In the ever-changing world of venture capital (VC), there’s no one-size-fits-all answer to what investors truly want. With a surge of startups in sectors like fintech, artificial intelligence (AI), healthtech and advanced manufacturing, the gap between what founders are building and what investors are actually seeking remains noticeable.
Why Solving Real Problems Attracts Startup Investors
The resounding message from investors to startups is, start with a real-world problem. While many founders get caught in the excitement of emerging tech, the most compelling startups are those that are anchored in solving tangible issues, ideally at a greater scale and with better efficiency and impact than existing solutions.
A great example of this is how fintech startups operate. For years, small to medium sized enterprises (SMEs) in South Africa struggled with limited access to funding and digital payment tools. Thanks to startups like Yoco, many of these challenges have been addressed. Yoco didn’t just offer tech, it solved a problem that had a real economic impact.
“Go find a customer problem and build a solution for it,” one investor said. “What is the job to be done? What’s the problem to be solved?”, said Mitchan Adams, co-founder of Aions Ventures.
Key Traits of the Ideal Startup Investors Are Seeking
When asked what their ideal startup would look like, investors outlined a few core qualities:
· A measurable, positive impact, whether social, environmental or economic.
· Scalability beyond local markets, without abandoning the core mission.
· Global competitiveness in international markets in both product and positioning.
· A solution that translates across borders and is adaptable to diverse markets.
“Many great solutions are localised and marginalised. But can you scale that business and take it across the board, across different global markets?” said Nico Jacobs, CEO of the SA Future Trust.
Emergency response startup AURA serves as a compelling case. Its platform uses real-time location tracking and a smart dispatch system to connect users to the nearest emergency responder. It addresses a global safety concern, and its expansion from South Africa to the United States reflects both scalability and relevance.
Why Investors Want More Local Innovation in Africa
Investors are also calling for more innovation in traditional sectors like manufacturing. “Why are we still outsourcing so much when we have the talent and the demand right here?” asked Adams. “We need more end-to-end solutions built in Africa, for Africa — and beyond.”
Understanding How Investors Think About Startup Funding
A key misunderstanding among founders is viewing investor funding as free capital. “It’s not a grant”, explained Adams. “That money represents time and sacrifice. We expect returns — not out of greed, but because that’s the nature of the partnership.”
Founders need to approach fundraising with respect, transparency, and a strong understanding of how they will use the capital to scale and generate returns.
One thing is certain, whether your startup operates AI, biotech, infrastructure or manufacturing, investors are seeking clarity: a clear problem, a clear solution, and a clear plan for scalable impact.
“There is an investor out there for every founder. The key is to understand the landscape and pitch with clarity, purpose, and respect,” concluded Jacobs.
Lungile is the Digital Editor for TechAfrica, with a knack for storytelling, technology and innovative ideas. Working with TechAfrica, she takes simple ideas and turns them into amazing stories.
Lungile Msomi
