Alexandra Fraser | Director and Founder | Viridian | mail me |
One of the biggest challenges facing entrepreneurial start-ups in sub-Saharan Africa is funding – particularly early-stage financial support – even though the landscape across the region has evolved over the past few years with more funders and capital deployed in this space.
This has been driven primarily by a growing appetite for alternative investments, successful recent exits, e.g., Paystack in Nigeria, and the fact that start-up investments have become more accessible.
Stage distribution
However, this capital increase is not evenly distributed. Less capital is available during the early stages, and women entrepreneurs continue to struggle to access funding.
Similarly, certain countries and specific sectors also battle to access capital. Raising capital as an established fintech in Lagos, for example, is vastly different to raising capital for a proof-of-concept agritech business in rural Tanzania.
Early-stage start-up gap
Even though several funds were established for African start-ups, the majority is aimed at those with a proven product that is market fit and ready to scale to new customers and markets. This has resulted in an aid gap for early-stage start-ups. Angel investors – defined as an individual or groups of individuals who usually provide equity capital for start-up businesses – are ideally positioned to help plug the seed-stage gap. In addition to providing capital, hands-on angels typically…
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Read the full article by Alexandra Fraser, Director and Founder Viridian, as well as a host of other topical management articles written by professionals, consultants and academics in the August/September 2022 edition of BusinessBrief.
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