Money Everywhere, But Not a Coin To Work – The Challenge of Tech Startups in Africa

It is not easy over here – in Lagos, Accra, Nairobi and other African cities for the tech startups. Finding capital is very difficult because the people with the money do not understand how to value or price assets that cannot be touched or seen. How do you create value for something that ‘does not exist’. It is tough to tell a real estate investor in Lagos that Facebook is worth $60b when the company does not even have many physical assets.

But good enough, these tech firms are figuring out how to manage – there are VC or private equity firms these days and some local angel investors. (Actis invested in Pagatech Nigeria). But the main thing now is investment club – that will be the major hope since banks have not caught the fever to help tech firms. Do not blame them – it is just risky to put money in these Internet firms in Africa. If you build a real estate in Lagos or Accra, you are sure of profit. But tech firm can go .gone.

Yet, there is an opportunity. The crash of the stock market shows many that anything can happen. But it has not made investors to move money to tech internet firms. It is still the old industrial age assets based firms. It works easily because those assets can be sold if things go very bad.

Yes, we must not lose hope. All that the tech firms should do is to form a development club and work together. Work in teams and forget the ego of I did it alone. That way, you can have synergies and chances of survival will improve.