Founder & Leadership Teams

Assessing indicative attributes  

Internationally, research demonstrates that founders of high-growth ventures are often highly educated and exhibit prior industry and leadership experience, if not necessarily prior entrepreneurial experience. High-growth ventures are also usually managed by larger leadership teams. 

We examined publicly-available data on African founders and their leadership teams. Those who have raised finance offer helpful insights to correlate between external success and how this may have been underpinned by certain demographic and/or experience factors. Our aim was to identify whether particular attributes are associated with venture building success. 

Whilst we have pieced together some existing data it is highly evident there are numerous research gaps that could be better supported by a scaling index or database. Further insights are certainly needed on the size of scaling venture management teams, functional expertise, entrepreneurial experience, and how leadership dynamics change as these businesses grow.

Founding teams on the African continent demonstrate great diversity along many demographic attributes such as level of education, gender, income status, race and ethnic group. Professor Tim Weiss points to three types of founder (and founding teams), which give rise to unique variations and configurations with distinct consequences for scaling styles and outcomes:

There are likely benefits of combining local and international expertise for leadership teams which can help catalyse scaling. Drawing together access to specific knowledge, resources and contacts from certain capital-rich markets (e.g. London or Silicon Valley) is likely to have positive impacts, especially if combined with deep knowledge of local institutional infrastructure. He suggests more research is needed to understand founding team compositions, especially looking deeply at industry and country-specific contexts. We have attempted to indicate some of the evidence that is available.  

Most startup deals in Africa (about 80 percent) are signed by startups with two co-founders or more. Data from blog Africa: The Big Deal suggests roughly half of the deals in Africa are signed by a founding team duo. This is true regardless of the deal size, deal type, sector, gender diversity of the founding team or CEO or geography. 

As deals grow in size, so does the size of the founding team. While one founder startups make up 27 percent of small deals (<$1m*), this proportion is down to 13 percent for $10m+ deals. (per figure 45).

Finally, gender-diverse founding teams are larger. But this is a direct consequence of the fact that in 95 percent of the cases, when a one founder startup raises $1m+, that one founder is a man.

Global studies have shown founders get eliminated fairly quickly along the scale-up journey; only 49 percent of VC-backed founders stayed on until an IPO. A review of over 200 US companies by Harvard Business School revealed that by the time ventures are three years old, half the founders are no longer the CEO. We are not aware of any such studies examining the longevity of African CEOs backed by investors.

Antler research on African scaling founders indicates the median age of entrepreneurs launching ventures is 29, with only 20 percent being over 35. In contrast, the median age of Unicorn founders globally, as reported by Ali Tamaseb's Super Founders book, is 34. A 2020 report found that the most successful US startups — those in the top 0.1 percent in growth in their first five years — were launched by founders with an average age of 45. 

The Art of Scaling acknowledges that scaling is an experience game: it truly helps to have gone through the dynamic of starting and scaling a venture before, and to have experienced the intricacies of product/ market fit, of competition, and of growing an organisation. Typically scale-up founders do not necessarily have more entrepreneurial experience, but scale-up management team members generally have more entrepreneurial experience than stall-up management team members. Looking at US founder studies, experience plays a more important role in success than age per se. 

The Antler research also notes that African founders have an average of eight years of work experience before starting their businesses. Scale Up Nation points to the average cumulative years of scale-up founder teams in previous management roles amounts to close to 10 years. 

Functional expertise - being industry insiders - can provide a greater understanding of past success and failure and avoids having to reinvent the wheel. African unicorn and soonicorn founders tend to have worked at a variety of different companies, both abroad and on the continent. Analysis shows that there is no clear dominant company where a majority of unicorn founders have previously worked, and the majority have experience working in more than one company. Immediately before founding their unicorns, 25 percent of the founders in the study had worked at a financial institution, 17 percent at a consulting venture, and 42 percent at their own startup. 

Experience within the enterprise’s sector is also important to success. As one interviewee told us, “It’s a question of skill sets, and understanding the nuances of Africa - how to be able to build a scalable business in the context of Africa.” Systematic reviews have highlighted that larger management teams with extensive industry experience, as well as experienced managers (from an established organisation or prior business venture), are more likely to run high-growth ventures. 

Education also plays a crucial role in the success of high-growth firms, as indicated by Figure 46. Managers with higher levels of education stand a better chance of succeeding in running enterprises. Looking at the Antler research, out of the total of 114 unicorn, soonicorn and growth-stage founders’ data analysed, 90 percent of the founders have at least one degree, 2 percent have dropped out and 16 percent have an MBA degree or higher. The University of Cape Town in South Africa shines brightly with the largest number of alumni CEOs who have raised funding in Africa in 2021.

Founder CEOs who last studied in Africa signed 44 percent of the deals in 2021; however, they raised only 28 percent of the total amount raised on the continent. Antler data points to the fact that, of unicorn founders, only 30 percent received their higher-level education degrees at African universities, with the rest going to universities outside the continent. International knowledge, contacts and networks are no doubt having some influence.

South Africa has the best ranked universities on the continent (followed by Egypt), so it makes sense that the majority of startup CEOs are educated in-country. Whereas in the case of Nigeria, 92 percent of the funding raised by Nigerian startups was raised by startup CEOs who last studied abroad. 

We are unable to find data on the impact self-directed learning and education has on firm success. We highlight this as a potential area for further research, given that self-directed online learning is the most obvious route to fill entrepreneurs’ educational gaps, especially for those founders who might not have had the educational opportunities available to entrepreneurs from more developed markets. 

The Antler data set indicates 68 percent of founders were African or of African origin. Scrutiny of the data raises serious questions about the fundamentals within investing circles as a problem of racial bias certainly seems evident: 70 percent of startup funding poured in Africa in the last decade went to companies that didn't have a black founder, according to Briter Bridges research. 

A Village Capital report showed that “90% of disclosed investments [in East Africa] over the past two years went to startups with one or more European or North American founders”. In 2019, only 6 percent of startups that secured more than $1 million in Kenya were led by local founders, according to ViKtoria Ventures, a Nairobi-based consulting and fund management firm. And 70 percent of startups in Kenya that raised at least $1 million of venture capital investment in 2018 were led by white founders, despite expats making up only 0.15 percent of the Kenyan population, according to analysis by Roble Musse, a US-based entrepreneur. Foreign entrepreneurs are generally better able to assimilate with the Silicon Valley archetype, which is also extolled by virtually all available funders and supporters: from international institutions to investors to local government. 

Reflecting global trends, the representation of female founders in the African tech startup scene is generally low. Of the 81 startups that have raised more than US$10 million in the past three years, only 10 percent had at least one female co-founder. And out of those eight companies, 80 percent had a female CEO, which indicates that when female founders embark on their entrepreneurial journey, they make strong leaders. 

Whilst the continent is now acknowledging the serious problems with programmatic attempts to address the lack of investment in female funders, these issues within the system are acute. The triple dissonance – between the feminine normative frames of womanhood, and the male normative frames of entrepreneurship and private equity, compounded by stereotypes of Africa - require sustained systemic efforts to repair.  

It is worth noting that these African diversity issues reflect similar issues at the source of investment capital. North America-headquartered investors accounted for a significant proportion of African venture capital deals. In 2018, a survey showed that there were just seven black decision-makers at the 102 largest investment firms in the United States, and that only 1 percent of venture-backed founders in the US are black.