A key outcome of a study on African start-ups by VC4A, a network-building organization with the mission to support the African startup community, has revealed that strong team of founders is key to success, especially the identification of their unique traits relative to the startups’ level of commercial performance.
The study, which is based on data collected from 1866 ventures from 41 African countries and 111 Africa-focused investors from 39 countries around the world, noted that though many factors go into building a company, analysis of data makes it clear that a strong team of founders is the key driver of venture success in Africa.
“Many investors consider this as the main thing they look for, but now the data also shows that the right team of founders makes the difference, and is the single most unique characteristic across the companies making commercial progress,” it said.
By analyzing two data samples of 100 ventures in more detail, both ‘emerging’ and ‘established’ ventures, the research team found correlations that help to understand the venture’s ability to be successful. The success of the ‘established’ ventures can be explained by the composition of the founding team based on size, education, gender, and age.
Findings indicate that gender balance can further explain venture success, as the founding teams of successful ventures are more likely to include male and female founders, noting that 46 percent of these ventures include a female founder in their team, while exclusively female teams run 9 percent of the startups.
“Among the countries with 20 or more ventures participating in the survey, Uganda and Kenya have the highest female participation. For Uganda, 57 percent of the ventures include a female founder where for Kenya the number is only slightly lower at 55 percent.
“South Africa has the lowest female participation rate at 33 percent. Nevertheless, these percentages of female founders far outpace averages recorded in more established startup hubs like New York or San Francisco. More details and other factors that differentiate a successful team of founders are included in the 2017 report.
The study, which set out to better understand the critical success factors for African startups and identify the key ingredients that determine why one venture outperforms its peers, indicates that its findings would be useful for both the entrepreneurs and for the support systems they depend on to make well-informed decisions.
“We are truly entering a new stage of start-up growth on the continent. Not only has the number of startups continued to grow at an impressive rate, they are increasingly successful at scaling into sustainable enterprises well-positioned for growth. With the right team in place, we are seeing a growing number of companies break rank. I’m sure we will witness many new success stories hitting the headlines as a result,” says Ben White, CEO VC4A