The venture capital landscape in Africa has grown exponentially over the past few years with an influx of investment from both local and international sources. To put this exponential growth in perspective, African startups raised $400 million in 2015, which is peanuts compared to the staggering $2 billion raised in 2019, according to Partech Africa. This massive amount of capital raised by startups is a testament to the fact that raising capital, while difficult, is not an impossible feat.
Here are a few tips and tricks to help you get through the process of raising capital for your startup.
Prepare yourself for the process
Research and preparation are essential if you want to find funding for your startup. Preparation is the most draining and time-consuming task in the fund-raising process, but it is also crucial. This step is crucial to ensure that your company is ready to take off and will be able to stay afloat without being a drag on your valuable resources. If you know your goal and have a firm grip on your resources, you can chart a plan to make sure your dream becomes a reality.
Learn about the different types of funding
There are several ways to fund your startup. From personal finances and taking loans from friends and families to pitching ideas to venture capitalists and business incubators, there are several viable routes towards funding. However, it is important to remember that some forms of funding are riskier and costlier than others, and you should seek help from a reputed financial advisor to make sure you make the right decision.
Get your pitch ready
While raising money for your startup, your investors are sure to ask some difficult questions. To field all their queries and secure the funding you require, you need to be equipped with all the relevant information about your company. Keep your target audience in mind and design a small presentation that captures the essence of your startup. Also, make sure to mention the specifics, like financial projections and the expertise level of your team members, to ensure your pitch impresses your audience.
Network to find potential investors
Securing capital for your startup is all about knocking on the right doors. Networking does not mean forcing your startup idea on whoever you can find. Instead, you should consistently build up a positive reputation so that you can leverage your social capital to get the funding you require. It is also important to remember that not every person you approach will be interested in your idea. Some investors might have their plate full, while some might not see the potential in your idea. You can research different investment groups and find online resources to help you find the perfect fit for your startup.
Find companies that might be interested in your idea
If your startup operates on a niche, it is important to find investors who are known to offer capital in your niche. For instance, if your startup is aligned with the technological and e-commerce industry, you should direct your search towards companies that are already interested in investing in those sectors. Even if you do everything by the book, it is important to realize that your outcome may not be what you have planned. Entrepreneurship is a tumultuous road that offers no guarantees. Preparing yourself fully and knowing all your options can help you secure funding and enable you to tackle any hurdles you might find along the way.