Technology

How to get funding for your startup

ELIAS PACHESO

Speak to any startup founder in Zimbabwe and they will tell you that obtaining funding is the biggest problem that is standing between them and the success of their startup venture. Infact a significant  number of  startups have not been started because their founders are waiting to get funded. This week i will try and unpack the problems being faced by entrepreneurs and come up with possible solutions.

Waiting for capital is not the right way to go when you are looking to start a startup venture. By their nature startups are not easy to fund for traditional funding partners such as banks or pension funds investors. Unlike small to medium enterprises that are often working on a proven business model, startups are creating a new product or service that has never been seen or heard off. This makes them very risky.

All around Africa the number of startups that are accessing  capital is on the rise, yet  in Zimbabwe that number is still very low. Let us look at some of the start-ups that have accessed funds in recent times in Zimbabwe. Data on who has obtained funding is not always easy to find because most of these activities are done privately.

Name of Start-up Nature of business Amount of funds raised USD Name of Funder
Zonful Energy Solar energy ??? Persistent / AECF
Payitup Zimbabwe Fintech 13,000,000

(Series A)

Thawer Fund Management
Africabookings Online tourism 25,000 Travel Startups Incubator
Oxygen Energy Renewable Energy solution development 965,000 AfDB
Golix Cryptocurrency Trading ???? ???

 

Do you know anyone Zimbabwean startup that has been funded lately? We want to hear from you. Please get in touch and help us build our database.

Judging from the little information that we have gleaned from our very limited research it is clear that some startups are obtaining funding from a number of sources is a clear indication that with proper planning and  clear strategies, many more startups can access funding too.

Getting funding is hard work. It doesn’t just happen overnight. A few ducks must be lined up for one to get to this stage. It starts with having the the right ideas and the right team or execution plan. By the time investors start lining up to invest in your startup you must have done your homework.

How do you start a business without funding from outsiders. This is a question most startup founders ask me everyday. It’s a subject that we have touched on before. Start by investing what you can yourself. When real investors come and ask you how much of your money you have invested you want to be able to show them you have some skin in the game no matter how small it is.

A look at the startups that were funded reveals a very interesting picture. Most of the startups that were funded already had teams and had identified a real problem worth solving. It’s therefore not a coincidence that startups that attract funding are often companies that already have strong links with incumbents or have done a lot of homework in their chosen  field.

What does this mean for your own startup. It means you must spend enough time creating a business that you can be noticed by and taken seriously by investors.This starts with identifying the right sector to play in.

Investors see growth in;

  • Fintech sector
  • Emerging technologies such as Artificial intelligence, virtual reality and blockchain
  • Agriculture
  • Renewable energy
  • Tourism

As can be seen from the nature of investments that have been recorded over the last two years in Zimbabwe, these are the main sectors that are attracting investors in Southern Africa. Startups that are attacking a problem with social impact often get access to grants which helps in building their startup. Enough attention should therefore be given to identifying the possible sources of funding.

Local investment houses with long term funds should seriously consider funding promising startups. Some local pension funds have started to do this and are benefiting already. As you raise funds from such institutions have a clear exit plan for them and you will be assured of attracting them into the investment.

Startup founders  in Zimbabwe are working very hard to get their startups to investable stage. They need all the help they can get. Tech Hub is helping startups with internet, space, providing networking opportunities and mentorship. If you require help with your startup you can reach out to Tech Hub at www.cowork.co.zw. We are ready to help you start and grow your startup venture.

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