Getting started withfunding is the first hurdle that confronts every African entrepreneur. The passion for your idea and business is always easy but finding sources for the money you need to raise is often difficult. Keep reading for some ways that African entrepreneurs can find funding for their startup business.
The first tactic that often works is pitching to those close to you. This is not only about funding, but it’s also a great way to test your ideas. If you can’t successfully explain your concept and get support from those closest to you, itmay be time to reassess your plans. Other investors at a later stage may also look at the initial investment by friends and family as proof that you arecredible and reliable.
An extension ofthis method is crowdfunding. Crowdfunding is the art of getting people to makes mall pledges during a campaign. Online sites like Indie GoGo and Kickstarter are the main platforms for this. Early investors will either get a product, ora reward once your funding goal is met. In Africa, equity crowdfunding is popular. In this model, the investors will get equity in your company for their money.
Another method canbe finding a startup accelerator or attaching yourself to an incubator. Often sponsored by corporate entities, these are great places to find a community ofen trepreneurs, mentorship, and concrete financial support. Even those that don’t offer funding will train you on how to pitch and refine your business.
If you have skills or something you can provide, you can also trade some of your services for help. Some potential customers or partners will also advance you some money if you ask.
Professional investors, called venture capitalists, will put money into your startup if it’s a proven business model. They often look for businesses that are scalable. You’ll also need to prove your team is a strong one. This is why it’s good to bring on a partner in the early stages who can add to your strengths.
There are often also local angel investors who will help you, especially if you are in a major city. Look for successful business people who are willing to support young companies. They can also be great sources of connections in a particular industry.
As with venture capitalists, be ready to prove your idea is a good one and have a solid plan to present to them. Even meeting with them and getting their criticism can lead you to get valuable insights into where you might be going wrong.
Bootstrapping your African startup
If all else fails, you can always fund your business on your own. There are often small costs at the beginning that you canpay in stages. This method, called bootstrapping, is more common than you think. If you can think strategically and create a savings plan, you can self-fundeasily. You will also have the added advantage of not giving up control orequity in your business.