How African Startups Are Rethinking Spending In The Downturn
African startups are increasingly experiencing the effects of the downturn that is affecting tech companies worldwide after appearing to be initially unscathed. Venture capital investment, which has been a key factor in the development of Africa’s tech ecosystem, has slowed down recently, prompting many African firms to examine their expenditures more carefully in order to extend their runway.
By 2030, Brookings projects that business spending in Africa will total USD 4.2 T. However, many African companies suffer from ineffective expenditure procedures that are prone to errors, cause financial losses and waste resources.
As startup funding dries up placing emphasis on smart, efficient spending, the importance of expense management software that promotes fiscal discipline is shining through with businesses keen to make the most of their finances.
Flex Finance, founded in 2019 by Yemi Olulana, is among the purveyors of such solutions capturing the growing opportunity, which Olulana says, rests on empowering businesses to proactively manage their spending, enabling them to save more than 40% on their monthly spend.
In this interview with WT, Olulana discusses the effects of the economic crisis on African startups as well as how good spend management is assisting companies in navigating these times.
This interview has been edited for clarity and brevity.
How has the global economic downturn affected African startups, and how does effective spend management help them navigate these challenging times?
Despite the challenges brought on by the global economic downturn, African startups have found ways to thrive through effective spend management. By optimizing costs, streamlining processes, and gaining enhanced visibility and control over their finances with tools like Flex, startups have been agile in adapting to market changes. These practices empower them to make data-driven decisions, maintain financial stability, and seize new opportunities. Despite the uncertainties, African startups are resilient and well-positioned to emerge stronger from these testing times.
With venture capital funding slowing down, how does Flex Finance maximize cash runway and support sustainable growth for startups in Africa?
Our automated expense reporting system and centralized spending controls minimize administrative overhead and prevent unnecessary spending, effectively extending the cash runway. Startups gain real-time visibility into their financial data and expenses, enabling data-driven decision-making. With flexible and customizable spending controls, startups can set spending limits tailored to their specific needs, ensuring funds are allocated efficiently in line with their growth objectives. Transparent approval workflows enhance financial control, reducing the risk of unauthorized spending and providing better financial planning opportunities.
How does Flex Finance address the inefficiencies in spending processes that many businesses in Africa face, and what makes your platform stand out in providing full visibility and control over spending?
We help businesses get 100% visibility and control of their spending, thereby streamlining their financial processes, such as approval workflows, expense tracking, employee reimbursements, and vendor payments. We also provide businesses with unlimited corporate spending cards (physical and virtual) with pre-approved spending limits, helping them to seamlessly manage their spending. In doing so, we save businesses time and money and enhance their productivity and profitability.
Flex Spend management platform is the only financial management solution that helps businesses manage their spending across mobile, web, and corporate cards. We leverage advanced AI and machine learning algorithms to automatically categorize expenses. Our algorithms are regularly updated and improved to ensure the accuracy of expense tracking. Users also have the ability to manually review and categorize expenses as needed.
What are Flex Finance’s future plans for supporting African startups, and are there any upcoming features or developments that will further enhance spending management capabilities?
We are committed to shaping the future of spend management for African businesses by constantly pushing the boundaries of innovation. Our unwavering dedication to developing new and advanced features ensures that our customers always experience cutting-edge solutions tailored to their needs.
Our team of experts continuously seeks out groundbreaking technologies and industry trends, driving us to stay ahead of the curve. By embracing change and maintaining a customer-centric approach, Flex Finance empowers businesses in Africa to take control of their finances, thereby strengthening their ability to grow and succeed. We are preparing to launch some groundbreaking products and services that will revolutionize spend management for businesses across Africa.
