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Traditional models for investing in early-stage businesses do not work in Africa, and investors need to rethink how they do things when backing startups on the continent.

That is according to panellists discussing investing in African startups at the recent startup-dedicated AHUB event held at the AfricaCom conference in Cape Town, who said models for investing on the continent needed to be different from elsewhere in the world.

Zachariah George, co-founder and chief investment officer at Startupbootcamp AfriTech, said many investors that are new to Africa think from a private equity perspective, which is not relevant.

“There is method in the madness of how you do early stage VC in Africa,” he said. “You have to go out and meet people. You have to go all over the place and meet entrepreneurs, and see what they are doing. It is a hard, grind in, grind out industry. This is not Silicon Valley, it is not New York.”

Sharron McPherson, co-founder of the Centre for Disruptive Technologies, agreed models that have worked in places like Silicon Valley were not right for Africa.

“Silicon Valley is a valley in the US, not everything that is done there is right for Africa. Often what we are doing is looking for unicorns, and other entities are not able to access capital,” she said.

“We are looking at leveraging new approaches to what is right in Africa. I don’t think we have got the language right yet and I don’t think we have got the business models right. It’s is definitely not private equity, and VC needs some tweaking here.”

Getting distracted by discussions around unicorns was also something Eric Osiakwan, managing partner of Chanzo Capital, cautioned against, saying there were excellent entrepreneurs across the continent building exciting business that, even if they are unlikely to become unicorns, should still be very appealing to investors.

“I get excited by the entrepreneur. There are entrepreneurs out there that are able to build amazing businesses. It’s great to build unicorns, but there are entrepreneurs in Africa with no access to capital that are able to build great businesses,” he said.

“The most successful companies in the world build great products that people can use and pay for. If you are invested in this in the long term this needs to be your motivation.”

So what should investors be looking for when it comes to African tech startups? George said it was very important to look at what the passion of founders, and their route to market, which he said was the reason why startups grow or fail. He also urged African entrepreneurs to solve truly African problems.

“There are so many developing world problems that are not tackled in the US, or Canada, or Western Europe. Let’s stop focusing on nice to have “vitamins”, let’s build some “aspirins”. We have some people that are talking about social impact, and some about VC. It is the same conversation. Every business in Africa is social impact,” he said.

Ben White, founder and CEO of VC4A, agreed with this.

“We are talking about transformational entrepreneurs who are using tech because of its transformational power. All of these companies are impacting change across all aspects of society. It is about business, and it is about social change at the same time. It is a big opportunity,” he said.

Making the most of this big opportunity may require a rethink of business models, however. Emilian Popa is principal at DiGAME Investment Company, an investor in recently-acquired South African ed-tech company GetSmarter. He wants to see more exits in the African tech space, but believes it will depend on the development of business models.

“We need to build business models that are more than just tech. Let’s call them tech-enabled. When I look at business models I’m looking for the ones that build tech but also build infrastructure, distribution models. That’s what I believe works,” he said.

For Osiakwan, there is a need to unlock more local capital, with the help of incentives, to get successful African entrepreneurs investing in startups themselves.

“In the local ecosystem, the ratio of of foreign capital to local capital is about 70:30. We need to unlock local capital because it comes with value that foreign capital does not add. That will increase the value of the raw money that goes into the ecosystem,” he said.

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