.
10. Mental Health Is an Overlooked Priority
The tragic deaths of Keith Makori of Kotani Pay and Nick Imudia of D.light Kenya highlight the mental health crisis among African startup founders. A staggering 86% of founders reported mental health struggles in 2024, with many facing anxiety and stress. The incidents underscore the need for comprehensive mental health support within the ecosystem.
The Bottom Line
The journey of African startups remains fraught with challenges but also brimming with opportunities. By internalizing these lessons from 2024, African startups and their founders can build more resilient, sustainable, and impactful ventures in the new year. As the continent’s entrepreneurial spirit continues to rise, these insights will be critical in shaping a more robust startup landscape.