A story about African exits

and why we should not be ashamed to cry

Appruve, Crowdforce, Fluidcoins, Kopo kopo, Sky.Garden, Thuthukani, Zoona.

An A-Z of exits over the last year. I am sure there are more but do you know what is common about these African startup exits?

We don’t know much about their deal terms; we don’t know who made bank and who is cv eating humble pie.

I suspect that if you look back to most of these companies, there would be a history of glowing announcements and articles from their inception, with decreasing swagger and less detail the closer we get to their exits. Why is this so dear friends? I don’t know but gather around - its story time.

I am not the only person wondering about the dearth of information around exits;

Jason 'Igwe' Njoku

, spiritual leader of the Nigerian ecosystem, made a point last week about the paucity of details around deal terms.

“Exits are supposed to inspire people…..so what is the point if you don’t know what the price is?”

It seems we like to share numbers when we fundraise but not so much on exit. Are we ashamed of this key part of our startup story?

This analogy of a ‘story’ is quite appropriate (if i say so myself 😀). Beyond the fundraises that we hear about ad-nasueam, the authors (founders) share the full story plot including acceptance into Y-Combinator or your favorite accelerator, a prize here and there and the the inevitable series of tweets/annual reports extolling whatever vanity metrics may massage the ego or fool investors. Then when we there is talk of an exit…… 🦗🦗🦗🦗 (these are crickets for those who failed biology exams).

Imagine being promised a story by one of your parents and they give you the following:

Once upon a time (Time Time), The big bad wolf was looking for the girl to eat. He found her playing in the garden. He began to salivate for he was very hungry, opened his wide mouth to reveal big snarling teeth to bite her and then….

The End

If you received this you wouldn’t you call a family meeting on your parents? And you would be perfectly justified. Why are we allowing poor storytelling in our ecosystem?

In the past my enemies have accused me of exaggeration in my rants so I went to my friends at

Afridigest

to get some objective information. Tadaaaaa!

41 exits collated over the last 18months - let’s play that lovely game: spot the odd one out. Dear detractors, you can see I was not even close to exaggerating. Of the deals that have numbers, 3 are from South Africa (are they the most transparent ?) and one from Nigeria. But of the South African deals:

• one’s a digital agency (boooooo),

• e4 is over 20 years old ( In the name of Jesus we reject waiting decades before we can buy our house in London) and finally

• Dariel Solution is a software provider but it has never been featured on TechCrunch. If a startup launches and it is not featured in Techchrunch, is it really a startup? I mean ….really.

So the only contender left is Crowdforce; but this $20mm deal was was a mixture of stock and (undisclosed) cash so we don’t know if the founders, Damilola and Oluwatomi, are going to be buying football teams anytime soon.

So as far as I am concerned in 41 deals reported by Afridigest we have no numbers. Not exactly inspiring to the next generation of founders. This is not just an African problem but its particularly pertinent because there are not many wildly successful counterexamples. In over a decade, I have only seen one deal, Stripe acquiring Paystack, celebrated with any fanfair. Have you seen others? Please tell

Emeka Ajene

if so.

Ensue my analysis & prescription

In my humble opinion, there are four reason why deal numbers are not disclosed:

1. Buyer & seller can’t be bothered because they think the market doesn’t care - Please we do!

2. It wasn’t a great exit for founders and their ego may take a bruising.

3. It was an AMAZING exit - so good that the tax authorities might want to pay the founders a visit to ‘congratulate’ them quickly.

4. The acquirer

   1. overpaid and is afraid of looking like an idiot

   2. underpaid and is afraid even their pastor will not forgive their stupidity.

I have my suspicions as to which is the most likely but far be it for me to influence you. And if people really don’t want to share, Jason’s impoloring (is this a word?) to inspire the next generation will fall on deaf ears.

Irrespective, allow me to throw small shade on the press corps, our redoubtable Fourth Estate. It seems too easy to report what is published/shared via press release but we would also love to see articles that attempt to dig deeper on these undisclosed deals. That would give us a sense of which one of the four options may be the cause of the lack of disclosure.

I have seen too many articles too content to accept “deal terms were not disclosed’ for my liking. Let’s sharpen our pencils people - even if buyer and seller don’t want share, we want to know. Did deep, speculate, threaten buyer & seller but don’t just wait to be spoonfed numbers.

But it would be nice if those who sold for pittance, or were acqui-hired gave an honest account of their journey so that we don’t get seduced by THE single story; that of founders grinding, raising and succeeding. Its a dangerous trope that needs to be addressed with evidence. So let me leave an alternative story

Once upon a time (Time Time), a founder had a dream to solve a hard problem. She raised money, tried really really hard but like >90% of startups her company failed. She has regrets but is proud of entering the arena; furthermore, she and her colleagues have valuable lessons to take into other startup ideas, or even that corporate gig that she thinks may be better for her even if its for a couple more years. The End.

In my opinion, there is nothing shameful in this story as long as the founder is not drinking champagne whilst her angels are licking their wounds. So founders please share your exit story with your full chest; it will help countless truly understand what it takes to operate in the arena!