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Why Failed Startups Can Be a Source of Strength
When a startup fails, it can feel like a loss to the founders, investors, and stakeholders involved. However, examining the broader ecosystem reveals that each failure carries valuable lessons and contributions that enrich the industry. Such is the case with Okra, an African open banking startup, which recently announced its scaling back after five operational years. While it might seem like just another casualty in the startup graveyard, the reality is much more nuanced.
The Ripple Effect of Failure
According to industry statistics, around 90% of startups across the globe do not reach profitability. In Africa, where a dollar can stretch significantly due to different economic conditions, this statistic takes on added weight. The closure of ventures like Okra does not erase the impact they had; rather, they pave the way for future growth by leaving behind a skilled workforce and innovative infrastructure.
Incubators of Talent
Startups are often seen as incubators of talent. Employees gain experience quickly in these dynamic, often chaotic environments. From novice roles to seasoned experts, team members learn critical skills that they carry into their next ventures. Many of them go on to become successful founders themselves, creating new businesses that build on the lessons learned from their past experiences. For example, Lanre Ibrahim, who co-founded Tunnel after working at Okra, showcases this growth and transformation.
The Value of Knowledge and Skills
Professionals coming from failed startups are priceless assets to the tech industry. They bring a wealth of knowledge about market challenges and customer needs, often learned through trial and error. This understanding equips them to tackle complex problems and contribute to the development of smarter, more robust business strategies. In a landscape like Africa's tech scene, where innovation flourishes, their insight is especially critical.
Lessons for Investors and Founders
For investors and entrepreneurs alike, it's essential to reframe how failures are perceived. Instead of viewing them purely as setbacks, they should be recognized for their role in the ecosystem's growth and maturation. Each failure leaves behind talent and innovations that can fuel the next wave of successful startups. The ultimate takeaway? Embracing the lessons learned from failures ultimately strengthens the backbone of Africa's tech revolution and enhances its capacity for future disruptions.
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