Access to funding, from venture capital and equity to bank loans, remains one of the biggest challenges facing African entrepreneurs and owners of start-ups. Whilst larger and more established enterprises generally speaking experience fewer problems in terms of attracting capital, smaller ventures continue to struggle. The problem is that these newcomers need the funding the most in order to grow their operations, create more jobs, and contribute to the overall economic development in their country. The situation is however far from hopeless: across the continent, SMEs are managing to access funding very successfully. This is how they did it.
1) All of them had a perfect pitch: to get investors on board – from banks to even angel investors like family members – you need to prepare a concise, crystal clear pitch. Keep it simple and to the point, stay true to yourself, and don’t oversell your idea/service/product. Don’t pitch just your company, pitch what it does, how it does it, why it does it better than others, and why your idea/product/service is what your customers need. A good pitch comprises the following elements: marketability, sustainability, value proposition, and unique selling point. As Nicole Munoz from Start Ranking Now says in an interview with AlleyWatch: “Whilst knowing your numbers inside and out (as well as proving your concept prior to pitching) is absolutely crucial, you must develop a pitch that ‘sells the shave, not the razor’. This means a succinct, well-considered presentation that appeals to multiple personalities. Investing in professionals to design your PowerPoint presentation is also an excellent idea.”
2) Some went after seed funding: venture capital or bank loans might seem like the first prize when it comes to funding your business, but don’t underestimate the power of seed capital and angel funding from friends and family (the very people who will have your back no matter what). As Carl Wazen (co-founder & Chief Business Officer at Yoco) says in an interview with VentureBurn: “Don’t skip the step of raising funding from friends and family. You need people that have your back and there’s more flexibility in that world. The institutional round is a big milestone for your company. Raising it as late as possible is best.”
3) They were ready for funding: make sure that you and your business (idea) are ready for funding when approaching lenders and investors. You need to have your ducks in a row, all of them. As Alexandra Fraser, co-vice chairperson of the Silicon Cape initiative in Cape Town, says in the above-mentioned VentureBurn interview: “Don’t approach a fund at the wrong stage. You’re not a great candidate if you can’t read someone’s website on their services.”
4) Most did it on a shoestring: use the resources you have and do things on a shoestring. Most successful entrepreneurs started from very humble beginnings, often with next to nothing. Fomba Trawally from Liberia is a good example. He began his rubber slipper business in the 1990s with just USD200 – his life’s savings. Today, he is a multi-millionaire owning various retail stores in Liberia’s capital of Monrovia as well as toiletries manufacturing factories – of which sales have crossed the USD1 million mark. Read more about his story here. That is why we at Afrinection have kept our advertising fees low, at USD9 per month.
5) Others entered into competitions: use your perfect pitch in one of the many African startup and entrepreneurship competitions, of which some are listed and will be listed on our Forum. Some of Africa’s greatest entrepreneurs and innovators used these and other competitions as diving boards into success and prosperity. Take 16-year old Kiara Nirghin from South Africa, who invented a low-cost, biodegradable superabsorbent polymer made of orange peels and avocado skins to fight droughts and boost food security. She won the 2016 Google Science Award and a $50.000 scholarship.
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