Read on Twitter
Startup funding sources in Africa:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: What do common terms mean?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: How much is available?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Where can you go?
A thread to help first-time founders kick off their fundraising plans.
(Plus some things "we all" know that aren& #39;t always obvious.)
A thread to help first-time founders kick off their fundraising plans.
(Plus some things "we all" know that aren& #39;t always obvious.)
-- Bootstrapping --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Growing your startup without outside capital by using a combination of savings & reinvested revenues.
Your pace of growth is limited vs. funded startups but you own ~100% of your company.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Depends on your savings/income.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Your bank account.
Your pace of growth is limited vs. funded startups but you own ~100% of your company.
-- Friends & Family --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Raising capital from people close to you.
Generally equity, but if debt, F&F is non-dilutive. Some founders use it to build prototypes/MVPs/traction before taking outside on capital.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Depends. Who& #39;s in your circle?
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Basically everyone you know.
Generally equity, but if debt, F&F is non-dilutive. Some founders use it to build prototypes/MVPs/traction before taking outside on capital.
-- Angels & Syndicates --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: HNIs investing in startups for equity (sometimes as groups).
Some angels bring expertise & networks, but not all. Follow-on capacity is limited.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$5-10K+
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: HoAq, LAN, Victoria Angels, Dazzle Angels...
Some angels bring expertise & networks, but not all. Follow-on capacity is limited.
-- Grants --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: "Equity-free", usually deployed for impact. Can be linked to competitions/conditions.
Great for bootstrapping products that aren& #39;t immediately monetisable. VCs can view grant-funded startups with scepticism.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$5-250K+
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: TEF, Google Black Founders Fund...
Great for bootstrapping products that aren& #39;t immediately monetisable. VCs can view grant-funded startups with scepticism.
-- Crowdfunding platforms --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Platforms aggregating small checks from many people for fundraising campaigns (e.g. a product launch).
Types differ, e.g. debt vs. equity. There aren& #39;t many. Outcomes vary (liquidity is critical).
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Varies.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Thundafund, Thrive Agric...
Types differ, e.g. debt vs. equity. There aren& #39;t many. Outcomes vary (liquidity is critical).
-- Accelerators --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Cohort-based programs offering capital in exchange for equity.
Some take large stakes which can be too dilutive. Not all accelerators are equal -- value propositions vary significantly.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$50-100K+
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: YC, Techstars, ODX, Antler, Catalyst Fund...
Some take large stakes which can be too dilutive. Not all accelerators are equal -- value propositions vary significantly.
-- Venture Studios --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Building startups by matching founders with ideas and incubating their early growth.
Great for support. Founders tend to own less vs. accelerator- or VC-backed startups. Sometimes, they can be replaced.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$100K+
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Founders Factory, CeedCap...
Great for support. Founders tend to own less vs. accelerator- or VC-backed startups. Sometimes, they can be replaced.
-- VC funds --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Investing in startups at different stages (pre-seed to series C~)
VCs focus by stage, sector, geography etc. Some can push founders hard for aggressive growth.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$50K-$20M (depends on stage)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: FirstCheck Africa, Ventures Platform, Ingressive, Partech...
VCs focus by stage, sector, geography etc. Some can push founders hard for aggressive growth.
-- PE funds --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Investing in late-stage startups with stable cash flows, or in traditional SMEs.
Some PEs are starting to look earlier, but experience & fit are critical.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$1M-$100M (depends on stage)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Aruwa Capital, Verod Capital, African Capital Alliance, Helios...
Some PEs are starting to look earlier, but experience & fit are critical.
-- Impact funds --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Similar to PE/VC, but investing with social impact objectives.
Investing in double/triple bottom line companies, social impact ventures, etc., for lower target returns than PE/VC.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: ~$50K-$5M (depends on stage)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Acumen Fund, Accion Venture Lab...
Investing in double/triple bottom line companies, social impact ventures, etc., for lower target returns than PE/VC.
-- Bank debt --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Lending from a bank/FI, usually requiring collateral (assets/cash).
Bank loans are hard for startups to get, given uncertain outcomes. There are sometimes concessionary (or government) programs but they take time.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Varies.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Stanbic, NedBank, BOI...
Bank loans are hard for startups to get, given uncertain outcomes. There are sometimes concessionary (or government) programs but they take time.
-- SME loans --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Non-bank FIs extending uncollateralised, cashflow-based loans on short-term bases (~30 days).
Higher interest (vs. banks), but easier & faster to close (hours/days). You do need to show account inflows/outflows.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Varies.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Carbon, PayHippo, Grofin...
Higher interest (vs. banks), but easier & faster to close (hours/days). You do need to show account inflows/outflows.
-- Receivables financing --
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💡" title="Elektrische gloeilamp" aria-label="Emoji: Elektrische gloeilamp">: Debt, but tied to an invoice. Lenders will cap their loan to the invoice& #39;s discounted value.
Typically easier to close than bank debt but they usually need you to have a track record with the lender.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldzak" aria-label="Emoji: Geldzak">: Varies.
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🏦" title="Bank" aria-label="Emoji: Bank">: Pivo Africa, Libra Circle...
Typically easier to close than bank debt but they usually need you to have a track record with the lender.
There are other forms of capital (many/mostly non-dilutive -- meaning no equity is sold), but those are also not common in Africa, e.g. revenue-based financing.
I& #39;m convinced there& #39;s a gap in the market there.
Details for another day.
Above all, DYOR & good luck!https://abs.twimg.com/emoji/v2/... draggable="false" alt="🍀" title="Klavertje vier" aria-label="Emoji: Klavertje vier">
I& #39;m convinced there& #39;s a gap in the market there.
Details for another day.
Above all, DYOR & good luck!
