Business
Towards a business model for funding African Startups
A business model designed to solve the problem
The business model I am proposing rests on certain key activities that will be performed by an Africa-focused early stage venture capital fund established specifically to implement this idea.
The fund will raise capital from a group of limited partners that wish to invest in early stage startups, and in particular seek exposure to startups originating from Africa.
The fund will select African startups in which to invest sufficient capital to reach the next funding milestone, but generally between US$50,000 and US$250,000.
The fund will seek additional capital from a crowd of large and small investors with a goal towards raising financing for the startups’ follow-on financings. Africans in the diaspora will be one group of constituents targeted by the fund’s fundraising outreach efforts in a bid to steer a portion of the annual remittance flows to Africa away from consumption and towards investing.
During this period the fund will be intimately involved in accelerating the startups in its portfolio with support that spans every area in which the startup might need assistance and help in order to ensure its ultimate success from the investors’ point of view.
The fund’s value proposition stated simply would be this: provide the most promising African startups with access to seed and early stage capital and a partner committed to their ultimate success, and provide investors from around the world with an opportunity to earn attractive monetary and financial returns.
