Africa · Early Stage Funding

What are good resources to consult when setting up funds/managing financial transactions in Africa?

Shingai Samudzi

July 26th, 2015

I'm developing a funding model for entrepreneurs with good ideas in underserved countries in Africa.  Essentially, finding investors in the US and connecting them with intriguing startups in these selected countries.

I'm trying to determine the ideal business structure to set up in the US for holding money in escrow and then making funds available for distribution when certain milestones are hit or for making asset purchases on behalf of the startups.  Any suggestions for resources to consult or lessons learned from past experiences?

Onikepe Adegbola, MD PhD

July 26th, 2015

Homestrings helps with funding for entrepreneurs in Africa. I'm sure the folks there would be able to give you some suggestions or point you in the right direction.

allison simpson non-for-profit, administration, leadership

July 27th, 2015

bitpesa 

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

April 19th, 2016

I'm Hong Kong-based and involved in China-Africa trade.

Basically what you want in this situation is a trust in which you have a third party (often a lawyer) manage the funds and disburse them when certain conditions are met.

However trusts are very rarely used in angel/VC investing for issuing money to the project.  The problem is that they end up locking up money, and the attitude of the angel/VC is usually that they either trust the company or they don't.  If they don't, they don't make any investment, and if they do, then it's less work to just give the company full access to the funds.

One other bit of learning is that the trouble with VC's is that they aren't interested in projects that are less than USD 10 million, and usually what happens is that there are three groups involved.  The people that operate the project, a person that develops the projects for the VC, and the VC themselves.  The funders for these types of projects usually do not want to do much work, just send to move.

I'm trying to develop funding mechanisms for smaller projects in the USD10k to 500k range.

However, trusts are very common even standard when you have a fund use money from the investor.  In almost all situations, the fund doesn't have total access to the money, and there is a third party custodian that holds the funds.