Experts Discuss the Role of Investors in Shaping Exit Strategies for Startups at AfricArena Tunis Deep Tech & AI Summit
Five experts led a panel discussion on the role of investors in shaping exit strategies for startups at the AfricArena Tunis Deep Tech & AI Summit, held in Tunis on October 15-16, 2024. Moderated by Safa Tijani, Venture Capital Analyst, the in-depth reflection was led by Sarah Ben Younès, Founder & CEO of V3 Factory; Mohamed Amine Boudhiba, Associate Principal of Crossboundary; Tania Eyanga, Founding co-Chair & CEO of Campea; and Fadi Bichara, Founder & CEO of Black Box.
The Goal is to Monetize Actions
To launch the debate, Safa Tijani acknowledged that discussing an exit strategy may seem uncomfortable for founders, but it is a crucial aspect that no business plan should neglect. An exit strategy for startups is a comprehensive plan by which the owners guide the company towards a profitable sale of their shares. It can also serve as a long-term goal for the company, such as an initial public offering (IPO). If the startup is willing to merge with other companies, it can consider mergers and acquisitions as part of its long-term objectives.
Thinking Ahead is Key
"It's essential to start thinking about it very early on, as many startups end up being absorbed by large companies, with the acquisition happening after investment. You position yourself to become more visible," emphasized Sarah Ben Younès. "The African continent offers a broad spectrum in this regard, with investors buying a startup and then selling it to other investors who sell it again... It would be interesting to compare business models across countries to draw inspiration."
Creating Value and Attracting Investors
Fadi Bichara evoked a prevalent credo in Silicon Valley: "Investment is linked to creating the highest possible value added. It's the founders' role to choose the moment to position themselves as a target for investors. The challenge is to introduce an ecosystem where evaluation is tied to exit."
Focus on Real Value, Not Just Cash
Tania Eyanga stressed that when an investor approaches a startup, the latter should not think about cashing out but about the real value of its infrastructure and processes: "The most common form of exit is to start with a merger and then move on from there. In the perspective of acquisition, the startup must position itself attractively and understand that investors bring not only funds but also advice, market vision, and network... It's the same process for unicorns destined for markets like Nasdaq."
Building an Evolvable Business Model
Mohamed Amine Boudhiba emphasized that founders should build a business model that can evolve from the start: "It's the ability to evolve that gives the startup the freedom to choose investors according to its vision and timing. We must remember that InstaDeep's success was due to its ability to choose the right moment and partner."
African Market: One or Many?
The five experts agreed that the exit strategy is delicate and requires alignment between founders and investors to succeed. To achieve this, value added, timing, and evolvability are key factors.
In this perspective, the African market is promising, but much work needs to be done to change the mindset of founders, provide guidance, establish dominant positions, and harmonize legislation (which varies greatly from country to country). According to the experts, it is essential to challenge African investors, discuss scalability, what makes sense, and what doesn't, and focus on profitability. Above all, it is crucial to prioritize the quality of data rooms, as this is where first impressions are made and success on the market is determined, given the diverse sophistications of the African market across countries.
Call to Action: Evolving Standards and Mindsets
The five experts also issued a call to action for central administrations in African countries to evolve their standards and provide an environment that facilitates exit strategies.
However, they emphasized that the primary responsibility lies with startups, particularly the need to document processes from day one, thoroughly research business angels, grasp details, avoid neglecting support structures, and maintain an open mind at all times.
