Why Do Local Investors Shy Away from Startups and How to fix it?

This is a question that everyone in the African startup ecosystem asks themselves: How can we convince local high-net-worth individuals to invest in startups?

I’ll tell you why they don’t invest—and then I’ll share the only way to truly convince them to invest in local businesses.

The typical high-net-worth individual in Rwanda (and much of Africa) is likely in his late 50s or early 60s. He’s looking for ways to expand his investments. He has made his money through years of sweat and sacrifice and is probably thinking about retirement—or bringing in his children to manage the family business.

This person has earned every cent the hard way. Especially in Rwanda, due to our history, most wealthy individuals are first-generation wealth creators. That contrasts with Europe or other parts of the world where castles have been passed down since the 12th century. In Africa, generational wealth is rare—mainly because of colonization, wars, and civil unrest that have displaced people and disrupted wealth continuity.

This history puts us in a precarious situation—we’re constantly rebuilding. Sustainability becomes difficult. Accumulating wealth gets harder and as a result, capital becomes scarce and extremely risk-averse.

So when you approach the wealthy 60-year-old in our community with a startup pitch run by young, inexperienced graduates straight out of university—with no work or real-world experience—what do you expect him to say?

He’s not going to risk everything he has built on a venture he doesn’t understand run by kids who don't understand anything about business.

Instead, he chooses investment vehicles that are failure-proof—like land, agriculture, and trade—where he can monitor his money and stay in touch with his capital.

Now try telling this same man to invest in a startup. It won’t work.

The economics don’t add up, and the concept is foreign to him. He’s not investing for “impact” or to “change the world,” like some of the fancy incubators say. He’s investing to protect his family—to make sure they don’t slide back into poverty or go to bed hungry like he once did.

He’s doing business to survive. If he gets wealthy in the process, that’s a bonus.

That’s the baseline.

So how do you convince someone like this to release $300K to invest in a business?

You have to speak his language, fit his frame of thinking, and propose an investment that makes sense in his context.

This is not because he’s less intelligent, less exposed or incompetent. It's because he's in touch with local realities, needs and intricacies more than anyone else. A typical founder speaks to the target market 1:1 when they are searching for product-market fit.

Contrary to our investor;

He Lives with them, socialize them, and hangs out with them. In fact, some of the most talented business people I’ve met in Africa had no formal education—but they’ve built incredible businesses for the simple reason of being closer to the market than an average founder that spends 90% in a co-working space and on linkedin.

So what kind of entrepreneurs will these investors trust?

They will invest in businesses that:

• Solve a local problem
• Offer a relevant solution
• Operate in an existing market
• Sell a tangible product/service
• With a real/undeniable proof of concept

In Africa, this is not a startup.

This is an SME.

Now you might ask: If that’s true, why don’t we see more of these investors funding SMEs?

Here’s the answer: Most SMEs are not run like businesses.

They’re run like small kiosks—with no systems, no technology, and poor management.

To a seasoned business tycoon who’s seen the ups and downs of entrepreneurship, these SMEs don’t feel investable. He’d rather put his money into land, treasury bonds, or government contracts because that's already systemized and predictable.

Remember: he's entire goal is to not loose a dime.

So, if we want the African economy to be built by local capital—which is how every major global economy has been built—we have to empower SMEs.

And by empowering, I mean:

• Building systems
• Integrating technology
• And Establishing proper management structures

Only then will local investors feel confident enough to invest.

A disclaimer:

This is not a “high-touch” kind of support.

This is a deep dive into businesses. It’s about building systems from the ground up—the very backbone that will support scalability and deliver return on investment.

It’s not sexy.

It’s not the startup dream of billion-dollar inflated valuations.

It’s not the Silicon Valley fantasy.

But it’s the only way that will work.

Mark my words.

The faster we accept this reality, the sooner we’ll reap the benefits.

This is why I’ve chosen to specialize in building systems—and I’m now focusing on SMEs and growth-stage startups.

If this fits your profile , book a free consultation and let’s work Together.

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