Africa · business

5 Reasons Why HNIs Aren’t Investing in the African Tech Space

This is in response to a twitter thread

Nigerian startups are yet to be backed & championed by local high net-worth individuals on a large scale. The result is a tech ecosystem powered mainly by foreign capital.

With thoughts from @TomiDee, @asemota, @OtunbaSho, @oviosu, my @qzafrica latest: https://t.co/5DXBHxMcfv— Yomi Kazeem (@TheYomiKazeem) January 22, 2019

HNIs = High Net-worth Individuals

  1. They’re too old– Average age of an African billionaire is 62ish… They are probably struggling to manage in the current world of emails and text messages. How would they see the value technology can provide to society and even their companies?
  2. If it ain’t broke – If I amassed my wealth by relationships and tangible / assets, why would I take a chance, let alone several chances, in something that only holds paper value? I’ve already established several moats that will keep me rich forever, why do I have to speculate on an industry when I can focus on things I can see.
  3. It doesn’t make financial sense– Alright, maybe I want to invest but the risk start-ups take on in Africa is higher than their counterparts ( I’d love to do research on this but we all know its true). Why would I invest in such a risky proposition when I can just buy government bonds or some land and see better returns?
  4. Not enough 0s- Even a later stage investment in some tech companies don’t make sense. An entry point for investment doesn’t even seem viable in the way some of the HNIs. Scale seems to be a problem
  5. They are afraid of their own death – African tech could be so dangerous, they stand to destroy the companies HNIs built. They are collectively starving out the competition.

Ultimately, the best way for HNIs to engage the tech space are as partners and not competition. I believe working with tech companies to figure out ways applications can solve real business problems and create scalable opportunities is the way forward. Think of further integrating Dangote’s supply chain by leveraging more digital solutions, or improving Otedola’s exploratory efficiency leveraging predictive analytics and drone tech. All thats possible with collaboration.

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