Read on Twitter
Startup funding sources in Africa:
: What do common terms mean?
: How much is available?
: Where can you go?
A thread to help first-time founders kick off their fundraising plans.
(Plus some things "we all" know that aren't always obvious.)
: What do common terms mean?: How much is available?: Where can you go?A thread to help first-time founders kick off their fundraising plans.
(Plus some things "we all" know that aren't always obvious.)
-- Bootstrapping --
: 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.
: Depends on your savings/income.
: Your bank account.
: 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.
: Depends on your savings/income.: Your bank account.
-- Friends & Family --
: 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.
: Depends. Who's in your circle?
: Basically everyone you know.
: 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.
: Depends. Who's in your circle?: Basically everyone you know.
-- Angels & Syndicates --
: HNIs investing in startups for equity (sometimes as groups).
Some angels bring expertise & networks, but not all. Follow-on capacity is limited.
: ~$5-10K+
: HoAq, LAN, Victoria Angels, Dazzle Angels...
: HNIs investing in startups for equity (sometimes as groups).Some angels bring expertise & networks, but not all. Follow-on capacity is limited.
: ~$5-10K+: HoAq, LAN, Victoria Angels, Dazzle Angels...
-- Grants --
: "Equity-free", usually deployed for impact. Can be linked to competitions/conditions.
Great for bootstrapping products that aren't immediately monetisable. VCs can view grant-funded startups with scepticism.
: ~$5-250K+
: TEF, Google Black Founders Fund...
: "Equity-free", usually deployed for impact. Can be linked to competitions/conditions.Great for bootstrapping products that aren't immediately monetisable. VCs can view grant-funded startups with scepticism.
: ~$5-250K+: TEF, Google Black Founders Fund...
-- Crowdfunding platforms --
: Platforms aggregating small checks from many people for fundraising campaigns (e.g. a product launch).
Types differ, e.g. debt vs. equity. There aren't many. Outcomes vary (liquidity is critical).
: Varies.
: Thundafund, Thrive Agric...
: Platforms aggregating small checks from many people for fundraising campaigns (e.g. a product launch).Types differ, e.g. debt vs. equity. There aren't many. Outcomes vary (liquidity is critical).
: Varies.: Thundafund, Thrive Agric...
-- Accelerators --
: 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.
: ~$50-100K+
: YC, Techstars, ODX, Antler, Catalyst Fund...
: 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.
: ~$50-100K+: YC, Techstars, ODX, Antler, Catalyst Fund...
-- Venture Studios --
: 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.
: ~$100K+
: Founders Factory, CeedCap...
: 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.
: ~$100K+: Founders Factory, CeedCap...
-- VC funds --
: 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.
: ~$50K-$20M (depends on stage)
: FirstCheck Africa, Ventures Platform, Ingressive, Partech...
: 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.
: ~$50K-$20M (depends on stage): FirstCheck Africa, Ventures Platform, Ingressive, Partech...
-- PE funds --
: 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.
: ~$1M-$100M (depends on stage)
: Aruwa Capital, Verod Capital, African Capital Alliance, Helios...
: 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.
: ~$1M-$100M (depends on stage): Aruwa Capital, Verod Capital, African Capital Alliance, Helios...
-- Impact funds --
: 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.
: ~$50K-$5M (depends on stage)
: Acumen Fund, Accion Venture Lab...
: 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.
: ~$50K-$5M (depends on stage): Acumen Fund, Accion Venture Lab...
-- Bank debt --
: 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.
: Varies.
: Stanbic, NedBank, BOI...
: 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.
: Varies.: Stanbic, NedBank, BOI...
-- SME loans --
: 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.
: Varies.
: Carbon, PayHippo, Grofin...
: 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.
: Varies.: Carbon, PayHippo, Grofin...
-- Receivables financing --
: Debt, but tied to an invoice. Lenders will cap their loan to the invoice's discounted value.
Typically easier to close than bank debt but they usually need you to have a track record with the lender.
: Varies.
: Pivo Africa, Libra Circle...
: Debt, but tied to an invoice. Lenders will cap their loan to the invoice's discounted value.Typically easier to close than bank debt but they usually need you to have a track record with the lender.
: Varies.: Pivo Africa, Libra Circle...
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'm convinced there's a gap in the market there.
Details for another day.
Above all, DYOR & good luck!
I'm convinced there's a gap in the market there.
Details for another day.
Above all, DYOR & good luck!
