TLDR
Key points of the article:
- Focus in venture capital investments on certain geographies or verticals may not be the best approach in the African tech ecosystem.
- Investors should balance focus on specific sectors or geographies with a more general approach to add value effectively.
In a podcast series by Disrupt Africa in partnership with Atlantica Ventures and Goodwell Investments, investors discussed the challenges of hyper-focus in Africa-focused venture capital investments. While focus can be beneficial for adding value, overly narrowing down on specific sectors or geographies may limit an investor’s ability to contribute effectively. The blurring of boundaries between geographies and sectors in the African tech ecosystem adds to the challenge of hyper-focus. Many investors are now considering a broader approach to stay relevant in a rapidly evolving market.
Wim van der Beek from Goodwell Investments advised that while sector-focused funds can identify fast-growing businesses effectively, they should also consider diversifying their focus to adapt to market trends. Justin Stanford from 4Di Capital echoed this sentiment, mentioning that borders are blurring in Africa, making it difficult to maintain a strict geographic focus.
The nascency of Africa’s tech ecosystems poses another challenge to hyper-focus, as the market may not be deep or broad enough for firms to focus on just one vertical. Early-stage funds, in particular, need to adopt a broader approach to cater to the evolving needs of startups. The lack of funding diversity across different development stages in African tech ecosystems further complicates the hyper-focus strategy, as companies often struggle to raise capital beyond certain rounds due to the limited availability of investors at later stages. This funding crunch underscores the importance of a balanced and adaptable investment approach in the African tech landscape.
