Vuyani Tati, Portfolio Manager/Finance Lead: Startupbootcamp AfriTech
Funding for startups on the African continent has been very fragmented due to a lack of access for early-stage ventures, with large amounts of capital available only for a few ventures that get to Series A and beyond.
The funding gap between Seed stage and Series A startups results in several founders with great potential having to close shop due to insufficient funds. Another key driver to the low number of startups getting to Series A level funding is the lack of support founders receive, which is required alongside capital injections. Most companies don’t get access to markets and sound strategic advice during their beginning stage because the funders in the ecosystem come from established industries and thus don’t know how to best advise early-stage businesses. The same can be said for the angel investor network –very few have founded businesses before.
With a mixed response and acknowledgment from investors outside of the African ecosystem on the Africa rising story, the perceived risk of investing in the continent is still very high. This perceived risk is even higher for early-stage businesses. The number of investors that do invest end up investing on terms that are more detrimental to the growth of the African ecosystem and founders. Ecosystem players like ourselves are working hard to try and educate investors on the potential of the continent and coming up with innovative ways to try and de-risk the investment opportunities for them.
Africa has a unique set of challenges that can be solved best by founders who come from those communities. Some of the innovative solutions we come across from founders continue to blow us away and serve as a source of inspiration to provide as much support to the founders as possible, and to grow with them.
Startupbootcamp AfriTech remains very excited for the future of Africa and the number of innovative ways our people will continue to solve problems. Through accelerator programmes like the Telecel African Startup Initiative Programme, we encourage more founders to start solving real problems in ways that can also be exported to other parts of the world. This will help lift countless numbers of people up from poverty in a more sustainable manner than just relying on aid from institutions that continue to see them as helpless.