Africa · Fundraising

How realistic is it for an early-stage African startup to seek funding from a Western based Fund?

Chamakhe Maurieni

March 4th, 2016

I founded Africas first corporate ridesharing service - Pair.Pair is a monthly based subscription service which enables the working class in sub-Saharan African cities(est. 150 miilion) commute to and from work,in comfort.
Pair works by matching Car-owners with passengers,going same way as themselves to work:for one month,with an option of renewal at month end.
 We launched in Africas most populated city - Lagos,with a working class population of 5 million.User reception for the service has been impressive so far (2000+ passengers),with over 20,000+ rides offered in 5months.We reached the above feat majorly via achievement were done via direct sales,and cold-calling potential users over the phone(telemarketing),and a few online campaigns.
We are looking at growing to our full potential,we feel we have the potential to onboard 14,000 passengers on the service monthly(just in Lagos),if we have the right funds to push our marketing and sales strategy.
  We are currently in discussion with a local private fund,but the discussions seem to have no timeline attached to it.Am looking at the possibility of seeking investments from Western based venture capitalists,and funds;but I am not sure how realistic this is.
Can I kindly get advice on how possible the above is,and how I can go about doing it?

Michael Rain Digital Media Professional

March 4th, 2016

First, great to learn about the progress of your company, Chamakhe. Looks like you're on to something.

It's tough for an African-founded company that serves an African market to raise funds from Western investors, at least the investors who are based in the U.S. Most have an extremely limited and poor perspective about Africa, so they fill the gap with flawed assumptions. Ernst & Young refers to this as the "African perception gap."

It's like Tristan Walker observed in a recent talk "A lot of folks let their lack of content cloud their judgement."

If you get their attention, you will burn a lot of time trying to educate them about the market and constantly deal with correcting incorrect assumptions based on ignorance.

The key is to find investors who already have some investment in Africa, no matter where they are based. You will at least be left only to make the case for your company and concept, instead of first being charged with the task of rebranding Africa in their minds.

Chamakhe Maurieni

March 4th, 2016

Thanks Angela Giglia,your suggestion makes a lot of sense.Unfortunately,company rules over here are rigid.Private companies are not permitted to seek funds from the public domain.
PitchingPair to our users for investment purposes,will be seen as acting as a publicly traded firm,when we are registered as a private company.

@Scott Perlman,I will send  Bruce Campbell an in-mail over LinkedIn.Thanks for the lead.

@ Michael Rain Thanks for the advice.I think I agree with you.


Angela Giglia Award-Winning Creative Idea Person | Communicator | Revenue Spotter | Human Connector | Digital Media Producer

March 4th, 2016

I love this idea. What if you contacted your user base and offered them the opportunity to invest in your company. You can hold onto the major shares but the company becomes user owned and they become invested in the success of the company. 

Scott Perlman Contract CFO / Fundraiser

March 4th, 2016

You may want to speak with Bruce Campbell, a Boulder based attorney (founder of Blue Dot , who's worked on a lot of fundraising transactions in Africa. He could advise you. https://www.linkedin.com/in/brucecampbelljr

Feel free to mention that I referred you.

Darnley Howard President/Principal Consultant, Advansa International

March 7th, 2016

Chamakhe, your company sounds promising. I tend to agree with Michael Rain's comment. In addition many angel/venture capital investors tend to stay close to home because it is easier to do due diligence on a company. That said, those entrerpreneurs who have successfully raised western capital often have a foot on both continents which makes it easier to develop relationships with investors.

Another strategy is to connect with the small but growing African startup/VC community via a portal like VC4Africa.com or by attending events like Angel Fair or the upcoming Lagos Startup Dealday run by the Lagos Angel Network.

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

April 18th, 2016

For Hong Kong, there are a few development firms that specialize in African firms.  A lot depends on the type of investment.  If you are looking at > USD 5 million, there are firms that will develop a project and then pitch it to investors.  If you are looking at < USD 50k, you are looking at angel investors, and I can introduce them to you.  There appears to be a gap in the middle, but I think that should get filled soon.


Mateja Yango Founder @ Mugeta Farms Co. Ltd, TradeMark/BrandName: VICTORIA FINEST

September 22nd, 2017

Good day Chamakhe,

How is your startup doing?

It is over one year since you posted in here, did you managed to raise funds from foreign investors?

I think most Africa StartUps are facing the same problem you faced, the major problem is angel investing and crowdfunding is still new to Africans, it will take years for people to get accostomed to these kind of things. While foreign angels have a different way of thinking about Africa.

All I can say Africa is a growing market of tech, investors should open their capital in our startups, it is most probably they will earn more compared with investing in US/EU.