Startups in Africa are growing at a rapid pace but despite the recent successes and heightened global recognition, a lot of founders still struggle to appropriately execute their ideas. The fact remains that a majority of startups still associate poor execution, limited funding, and market access as the primary drivers of most failed innovative ideas.
While most investors have an appetite for high-risk high-reward endeavors, these failures can be avoided by providing the right support ecosystem to the founders. We’ve seen the brightest teams with the most viable ideas go down for very frivolous and avoidable reasons.
Some of the reasons gathered as the causes of these failures are founders’ failures to define the right goals, inability to build the right product, wrong investors or failure to secure funding, disproportionate waste on growth, and inability to pivot at the right time.
The opportunities posed by African startups are promising and attractive, but most angels and VCs are worried about founders/team dedication to follow through vigorously on an idea or a business until returns on their investments are visible. With many founders seeking funding and some other forms of support, early-stage investors find it harder to pick who gets a slice of their check.
Why Startup Studios Exist
Most experienced entrepreneurs who are passionate about building profitable and scalable ventures are usually shuffling between their best ideas and end up launching the right business at the wrong time. This process costs money, time, and other resources that founders do not have the luxury to waste.
Startup studios are not to be confused with accelerators or incubators in the traditional or operational sense of venture capital firms. Instead, the model, built using an interdisciplinary body and an inventive, yet highly effective infrastructure creates startups from scratch.
Image Caption: Medium/Sergio Marrero
The studio model of venture building has shown significant success, with more than 300 Startup Studios globally, including, Betaworks, Expa, and Accretive to name a few. We are beginning to witness the success of this model through the rapid growth and big exits of these firms’ ventures.
Introducing CeedCap Studio
CeedCap is a startup studio on a mission to build great companies. We combine financial capital, human capital, and analytical rigor to de-risk the process of building new ventures. As an innovation-driven startup studio, we operate on a mix of cash and equity for founders co-building digital products of the future.
CeedCap is neither a traditional VC firm nor an incubator, rather, we are hands-on co-founders. We work with high-capacity growth executives at the idea stage, to launch and scale a company. Our formula is to do rigorous due diligence on business opportunities in areas we are familiar with, and launch businesses with validated customers when we have a pre-built board that can work alongside talented and driven co-founders and CEOs.
CeedCaps’ story is based on shared values that all the startups we build benefit from; the ability to rapidly develop and provide prototypes of products. This agile process helps us build 3–4 startups yearly by sharing resources, management, infrastructures, software, and skilled community competencies.
Africa’s early-stage investors can tap into this opportunity to diversify their portfolio with minimum risk and high return. As a startup studio, we don’t have the luxury of having a success rate of 10%, because we can only place a small number of bets. For example, by investing in 4 companies a year, we aim to have a success rate of at least 33%.
Image Caption: Startup Studio Playbook
Startup studios typically don’t work well with moonshots (i.e. high-risk/high-return business models) and therefore should focus more on businesses that can address clear market needs quickly.
In essence, we believe that a startup studio’s end result is extremely enriching and rewarding. The process of forming startups that solve problems for society is fulfilling, and you never know where the next “great” idea will lead.