Inconsistent reporting, lack of clarity, vague performance metrics: African investors share their biggest frustrations with startup investor updates

September 6, 2023
2 min read
Boardroom discussions

Earlier this month, Editi Effiong, filmmaker, and founder of Anakle Films, made a post about sending 50 investor update emails while filming The Blackbook. Among the responses were three from Kola Aina, General Partner at Ventures Platform, Jasiel Martin-Odoom, and Oo Nwoye, who stressed the importance of founders sending investor updates.

The post was yet another reminder of the value investors place on getting regular updates from portfolio companies.

According to a new report by PR firm, Wimbart, 71% of African investors receive consistent reports from their portfolio companies, with all investors surveyed stating that they consider investor updates a major priority. For these investors, regular updates influenced their willingness to provide follow-on funding and their perception of the startup’s leadership.

Commenting on the report, Aina explained that consistent investor updates signal that a founder is accountable, an important factor when deciding which startup to write a cheque to.

"When startups regularly share their progress, challenges, and achievements, they are demonstrating a genuine commitment to transparency with investors. This reporting is also critical to keeping investors engaged and excited to help the company navigate challenges. In Africa, especially, this credibility can serve as a crucial differentiator for investors seeking the most promising companies," he said.

But while most investors reported receiving regular updates from portfolio companies, it appears they are unsatisfied with the quality of the reports, and highlighted common mistakes founders make.

A lack of clarity and focus was one of the major problems highlighted. One investor disclosing the content of an investor report shared that it read more like a sales pitch than an investor report. Startups also shared lengthy reports but failed to provide sufficient information.

Vague performance metrics were also a common theme. Financial and operational KPIs were rated as the most important metrics for investors, with sustainability metrics also listed. Investors stated a desire to understand how the startup was doing in terms of revenue growth, customer acquisition, and product milestones. They also stated they would want to see negative and positive developments, and encouraged founders to identify ways they could help.

The report stresses the importance of consistent timelines for investor updates. All investors surveyed reported that they would prefer monthly reports, but only 64% currently receive monthly reports, while 29.4% receive quarterly reports, and 5.9% receive bi-monthly reports.

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When asked to rank five factors in order of importance, the consistency and reliability of the information presented ranked highest. Brevity ranked lower than comprehensiveness, indicating a willingness to read longer reports provided they contain vital information.

Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.

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