Business
African Startups Face An Uphill Task Even After Funding
All across Africa startups are coming against several teething obstacles including difficulty in accessing financing for their ventures. But in recent years a number of funding sources have come into play and most startups just have to make the right pitch to more than willing investors to access the most required initial capital.
Crowd funding sites that provide micro financing platforms have also made it easy for budding entrepreneurs to fund their businesses. There are as many as three crowd funding sites in South Africa namely StartMe, FundFind and ThundaFund. In Nigeria there’s StartCrunch, while Kenya has M-Changa and Babandu. In Ghana there is SlizeBiz that focuses on angel investments as well as obtaining micro finances through the general population.
There are also venture funds that such as the Savannah fund and The Omidyar Network that can provide financing to the second stage startups. But even with these funding sources African startups are finding it difficult to make a name for themselves in a continent where even medium sized companies struggle with a market dictated by cartels, multinationals and government interference.
A number of incubation hubs with international and organizational assistance, such as the IHub and NaiLab in Kenya, have put in place centers of excellence that seek to give entrepreneurs an enabling environment and have even gone forth to find interested investors for these startups.
Startup Garage support
Through these garages the startups can access free office space, free utilities and a chance to network with other small businesses in various fields and learn from each other even as they interact with mentors hired by the incubation facilities. The incubators are also a good place for the founders of these businesses to meet with investors who can provide funding many of whom prefer to work with the centers rather than with individual startups.
But as many of these budding entrepreneurs have discovered it takes more than just accessing financing to make it in the African market. Anthony Gitobu, chief operations officer at online food delivery company – Yum, says the first thing these investors realize upon launching their business that they are not operating in a perfect market, where forces of supply and demand will help their business, but that they will need to build more social linkages with the right people and organizations for them to access the actual market.
Many of the investors in these firms are usually foreign who appreciate good ideas and go forth to inject money into them, but do not run local businesses which could help them pull strings. “Besides capital start up need business advice. Start up need all the advice they can get in the different venture they get into. It’s important to hear from successful people and those who have failed from start up. This offers a learning opportunity for the start ups,” Gitobu told AFKInsider.
