Chief Executive Officer of Tizeti, Kendall Ananyi, has emphasized the importance of African startups expanding into multiple countries to mitigate currency risks.
Ananyi shared his insights through a blog post, drawing from his experience of investing in over 40 startups over the past eight years.
Ananyi highlighted the challenge of skyrocketing exchange rates for African startups, especially when providing investor updates in USD. He explained that by diversifying their geographic presence, startups could reduce the impact of currency volatility from any single market and stabilize their financial results when consolidated.
“Hedging currency risk is difficult,” Ananyi stated. “Startups should explore additional geographies and launch in multiple countries once they are in the growth stage so the effect of one currency doesn’t weigh down their results when consolidated. For example, the Nigerian Naira might be down in a year when the Ghanaian Cedi is having a great year, or you might get stability from expanding to Francophone Africa and earning FCFA/XOF. The MENA region is also an area to consider to mitigate currency risks as a startup further.”
Ananyi also addressed various challenges faced by startups, such as co-founder conflicts and crisis management. He advised founders to move on from crises by taking stock, re-strategizing, and continuing to build.
Emphasizing the importance of proper governance, he noted that startups receiving significant investment should adhere to governance policies and hold regular board meetings with experienced members.
Reflecting on his own investment experiences, Ananyi said, “Out of 40+ investments, I only had one startup not launch or show any visible traction. I got no updates and had to chase down the founder to get the documents months after the investment. One out of 40 is 2.5%. It is a small number but it does exist and has resulted in increased scrutiny of African startups. Proper governance should help keep it at the historic low %.”
Ananyi expressed optimism about the potential for startup exits in Africa, noting that while they may be rare, the majority of current startups were founded after Paystack’s exit to Stripe and are less than three years old.
Consequently, investors may need to stay longer to see significant returns. He explained that the inflated valuations seen during the investment frenzy of 2021 and 2022 mean that investors may need to be more patient.
Founded by Ananyi, Tizeti is a leading Internet Service Provider in Nigeria with operations in Ghana and Côte d’Ivoire. Last year, the company secured debt financing from Chapel Hill Denham’s Nigeria Infrastructure Debt Fund (NIDF) to expand its business across West Africa.
Ananyi’s investment portfolio spans sectors such as energy, education, financial services, healthcare, food delivery, internet, and space, including companies like BuyPower, Helium Health, Kuda, Brass, Edukoya, Curacel, and Topship. He has successfully exited four companies: Paystack, Flutterwave, Reliance Health, and Oxio.
