What do you do when you can’t get funding because you don’t look like them?… You get creative!
Statistically speaking, someone like me does not stand a chance when it comes to raising venture capital in the tech world… (or in the world — in general), no matter how amazing my idea could be. I am a black (African) female entrepreneur in one of the most obscure places in the world. Local financing isn’t even an option in a country where venture capital and professional angel investing is truly in its infancy. Local investors are hard to find and probably would still doubt the potential profitability of a tech innovation that is probably outside of their scope of expertise or range of interest. Banks, on the other hand, are incredibly risk-averse because tech ideas are risky business and that does not mesh well with the whole “repayment of a loan within a reasonable period of time” part of the deal. Entrepreneurs would generally not have shorter runways and unfortunately, that may not be very realistic. Above and beyond that, locally loaned monies are incredibly expensive. From personal experience, I can honestly say the cost of repayment can sometimes negate the whole purpose of borrowing said funds.
In fact, I will give you a personal example. I once painstakingly managed to get a loan back in 2010 or thereabouts, which (admittedly wasn’t that much money but I am too ashamed to say how much it was: just now it was not that much in the grand scheme of things). Though the bank was incredibly patient with me: it took me 5 years to repay it off completely! 5 whole years! I had expected to take 2 years but during this period Malawi experienced massive inflation to a point where my banked funds in local currency (and those of others) on one occasion seemed to have lost 60% of its value, almost overnight. It was probably not overnight but certainly felt like it. At the height of my repayment period, I remember my loan’s interest rate being at 52%. That is incredible, I know but that was the financing experience that many other entrepreneurs had to live with and deal with way over here. I think we can agree that from a micro-entrepreneurs perspective: this is prohibitive.
Mainstream crowdfunding platforms often require payment options that do not integrate well over here (most Malawians still do not have credit or debit cards though this is changing with the introduction of these by several prominent banks). In fact, the least stressful thing is to get a friend to help you. You ran your crowdfunding campaign through a friend’s debit card and withdraw to their foreign bank account, they then have to arrange for you to get it wire-transferred to Malawi. Very tedious, very roundabout and very uncertain. Often, you don’t always have someone that can help with such matters.
Countries like South Africa have several crowdfunding platforms that are doing a great job over there but that’s not the case for where I’m from.
So Malawian entrepreneurs look outside of the country’s borders. They soon find that many other African countries are dealing with similar issues. Only a few countries such as South Africa, Nigeria and maybe Kenya might have more financing options for entrepreneurs. I haven’t entirely checked, the situation on the ground could be far better elsewhere.
So, here I am having entered a highly competitive competition (a program under the United States Department of State) called the GIST (Global Innovation through Science and Technology) — Tech-I Competition. I made the audacious decision to try and fix the financing gap that micro and small enterprises and entrepreneurs face in Malawi (and other African countries). The solution offered being — Afrineur: a platform for connecting entrepreneurs with entrepreneurs and other investors.
So, far Afrineur focused on what we could do: offering business development services through the gracious support of some of our unofficial partners like Frankfurt School of Business, Longevity Development, Enterprise Development Holdings, Events All Day (Events265), MHub and various other entities. However, over and over again, we kept on experiencing that teaching someone how to run a good business without them having the resources to execute effectively is and was a waste of time for everyone. Entrepreneurs need finance. There is literally no way around it. That’s what Afrineur wants to try and help with by building into the existing entrepreneurship and investor social networking platform we created (www.afrineur.com), we want to develop the crowdfunding functionality necessary for entrepreneurs to raise the finance they need from their community or international investors (angel /impact or vc). The goal is to build in this functionality within 12 to 24 months and include local payment methods like Airtel money, Mpesa, TNM Mpamba, Mukuru etc as well as the standard Paypal, debit and credit card options. It may be a slow painful journey when we do start but we have no choice: Africa’s entrepreneurs need this!
For that reason: Competitions like these are crucial for attempting to level the global playing field. VC funding is probably never going to happen for me or a lot of the entrepreneurs I represent. The argument I have heard is that many of these businesses are not “scalable”. Professional angel investing is in its infancy here and loans (already told you my horror story)… etc. I need you to vote for me (Maclean Mbepula) for the GIST Tech-I Competition because I truly believe, if I win, those entrepreneurs win too. If you can, please share this post with your connections for the same purpose. Voting is open from now until the 22 February 2018. You can vote more than once but a maximum of once a day. As one of 109 semi-finalists, competing for 10 spots in the finals, your vote will make a genuine difference. Vote here: www.gistnetwork.org/content/vote.