Mandela Day is now very much a part of South African culture. It’s a day where we all strive to give back to the…
Over the last couple of weeks, Ventureburn has sampled a diverse array of views to a question this writer has long wondered about. The question itself is one of identity, “What is an African startup?”
To some it is an irrelevant question. They argue that we live in a globalised world in which where a company or person is based should not be of such importance.
To others it’s a contentious topic that simply has no straight and simple answer.
But, nevertheless, it is one that must be asked.
I am wary of expat-founded startups using the ‘African startup’ tag
While some base the definition on where the economic value of a venture ends up, others feel that is should be about where the company is incorporated or based. This while others look at where the company operates — its focus or primary market.
Ventureburn’s coverage centres on tech startups that are either based on the continent or have operations in Africa.
While the publication defines a startup loosely as one that is seven or more years old (this is contained in our style guide), we have no set definition of what an African startup is. Our approach is one shared by other publications like Digest Africa.
A new approach
However, there’s an argument to be made for totally different approach.
An African startup should ideally be defined as a company with at least one founder on it its team who is of African origin or descent.
Given that we live in a world that has been and still is increasingly shaped by globalisation, this definition should still hold true for firms that move to incorporate overseas.
We shouldn’t limit the definition to geography, as sometimes moving overseas is simply something that must be done. Founders are doing so in search of funding, more lucrative markets or because they might have studied in the US or Europe and have ended up living and founding their companies there.
The latest review of the African Tech Scene released by Orange Digital Ventures Africa is indicative of this. The review shows that at least 66% of African founders have studied in either the US, France or the UK (The study focuses on African startups that have their headquarters on the continent or have where their primary market is an African country, this while startups had to have raised over $100 000 last year to be included).
Expats or African founder?
Furthermore, a distinction should be made between companies started by founders of African origin and those founded by expats.
We are by our very nature inclined to certain biases — and these as New York Times bestselling author and tech entrepreneur Christopher Steiner has shown — permeate all aspects of our lives, even the world of venture capital.
Steiner, in a 2016 blog post for online venture capital (VC) firm Funders Club identified six biases that affect investors. These he said are anchoring bias, experience bias, education bias, race and gender bias, geography bias and confirmation bias.
Investor bias is an issue that Ventureburn has covered before. Foreign investors it seems tend to favour expat-founded startups (see this story).
This is an important topic as the majority of the VC funding in the African tech community comes from overseas.
Given that people will likely invest in founders that look, talk and behave like they do, are we not doing the African tech community a disservice by ignoring this fact when we compare expat founded startups and those founded by founders of African origin?
One must agree with the comments made by Chipper Cash CEO Ham Serunjogi earlier on in this series. We need all hands on deck to develop the continent, and this includes startups founded by expats.
After all, where ever they are from and who ever started them, many startups are helping to address the needs of African consumers and sellers, and in some instances are stepping in to help governments provide vital services. We should therefore celebrate such companies and their successes and learn from these.
However, much like Nigerian tech entrepreneur and investor Victor Asemota pointed out in this Quartz Africa article, one should remain wary of expat-founded startups using the “African startup” tag to (in his words) “gain quick recognition”.
More than anything, if we are to inspire more local African tech entrepreneurs — and grow the community — we must focus more on those companies founded by entrepreneurs of African origin. The African startups.
*Daniel Mpala is a writer for Ventureburn
This article has been part of a series that sought to explore the question of what an African startup is.
Read more: ‘Not easy to classify whether a startup is African because of globalisation’
Read more: ‘It’s un-African to not welcome anyone willing to start a business serving Africans’
Read more: So, let’s call it out – what then is an African startup?
Featured image: WikiImages via Pixabay