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Raising money for your Startup, some options

Whenever we have a conversation with entrepreneurs and techies the number one question is “How can I get funding?”. We’ve touched on this issue before but due to the frequency of the questions we felt it useful to provide an update about what options are available in the market right now. There is no easy answer to this and part of the solution will depend on the entrepreneurs commitment and resourcefulness. At the recent AMH Conversations when asked about what Zimbabweans can learn from Google about innovation, Ory Okolloh pointed out that maybe it is Google that can learn more from Zimbabwean business as it had shown remarkable innovativeness in navigating economic and political chaos. The same attitude is probably required of startups as they seek for funding to get them on their way.

Locally there are revolving fund facilities operated by Cabs and Stanbic are still available. Cabs offers up to $5,000 per loan and applications can be made at any branch nationally. In Harare applications for the facility are done at the First Street Branch (Corner George Silundika). To submit your application you will need your business proposal, 12 month cashflow projection and a Cabs savings account or Textacash account among other things. If you are outside Harare application forms are available for download on the Zimbabwe Youth Council website and can be submitted to any local branch once all requirements are met. To date we are not aware of anyone who has successfully applied for a loan but we received the following feedback from an individual who submitted an application:

  • I drafted and wrote my business plan in January 2012.
  • It was a 20 page document that included Executive Summary, Services, Competitive Advantage, Marketing Plan, Team, Financial Projections and Conclusions.
  • I had to meet a 10-15 point checklist that was provided by CABS.
  • I could only apply at Cabs First Street and not anywhere else, where I was met with long queues
  • I was not provided any feedback on my documentation, and saw it immediately being dumped on a pile of other applications.
  • I was then given a call in February/March by a rep from Cabs who said he wanted to inspect my offices asap. I rescheduled for the next day but he didn’t show up. (Not sure how they expected “youth” to have offices to operate from)
  • In April, I enquired at the Cabs branches I bank at, about my loan and there was no feedback. I have since given up hope.

The Stanbic Youth Wealth Creation Fund funding is available for those aged between 21 and 35 years. Loan amounts US$5,000 to US$20,000. The interest rate is 14% per annum payable monthly in arrears. Maximum loan tenure up to 12 months for working capital and up to 36 months for working capital and capital expenditure respectively.

In Harare you have to approach the Westgate branch to have your application processed. A Stanbic official who preferred to remain anonymous indicated that each project/application is judged on it’s merits and Web, Software and IT projects are considered. He added rather worryingly that order financing had the highest chances of securing funding. As the purpose of this facility is to encourage the growth of the country’s productive base this seems counter productive. Further Stanbic indicated that prospective borrowers who do not have tangible security will be required to provide acceptable guarantors to be vetted by the bank, something which may prove to be a challenge for startups. Outside Harare application forms can be acquired from any Stanbic branch or Ministry of Youth Development district office.

The seemingly long odds of getting funding locally should encourage startups to explore options further afield. Yes this introduces other challenges like travel and accommodation, legal status with regards to citizenship and language and cultural issues. Yesterday we ran an article about how 88mph are looking at funding up to 15 Kenyan and International startups. Another option that is worth considering is DEMO Africa an event that is taking place in Nairobi on the 24-25th of October.

According to organiser Harry Hare, DEMO provides a platform for entrepreneurs and startups to have a meaningful engagement with potential investors. For the two days, entrepreneurs will have the opportunity to meet with investors who are active or interested in the technology investment space to give them a first look and see if the products are of interest to their investment. Hare points out that DEMO does not guarantee funding to the demonstrators however in the last five years more than 50 companies that launched their products at DEMO in the USA have been acquired by technology giants like Microsoft, Google, Motorola, Nokia, Adobe etc

The discussions on investment will be purely between the startups and the interested investors. What we do as DEMO is to equip the startups with knowledge on how to engage with potential investors. So for instance the forty companies that will be selected to launch at DEMO will undergo a three weeks online course on entrepreneurship and a further two-day bootcamp on the same by the University ofStellenboch Business School. This should equip them with the necessary knowledge to negotiate and make informed decisions on the future of their businesses.

So the benefits are:

  • Launch in front of VC, Angel Investors, Acquirers and Tech buyers (all these are potential investors in the startups)
  • Get continent wide publicity of the product – This could extent the visibility of the startup beyond the confines of the conference and therefore expose to more investment opportunities
  • Get training and Entrepreneurship – This will equip the startups to use best-practices in managing their startups and therefore making them even more attractive to investment

You can also check if you meet DEMO Africa’s requirements and startups have to:

  • Solve a commercial problem
  • Make an impact or change the marketplace into which it is introduced or create a new market
  • Have a business plan and a management team capable of delivering the product to market
  • Make its public debut at the DEMO conference

Hare says DEMO are looking for 40 startups to launch on their platform. The event organisers are still working on finalising the VC/Angels who will attend. They are looking at both Silicon Valley VCs and those operating in Africa. DEMO is reaching out to them through a separate initiative – DEMO Africa Investor Roundtable. In this regard VC4Africa is the DEMO platform partner and are also being used to build the pipeline for the DEMO Africa applicants before we go into adjudication. VC4Africa are also promoting the activity to their members just like other partners we have. Startups should however note the terms and conditions of using VC4Africa. According to their website VC4Africa asks for “a 3% fee (of the total deal sum) if a deal is closed because of our website (practically speaking 1.5% from the investor and 1.5% from the entrepreneur)”.

Chembe Ventures is another firm worth looking at as it has been fairly active in the Afritech investment scene. According to Sean Murphy “Chembe Ventures organised and funded the first VC investment competition for East African mobile developers. We were the first investor in an East African mobile VAS start-up ( in Uganda).” is described as an inexpensive, and efficient, mobile gateway for Ugandans to update Facebook via their mobile phone. Murphy adds that Chembe has organised or sponsored half a dozen first barcamps and pitch competitions from Cape Town to Lagos and Abidjan to Kampala. The fund has invested in two social enterprise projects, Sandlers Football Zanzicode. Murphy notes however that Chembe has not been active in seed investing for the last year.

Other resources you can try are:





1 Kitendo Capital Dariu Treub dariu.trueb[at]
2 Invested Development Sean Smith ssmith[at]
3 eVA Africa Fund

Generally these are firms that are investing in firms across Africa on a case by case basis. We certainly hope that entrepreneurs are able to benefit from some of these resources.

Image Credit: 88mph

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3 thoughts on “Raising money for your Startup, some options

  1. Perhaps you don’t need “funding” try get it up and running on your own steam… What do you need money for for a web/software startup? shouldn’t you be sitting down and writing code rather?

    Are you saying you don’t have 20 bucks to buy a domain? and host it?

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