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African technology startups are being urged to strengthen their legal foundations, demonstrate measurable market traction and develop sustainable competitive advantages as securing venture capital becomes increasingly difficult.
The advice was delivered by fintech and startup industry experts at the fourth edition of Founders Meet and Chat, organised by BlackCrest in Lagos, where entrepreneurs were encouraged to prepare their businesses for a more demanding investment environment.
Investors Want Businesses Built for Resilience
Osita James, Managing Partner at BlackCrest, said investors are paying closer attention to how startups intend to remain competitive when their original business models or growth strategies come under pressure.
He advised founders to build advantages that can protect their businesses over the long term, including complementary products and services that create a broader ecosystem around customers.
James also stressed the importance of developing products that encourage sustained customer relationships rather than relying primarily on one-off transactions.
According to him, founders must be able to explain clearly what will keep their companies relevant and resilient as markets evolve.
Legal Compliance Can Make or Break Deals
Beyond business strategy, James highlighted legal and regulatory compliance as an increasingly important consideration for investors.
He warned that potentially attractive investment opportunities could collapse if startups fail to satisfy applicable regulatory requirements.
This is particularly important for companies operating in highly regulated industries such as financial services, where obtaining the necessary licences and strategic partnerships can influence an investor’s willingness to commit capital.
The message reflects growing investor caution around regulatory and legal risks as startups compete for a smaller pool of available funding.
Customer Traction Becomes More Important
Omolara Sanni, Co-founder of Midddleman, urged entrepreneurs to concentrate on building products that customers actually use and are willing to pay for.
She said investors increasingly want tangible evidence that a startup has identified a genuine market need rather than simply presenting projections and ambitious growth plans.
Sanni encouraged founders to prioritise customer acquisition and demonstrate measurable traction while also considering alternative financing options such as grants.
Unlike equity financing, grants can provide capital without reducing founders’ ownership stakes or creating additional repayment obligations.
Fundraising Requires a Clear Strategy
Winner Attai, Chief Operating Officer and Co-founder of Winich Farms, said entrepreneurs should approach fundraising as a structured, long-term process rather than an activity centred solely on networking or preparing financial documents.
He advised founders to identify the type of investors that best matches their business objectives.
Some investors may prioritise social and economic impact, while others focus more heavily on customer traction, financial returns, growth or scalability.
Understanding these differences, he said, allows entrepreneurs to develop more targeted fundraising strategies and present their businesses more effectively.
A More Disciplined Investment Environment
The advice from the Lagos gathering highlights the changing expectations within Africa’s startup ecosystem.
As investors become more selective, startups are increasingly expected to demonstrate more than a compelling idea. Regulatory readiness, strong legal structures, paying customers, measurable traction and defensible competitive advantages are becoming critical components of an investable business.
For African founders, the tightening funding environment could therefore accelerate a shift away from growth-at-all-costs strategies toward businesses capable of demonstrating sustainable value, operational resilience and clear economic impact.
