African startups face stricter investment scrutiny compared to their global counterparts, as investors demand greater proof of success, conduct more comprehensive financial audits, and often overestimate the risks associated with the region.
Angel investors point to Silicon Valley in the United States, home to many of the world’s leading tech startups, as the most favorable region for founders to raise capital, especially when compared to emerging economies like Africa.
Taiwo Oluwo, a venture capital strategist, stated, “The evaluation process for African startups often focuses on finding reasons not to invest, rather than assessing their potential.” Oluwo, who has conducted due diligence for over 50 investment deals since 2020, emphasized that African founders regularly face stricter requirements than their peers in Silicon Valley, London, or emerging markets like India and Brazil.
According to Oluwo, a U.S.-based startup can secure millions of dollars in funding based on an idea and a strong founding team alone, while an African startup often needs to demonstrate significant revenue before attracting serious investor interest.
