This is a piece I’ve been longing to write, not just because of it’s immediate importance to the tech community, but because it’s a question that really needs answers.
Why aren’t Ghana’s elite really investing locally in tech?
In 2015, Pulse reported in this article that the top 80 richest people in Ghana have a combined wealth of $29.3 billion (GHS 128,575,530,852) and own businesses that employ over 150,000 Ghanaians which are numbers that shouldn’t be taken for granted. The piece also went on to identify some of Ghana’s richest individuals, with at least 3 billionaires emanating from that list.
While these figures look like large sums of money that should be thrown around a few startups, we also take a look at why the money moguls aren’t investing in their local tech community.
Will These Startups Scale?
A few months back, Edem and I had a twitter conversation about the scalability of Ghanaian tech startups. It was centred around Paystack crossing N1 Billion in transaction figures and I was of the opinion that maybe someday, a Ghanaian startup would achieve those figures. Edem on the other hand, was of the accurate opinion that there needs to be a broader audience, for this to be achieved. They needed to expand their reach to Africa. They need to build not just for Ghana but for the larger African audience.
With reference to scaling, I agree with him. A multi-millionaire isn’t going to invest in a Ghanaian startup that’s building just for Ghana. Chances are, it just won’t scale and most importantly, s/he’s not guaranteed of return on investments. These billionaires are all about their money; If they’re investing in your startup, they need to see the bigger picture, where they’re raking in the same millions as they currently are.
While one might argue that they are well in right to demand imminent Return on Investments, one could also argue that they lack the basic understanding of tech and the fact that startups grow in their own organic pace. Both conundrums sort of form a crossroad where none is better off.
Branding and Exposure
One thing that Ghanaian startups lack for sure is proper branding and the much-needed exposure. They stay in their own little corners (no pun intended), doing their own thing and hoping for funding from Ibrahim Mahama. If only it were that easy.
Ghanaian startup founders need to realise that no Billionaire is going to throw money at what they don’t know about. You’ve either got to be aggressive with the marketing, or with the pitches. Either way, your product has to be out there for them to even give you a listening ear.
Investing in tech startups is a risk and not a sure investment as oil & gas or telecoms, where most of Ghana’s billionaires have their wealth domiciled.
Those who have invested in this space will tell you for free, that the element of risk in investing in tech outweighs any fears you might have. While you might also argue that these multi-millionaires must have taken risks to achieve their billions, there’s also the fact that they invested in sure banker industries.
An oil well/field is guaranteed to produce a certain amount of barrels daily with a fixed oil price on the global market, but a startup, with months of market research, might not live up to expectation. I’m willing to bet that, there’s a good amount of Ghanaian Startups failing yearly. Even Ghana’s Minister of Business Development thinks so.
There’s also the fact that there might really be no market for these startups, but they take the plunge regardless. These factors deter well-seasoned investors from throwing their money into the ecosystem.
Is All Hope Lost?
Not entirely. Affluent Nigerian billionaires are starting to invest in local startups. The likes of Tony Elumelu, Uzoma Dozie etc, are throwing their money into local startups, most especially in fintech.
For Ghana, it might require a little bit more than that. We recently caught wind of Logique, Paul Miller’s initiative, which raised $4.3m locally. Could it be from one of these billionaires? Probably.
The startup space in Ghana has also risen to a place where foreign investments are trooping in with startups like meQasa.com and OMGVoice, raising well over $1.5 million in investments and going on to expand their business operations across regions.
These are headlines that attract billionaires. If the Y Combinators are taking the risk, why can’t Ghana’s billionaires?
Ghanaian Startups, on the other hand, need to play their own part and play it right. They need to be aggressive in this fight for a thriving startup ecosystem. A viable product isn’t enough; You need a tested product, with a proven record of profit making to convince local investors or better still, you just need a rich uncle.
This is a conversation that’ll linger till they begin investing; We’re just asking the questions!