In the wake of Dash’s closure due to fraud, 5 investors talk due diligence in Africa
- SoftBank sued IRL, a social media platform, for fraud after discovering that 95% of its users were fake.
- Dash, a Ghanaian fintech, shut down after an investigation revealed financial misreporting and missing funds.
- The demise of these startups may lead to global VCs becoming more cautious about investing in Africa.
The challenges faced by tech startups in Africa, such as fraud and mismanagement, have had negative repercussions on the ecosystem. These incidents highlight the need for stricter due diligence, enhanced governance processes, and a culture of truth and ethics. Local VCs play a crucial role in carrying out due diligence, and international investors should rely on them. The focus should be on financial prudence, near-term profitability, and providing financial training to founders.
