As a Senior Product Manager with a deep interest in the startup ecosystem, particularly in emerging markets like West Africa, I’ve spent a significant amount of time analyzing the region’s entrepreneurial landscape. A question that keeps surfacing in conversations with fellow founders and venture capitalists (VCs) is, “Will we see any significant exits from West Africa, specifically Cameroon, within the next 10 years?”
This question is not just a theoretical exercise. It reflects both optimism and a healthy dose of skepticism about the region’s capacity to foster startups that can scale to the point of a successful exit—whether through acquisition, IPO, or another form of buyout.
The Current Landscape: Opportunities and Challenges
West Africa, and Cameroon in particular, is teeming with entrepreneurial energy. The region’s youthful population, growing internet penetration, and expanding middle class create a fertile ground for startups across various sectors—from fintech and e-commerce to healthtech and agritech. However, the reality on the ground presents a mix of opportunities and significant challenges.
Opportunities
The entrepreneurial spirit is strong, with many young innovators eager to solve problems unique to the region. Local solutions for financial inclusion, agricultural efficiency, and access to healthcare are emerging rapidly. Moreover, the success stories of tech hubs like Lagos, Nairobi, and Cape Town are inspiring a wave of optimism across the continent.
Challenges
Despite this potential, Cameroon’s startup ecosystem is still maturing. Key challenges include limited access to funding, a complex regulatory environment, and a skills gap. These factors raise questions about whether the necessary infrastructure exists to support large-scale exits.
What Does Infrastructure Mean for Startups?
When discussing infrastructure in the context of startups, we’re not just talking about roads and electricity—though these are undeniably important. We’re also referring to:
- Financial Infrastructure: Is there sufficient access to capital from local VCs and angel investors? Do startups have access to financial services that can support their scaling needs?
- Legal and Regulatory Frameworks: Is the legal environment conducive to business growth? How straightforward is it to navigate the regulatory landscape, and are intellectual property rights well-protected?
- Talent Pool: Is there a deep enough pool of skilled professionals to drive innovation and manage business growth?
- Market Access: Can startups easily scale beyond local markets to reach regional or global customers?
Financial Infrastructure: The Lifeblood of Startup Growth
Financial infrastructure is arguably the most critical factor in determining whether significant exits can be realized. In established startup ecosystems, access to capital is abundant, supported by a well-developed network of VCs, angel investors, and private equity firms.
In Cameroon, however, this is still a work in progress. While there is a growing presence of local investors and some interest from international funds, the volume of capital available is still relatively small. Many startups struggle to raise the necessary funds to scale, limiting their growth potential and attractiveness to acquirers.
Case in Point: The Struggles of Local Startups
Take, for example, a fintech startup in Douala that I’ve been following closely. Despite having a solid business model and early traction, the founders struggled to secure follow-on funding after their seed round. The local investor community is still developing, and international investors often view the market as too risky or underdeveloped.
To address this gap, there needs to be a concerted effort to attract more capital into the region. This could involve creating more local funds, encouraging diaspora investment, and fostering partnerships with international VCs who are willing to invest in West Africa. Financial institutions can also play a pivotal role by offering products tailored to the needs of startups, such as venture debt and growth capital.
Legal and Regulatory Frameworks: Creating a Business-Friendly Environment
A robust legal and regulatory framework is essential for any thriving business ecosystem. In Cameroon, entrepreneurs often face a complex and sometimes opaque regulatory environment that can deter investment and hinder growth. Issues like bureaucratic red tape, inconsistent enforcement of laws, and unclear tax obligations create an unpredictable business climate.
Improving the Business Environment
Improving the legal and regulatory environment is critical to supporting startups and attracting investment. Simplifying the process of starting and running a business, protecting intellectual property rights, and creating more transparent and efficient tax systems could go a long way in fostering growth. Additionally, establishing clear regulations around exit processes, such as mergers and acquisitions, will provide the clarity and confidence needed for both local and international investors to consider serious exits in the region.
Talent Pool: The Engine of Innovation
The availability of skilled talent is another key factor in determining whether significant exits can occur. Startups require a diverse range of skills, from technical expertise in software development to business acumen in areas like marketing and sales. Unfortunately, there is often a gap between the skills available in the local workforce and the needs of growing startups.
Bridging the Talent Gap
This talent gap can be addressed through a combination of education and training initiatives. Investing in STEM education, offering entrepreneurial training programs, and creating opportunities for continuous learning can help build a more robust talent pool. Moreover, tapping into the diaspora, who often have valuable skills and experiences from working in more developed markets, can also help bridge this gap. Incentivizing their return to Cameroon or their involvement through remote mentorship and investment can bring much-needed expertise into the ecosystem.
Market Access: Scaling Beyond Borders
For a startup to achieve a significant exit, it often needs to scale beyond its local market. Cameroon, with its population of around 26 million, offers limited market size on its own. Therefore, startups must look beyond national borders to the broader West African region, or even global markets, to achieve the scale needed for a major exit.
Challenges in Scaling
Expanding into new markets comes with its own set of challenges, including navigating different regulatory environments, understanding diverse consumer needs, and dealing with logistical hurdles. To facilitate this, regional integration efforts, such as the African Continental Free Trade Area (AfCFTA), could play a significant role in making it easier for startups to access larger markets. Additionally, partnerships with larger, more established companies can provide the platform and resources needed to scale effectively.
The Reality of Exits
Successful exits are often seen as the ultimate validation of a startup’s journey, providing returns to investors and enabling founders to reinvest in the ecosystem. However, in Cameroon, the path to such exits is far from clear.
While there have been some promising moves—such as the acquisition of Nigerian fintech companies by international players—Cameroon has yet to see its first unicorn or major acquisition. The reasons are manifold: a relatively small market, regulatory hurdles, and a lack of awareness among global investors about the opportunities in the region.
Learning from Other Markets
Looking at more developed African markets, such as Nigeria or Kenya, can provide valuable lessons. These countries have managed to create vibrant startup ecosystems that attract significant international investment. Cameroon can learn from their successes by adopting best practices in regulatory frameworks, capital formation, and market access.
What Needs to Change?
If we are to see significant exits from Cameroon in the next decade, several things need to happen:
- Enhanced Access to Capital: There needs to be a more robust local investment ecosystem, with more VCs and angel investors willing to take calculated risks on early-stage companies. This could be supported by government policies that incentivize investment in startups.
- Improved Regulatory Environment: Simplifying the process of starting and running a business, protecting intellectual property rights, and creating more transparent and efficient tax systems could go a long way in fostering growth.
- Development of Human Capital: Investing in education and training programs that equip young people with the skills needed to work in startups is crucial. Additionally, creating incentives for the diaspora to return and contribute to the ecosystem could help bridge the talent gap.
- Regional Integration: Encouraging startups to think beyond national borders and target the broader West African market could provide the scale needed to attract significant investment and potential exits.
The Road Ahead
It’s clear that the potential for significant exits in Cameroon exists, but realizing this potential will require coordinated efforts from all stakeholders—entrepreneurs, investors, government, and the broader business community.
As someone deeply invested in this space, I’m both hopeful and realistic. The next decade will be crucial in determining whether Cameroon can produce startups that not only survive but thrive to the point of exiting successfully.
The journey won’t be easy, but with the right infrastructure, a commitment to nurturing talent, and a focus on scalable innovation, there’s every reason to believe that Cameroon’s startup ecosystem can rise to the challenge. If you’re a founder, investor, or policymaker, now is the time to ask yourself: What role will you play in shaping this future?