Serious question here – how come Zimbabwean startups do not pull in as much funding as their African counterparts? Is that even a fair question to ask? Let’s talk about it.
There are various reasons why Zimbabwean startups struggle to raise funding from international investors.
It may sound crazy to say that when just a week ago we were talking about Jamboo raising over $1m in just over a month. By the end, we will all understand why Jamboo stands out and why on the African continent, million dollar deals are more commonplace.
There is no getting around it, Zimbabwe is a small market. There are about 15 million of us in this teapot and that sounds like a lot until you realise that Cell C, the fourth largest mobile network operator in South Africa reports having more than 16 million subscribers.
So, the big gun in this country, Econet, has way less subscribers than the fourth largest in South Africa.
Consider that most business ideas will have addressable markets much less than 15 million. We have talked a lot about Starlink but if we’re being honest, with kits costing above $600 and subscriptions close to $40, there’s probably less than 50,000 people that can afford that.
Those are not do-whatever-it-takes-to-get-in kind of numbers. Whatever crazy gatekeeping may be going on, I would bet if we had a market the size of Nigeria’s, Starlink would have found a way by now.
So, when someone starts a ride-hailing business in Bulawayo for example, we’re talking really small numbers.
Bulawayo province has 666,000 people and if we’re generous and say 10% of the population would use the ride-hailing service, that’s 66,000 people. That’s not making a venture capitalist in Silicon Valley salivate.
See, those of us fortunate to be reading this sometimes find it hard to believe the level of poverty in this country.
We think we’re struggling but when Zimstat, the government agency, says 61% of Zimbabweans make less than Z$100,000 a month (US$13 at the time), we scream, “That’s not possible, it can’t be that bad, can it?”
Oh yes, it is that bad. So sometimes when a startup finds a problem worth solving, the business model falls apart when they realise although the people need a solution, they can’t pay what’s needed to warrant the business.
Investors are aware of this. In our talks with startups, we hear of how how some investors pulled out after googling Zimbabwe and realising we have a small poor market. All this after being excited by the projections pitched to them.
Our national currency is a disgrace. You know they say inflation is akin to taxation because it has the exact same effect – it reduces the spending power of the population.
The loss in value of the Zimbabwe dollar is a deterrent for would-be investors. Aren’t we a dual/multicurrency economy though?
Yes, but in practice, as our mobile network operators will tell you, you will still find yourself saddled with Z$ and wishing on the government to allow you to convert it to the USD.
We have a reputation as a tough economy to operate in – high inflation, iffy political situation, high taxes etc.
We have a government that believes in Nicodemously legislating through Statutory Instruments so as to ensure the public has no chance to think of loopholes beforehand.
That makes it hard to plan and we have seen some businesses fold following some of those overnight statutory instruments.
Then there is the whole sanctions issue. As much as they are targeted, the country has still lost out on potential investment as investors fear accidentally working with companies that may have a sanctioned individual as a shadow director.
Not a death sentence
The above does not mean no startup can get funding in Zimbabwe. It just means it is much harder and a Zimbabwean startup needs to pitch like their lives depended on it.
They have bias to work against and they have to demonstrate that despite the above, their business model is solid. So, it has to be more solid than some of their African counterparts’.
We have seen the likes of Entry raise tens of thousands from international investors and so it can happen. Again, not significant amounts compared to other African countries but huge in Zimbabwe.
Then comes Jamboo which raised over a million in a month’s time. Well, they may be Zimbabwean in that the founders are Zimbabwean and that the app will serve Zimbabwe, but Jamboo is actually a UK company. That helps.
Also, we find that both investors who pumped in the mil are Zimbabweans. So, not really international investors. However, one might argue that’s even more impressive than getting international investors because Zimbabweans do not have a culture of investing in startups.
With this said, let us talk about…
Africa Tech Summit Nairobi 2024
Africa Tech Summit Nairobi has announced ten African tech ventures that will showcase their solutions to a diverse audience of industry experts, investors and fellow innovators on February 14th and 15th.
While African startup funding declined in 2023, the investment showcase continues to foster collaborations and stimulate investment opportunities to bridge the funding gap in the ecosystem. According to data from Africa: The Big Deal, African startup funding experienced a 39 per cent decline, falling to $2.9bn in 2023 from $4.6bn recorded in the previous year.
The 250+ entries received from various countries across Africa, including Kenya, Egypt, Tanzania, Nigeria, Ghana, South Sudan, Malawi, Angola, Morocco, Botswana, Benin, Congo, Uganda, South Africa, Sierra Leone and more, highlight the immense potential for innovation and partnerships in the continent. The ten selected ventures, spanning fintech, agritech, e-commerce, Web3, and climate-tech sectors, are looking to raise funding ranging from $500,000 to $15mn. They include:
Node Bio (Kenya) is utilizing cutting-edge plant science to develop crop treatment that effectively combat the adverse effects of climate change. Their innovative solution, Farmchef, enables plants to withstand drought, extreme heat, and other water-related stressors.
Valu (Egypt) is MENA’ s leading Buy Now Pay Later (BNPL) lifestyle-enabling fintech platform, offering customers and businesses convenient and comprehensive financial solutions.
Bingtellar (Nigeria) is building payment infrastructure for global citizens including freelancers, remote workers, contractors, businesses. Their ramp product simplifies the process of buying and selling crypto and facilitates swift money transfer across Africa.
Dukka (Nigeria) is digitizing payments and bookkeeping solutions to assist small businesses across Africa to accept all digital payment methods.
FutureLink Technologies (Uganda) is a digital marketplace that is simplifying financial access for individuals and facilitating payments for financial cooperatives. FutureLink Technologies is the first African company to win the Global SME Finance Platinum Award for Product Innovation of the year 2022.
Tausi App (Kenya) is a beauty tech company that is leveraging technology to link beauticians to potential customers. Tausi has registered over 6000 beauticians so far.
Feegor (Nigeria) is a B2B e-commerce company that is connecting Small and Medium Enterprises (SMEs) to manufacturers and major wholesalers.
Peercarbon (Kenya) is a climate fintech startup leveraging granular emissions data and cutting-edge sustainable finance technology to empower African SMEs. Peercarbon’s Software as a Service (SaaS) platform provides real-time insights, making it easy for businesses to track their carbon footprint.
Regxta (Nigeria) is making financial services accessible to underserved communities and micro-businesses in rural and peri-urban areas across Africa, including internally displaced persons and refugees.
URBANET (Kenya) promotes international dialogue on development activities worldwide, providing insights on municipal and local governance, sustainable urban development, and decentralization.
Henry Umunnakwe, Ecosystems & Sales Manager of Africa Tech Summit shared: “Amidst the challenging backdrop of decreased funding for African startups in 2023, the resilient spirit of entrepreneurship continues to thrive across the continent, and we are delighted to introduce these 10 pioneering ventures for this edition of the Investment Showcase. Our main objective of the Showcase is to spotlight and foster connections for these ventures with both local and global investors. We look forward to welcoming over 1000 delegates to the summit to catalyse collaborative efforts and propel investments to further fuel innovation and growth throughout the continent.”
Register for passes to Africa Tech Summit Nairobi, Feb 14th & 15th here.
We will keep looking at some of these events to get a better idea of which business solutions are funded. We want to see Zimbabwean startups on these lists and we can all share what they need to do to make that happen.
So, if you a startup founder, pay attention to the chosen few, analyse their models, websites, pitching techniques and the like.