Young entrepreneurs and business people in Kenya and Rwanda were excited this past week with the visit of Jack Ma, the founder of e-commerce giant Alibaba. Ma, who was on his first visit to the continent, seemed to be inspired and excited to be visiting. His audiences seemed to feel the same way about him.
In particular, it is Ma’s backstory to which many African entrepreneurs can relate. Ma comes from a modest background in a China that wasn’t the economic world power it is today. His willingness to share the stories of his failures and setbacks is particularly appealing for young entrepreneurs in a continent where poor infrastructure and weak institutions can be major obstacles to getting anything done.
But Ma argues this is why African entrepreneurs should see more of the promise than the obstacles. “If the government does not have a solution to any problem, it is an opportunity,” he said in Nairobi. “If people complain, it is an opportunity.”
Failure for startups, particularly under the harsh spotlight of today’s high-profile tech ecosystems in cities like Nairobi, Lagos or Cape Town, can be particularly challenging. Yet, Ma insists startups should learn from their failures, not their successes.
African entrepreneurs in the startup world will have to ready themselves for the very real possibility of disappointment, especially when it comes to raising capital. The odds of success in this environment are particularly tough as shown in startup investment data this week from VC4Africa. Looking at 600 startups and over a hundred investors, it found only 42% of the startups received external funding and around 96% of the ventures that secure funding get less than $250,000. This means only a very small number are able to reach larger rounds of follow-up funding.
Yet, on the plus side, the funding ecosystem is evolving with more local syndicates of early stage investors forming to help get startups off the ground, notably in Lagos, according to VC4Africa. The amounts of money are still small at around $12,000 each on average per round in syndicates of five to 15 investors, yet it’ll improve those bad odds and see more startups getting to the next stage of growth.
But nevertheless, We emphasize, the future of Africa lies in the Hands of Africans. Support will come and go but if you do not use that chance while it is still available, You will be a total loss to you and your country. Motto: For God and My country.