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How Startups Can Raise Capital In Low Liquidity Markets 


By Marie Nielsen 

Enterprise capital has grown out of Silicon Valley and change into world by default, mirroring the trade that receives nearly all of its consideration: tech.

Fund managers within the U.S. and Europe nonetheless dominate the headlines, however quietly (and actually more and more noisily) different buyers in rising markets are honing their craft in contrasting circumstances.

Solely about 1% of global venture capital is at present deployed in Africa, which raises an attention-grabbing query: How ought to an growing variety of tech founders on the continent go about elevating capital in a low liquidity market?

Based mostly on my 10 years of expertise elevating capital for my very own startup and advising a portfolio of tech startups in East Africa, I goal to supply my view on methods to finest fundraise in robust market circumstances.

Early-stage competitors

Marie Nielsen, partner at Antler East AfricaMarie Nielsen, partner at Antler East Africa
Marie Nielsen, accomplice at Antler East Africa

As of 2024, there’s extra liquidity (particularly cash closed by Africa-focused funds) within the continent’s enterprise capital area than ever earlier than. In that context, I discover latest fund deployment charges to be surprisingly gradual at choosing up following the capital downturn.

I see buyers searching for the following technology of “novel” African tech options in favor of already “tried and examined” enterprise fashions, and fewer willingness to “save” present struggling growth-stage firms. Because of this, a number of mature firms in East Africa have just lately needed to wind down their operations, underscoring the pressing want for brand spanking new success tales.

Unsurprisingly for an rising VC market, competitors is especially pronounced within the earlier phases. Collection A offers are hotly contested proper now, whereas there’s nonetheless a scarcity of pre-seed and seed funding resulting from lowered investor threat urge for food.

Capital sources

At Antler, once I’m advising founders who undergo our funding cohorts, I inform them to consider buyer income as their least expensive supply of capital. When there’s much less cash sloshing round, founders need to be centered on pursuing enterprise fashions with sturdy unit economics and a comparatively fast path to profitability. This embraces the basics in good enterprise observe in distinction to the hype-driven decision-making you would possibly see in some U.S. tech hubs and even in Africa in the course of the 2021-2022 capital growth.

Bootstrapping is one other approach of describing this method to constructing firms — one which had considerably of a renaissance in Europe and the U.S. throughout their VC funding drought. I all the time encourage Africa-based founders to embrace a stability-centric and long-term development mindset first, permitting them to then take into consideration experimentation when early income is coming in and there’s much less runway threat hooked up. Various capital sources are additionally value contemplating, reminiscent of grants.

Constructing belief

East Africa is a lower-trust atmosphere, and the execution of offers will be tougher than in different markets. In the event you’re a brand new founder, hunt down a heat introduction to an investor from one other founder who’s extra skilled than you.

Investor circles in decrease liquidity markets are usually smaller, so face-to-face conferences could make all of the distinction when pitching. In my expertise investing in East Africa, seed funding rounds typically take a very long time to shut, even six to 9 months. These timeframes require workarounds so founders don’t find yourself stranded.

An instance is the usage of Easy Agreements for Future Fairness, or SAFEs, enabling founders to shut and obtain smaller checks “one after the other” as buyers commit.

One other hack is to ask a world investor to affix your spherical; typically they set a extra formidable tempo that native buyers then observe.

And you probably have a startup adviser, why not see in the event that they change into your first angel investor in the event that they’ve purchased into your imaginative and prescient?

In 2021, a BCG analysis of the African VC scene concluded that almost all offers struggled to progress past the second stage (word that that is from the yr fondly appeared again upon by folks in Europe and North America as a golden period for affordable cash in tech).

This context calls for self-discipline and resilience from African founders, which is able to assist them reveal to buyers the viability of their firms in the long run. A lot of the traditional knowledge on fundraising applies primarily to extra mature markets. On this period — and particularly on this continent — it’s essential to know your market context clearly and adapt rapidly. This method helps guarantee your startup not solely survives but in addition thrives within the face of low liquidity realities.


Marie Nielsen is a accomplice at Antler East Africa. Earlier than Antler, she based and managed Penda Paper Recycling in Addis Ababa and was a junior accomplice at McKinsey & Co. in Oslo and Addis Ababa.

Illustration: Dom Guzman

How Startups Can Raise Capital In Low Liquidity Markets How Startups Can Raise Capital In Low Liquidity Markets 


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