6 ways to get financing for your business in Africa

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This article discusses 7 (seven) proven ways for Africans to raise funds to finance their business. Let’s dive into it.

The first step in financing is most often investing your own money. When you’ve done it yourself, it’s often easier to convince others to invest in your business. Friends and family, investors, banks and other financial institutions would likely invest in your business if you could show them how much you’ve grown the business with your own money.

Personal funding may not always be enough, but it makes it easier to attract more funding.

Seeding is like financing your business from within. In some cases, the bootstrap is another way to prove that the business can be profitable. In such situations, the business is structured to be self-financing. As the business grows, it generates cash that allows for further growth.

Friends and family are often the first to believe in us, and in most cases without any proof of our work first. At the same time, they are generally willing to invest in us before any other entity. They can therefore be a good source of financing. The downside is that not all businesses are successful, and if your business doesn’t make a profit, you risk ruining the relationship. Make sure your investors understand the risks of financing your business before taking their money.

Access to funds is a challenge for African businesses. However, some funding opportunities are still available to African entrepreneurs in the form of grants. Some of the funding opportunities that exist in Africa in the form of grants include;

  1. Tony Elumelu Foundation Entrepreneurship Program
  2. Africa Business Heroes Awards
  3. Anzisha Prize
  4. MEST Africa Challenge
  5. African Entrepreneurship Award.

Today, several online investor groups allow startups to pitch their ideas to investors around the world. When an idea is successful enough to attract multiple investors, multiple people will be willing to fund the idea. This is called crowdfunding.

Some platforms that provide crowdfunding in Africa include;

  1. african crowd
  2. Jamaafunding
  3. Fadav
  4. Afrikwitness
  5. Thundafund

The crowdfunding industry in Africa is estimated to grow 300% annually, reaching $96 billion by 2025.

6. Angel investors and venture capitalists

Venture capitalists provide seed funding and usually make relatively large investments, often taking a large share of the business. On the other hand, angel investors are usually wealthy or at least middle-class people who are willing to invest in businesses individually or by combining their strengths.

Here is a list of some venture capital platforms in Africa;

  1. Seedstars Africa Ventures
  2. Ajim Capital
  3. Advantageous capital
  4. Business platform
  5. Ingressive capital

It is important to note that the viability of various financing vehicles may change over time as the economic climate changes. Either way, the window of opportunity is still open for African entrepreneurs to access finance. Also, the capital needs of a growing business at different stages and in different states vary widely, depending on the financing vehicles used. It is important to carefully evaluate your options before making a decision.

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