No matter where you start your business it’s essential to secure some sort of funding to get it up and running. However, in some countries, this can be more challenging due to various factors. Africa is one of those places. Despite having incredible talent, its complex and ever-changing landscape makes it hard for tech entrepreneurs to secure funding. However, in recent years, the funding situation has changed in many ways, with new options being introduced.
In this article, we’ll explore new funding avenues in Africa for tech entrepreneurs.
New Funding Avenues In Africa For Tech Startups
With the right financial support, African entrepreneurs can start their businesses, make profits and ultimately contribute to the country’s economy. Here are some funding opportunities for African tech startups:
Government Grants And International Support Programs
With low or no interest, government grants and support programs are the best way of getting funding for your startup. Kenya and South Africa have started programs to help small businesses and nonprofit organizations. The Kenya Industrial Transformation Programme (KITP) offers funding and support to startups in important sectors. In South Africa, the Department of Trade, Industry and Competition provides grants through programs that encourage entrepreneurship and create jobs.
Other funding avenues in Africa include Village Capital Africa which is partnering with local organizations to offer grants and investment ranging from $10,000 to $50,000 to African startups. Orange Corners Program, funded by the Dutch government, supports young entrepreneurs in countries like Nigeria, Senegal, and South Africa, offering grants up to €50,000. It focuses on startups in agriculture, creative industries, and digital tech.
Incubators And Accelerators
Incubators and accelerators help small businesses grow with mentorship, office space, and resources. For example, LakeHub supports tech development and entrepreneurship for youth in western Africa by offering training, co-working spaces, and various community events.
UNICEF StartUp Lab in Ghana is a 6-month program which offers guidance to participating entrepreneurs on how well their products solve problems through boot camps and virtual sessions.
Akro Accelerator is another accelerator program in South Africa. The unique thing about this program is that it helps businesses become investment-ready in five months. The program is for African passport holders and only focuses on startups that are 51% black-owned and based in townships.
Crowdfunding Platforms
Crowdfunding helps you gather money from a large group of people. Currently, there are various platforms in Africa where you can add your business idea and other people who want to support it will fund you. One of them is GiveSendGo which helps African tech businesses raise funds through personalized campaigns.
Another platform is Crowdsofts, which focuses on crowdfunding for tech startups in Africa by offering donations, investments, and pre-sales options. This platform helps entrepreneurs connect with local and international investors.
Venture Capital Firms
Venture capital firms provide funds to a startup with the potential to grow. One of these firms is Voltron Capital which invests in early-stage African startups, focusing on Fintech, Healthtech, and Edtech. They offer funding between $20,000 and $100,000, supporting businesses like AltSchool, Bamba, and Chargel.
Launch Africa is another VC firm which provides funding between $200,000 and $300,000 for tech-enabled startups across Africa, focusing on Fintech, Edtech, and B2B/B2C. Its portfolio includes companies like Workpay, Balad, and Gameball.
Peer-to-Peer Lending Platforms
Peer-to-Peer lending platforms connect entrepreneurs with investors. RainFin is one of these platforms. It started back in 2012 to help people get loans at lower costs and give investors a new way to earn money. Here investors and entrepreneurs can lend and borrow money directly from each other instead of using a bank.
FunderJet is another peer-to-peer lending platform in South Africa that helps people and businesses invest and borrow money directly. It offers better loan rates for borrowers and good returns for investors. Here Borrowers simply need to pay an initiation fee + R69 monthly admin fee to get started.
Small Business Loans
GroFin is focused on supporting small and medium-sized enterprises (SMEs). They provide business loans and expert advice to help entrepreneurs grow their businesses and create sustainable jobs, driving social and economic development.
Based in Mauritius, they operate in 14 countries across Africa and the Middle East. With support from 34 global investors, they have raised nearly $540 million to fund and support businesses.
Conclusion
With the rise of new funding avenues in Africa, tech entrepreneurs have more opportunities than ever to secure capital for their startups. Venture capital, government grants, crowdfunding, and small business loans are just a few options. These changes in the funding opportunities are boosting new ideas and helping the economy grow. Entrepreneurs should focus on finding the best fit investment option for their business needs and grow their business.
