For start-ups looking for sustained funding, the best way to access the right funding is to look out for investors who have experience in their field of business, Dr. Belinda Gail Quarterman Noah, Executive Director of the Founder Institute, a world premier idea-stage accelerator and start-up launch programme, has said.
They [start-ups] should first understand the best practices needed to operate a successful and enduring global company but the key is to find an investor that has some type of experience in your industry, so they will quickly understand the problem that you are solving, and your solution.
If you make the mistake of pursuing investors that have no experience in your industry, you will create a much harder road for yourself, because they will not have the natural sense of empathy for your company and industry,” she told the B&FT in an interview on start-ups and the challenges faced in accessing funding.
Even though start-ups continually spring up on the continent, many die out before they reach year two. Statistics by the Harvard Business School shows that 75 percent of venture-backed start-ups fail globally. While start-ups in the west do face financing or funding challenges, the situation in Ghana and Africa is much worse.
Other challenges include limited capital and knowledge, unavailability of suitable technology, low production capacity, ineffective marketing strategies, lack of capacity to identify new markets, constraints on modernisation & expansions, unavailability of highly skilled labour at affordable cost, bureaucratic delays and a maze of rules in following up with various government agencies to resolve problems.
In short, African start-ups lack the needed infrastructure and strong government policies to protect and support them put up their best to contribute to economic development.
To circumvent some of these challenges, Dr. Noah noted that African entrepreneurs should form a coalition and lobby their respective governments to design policies and procedures which are conducive to creating public/private partnership opportunities for start-ups and policies and procedures that will attract foreign venture capitalists and investors.
African investors changing the funding story
Despite the growing challenges, Dr. Noah pointed out that the funding challenge is gradually fading out. “The African start-up struggle for the smallest of finance has changed. In the early days of African entrepreneur ecosystems, few start-ups made it to a major Series C round of funding. However, there is now more opportunity for African venture funds to back local African entrepreneurs than in the past.
This has opened up more opportunities for Ghanaian and other African start-ups to receive funding because the African VC better understands the nuances of the local African market. In addition, the globalization of the best practices of Silicon Valley by the Founder Institute is enhancing African start-ups ability to successfully engage with all investors on a global level,” she said.
Impact of incubators and Founder Institute
She noted that the impact of start-up incubators have been positive for their development over the years. “Start-up programmes and accelerators such as the Founder Institute are now training aspiring entrepreneurs in Ghana and elsewhere in Africa on the best practices used by successful global companies to operate their companies.
For example, our mission is to ‘Globalize Silicon Valley’. Such training is enhancing the opportunities for the graduates of the programme to attract the attention and receive funding from investors.I must say that the Founder Institute is more than living up to the task, as indicated by the feedback we have received from our Founders and as indicated by the success of our graduates.
We operate in 170 cities, 60 countries, and six continents. Our graduate companies estimated portfolio value is in excess of US$15 billion, and our graduate companies have received over US$600million dollars in funding. Moreover, 72percent of our graduate companies are still operating after two years, whereas over 90percent of start-ups fail that have not graduated from the Founder Institute,” she added.
Through a challenging and rigorous curriculum, the Founder Institute provides early-stage and aspiring entrepreneurs with the structure, training, mentor feedback, global network, and lifetime of support needed to start an enduring company.
The organisation just launched the ‘Star Fellow’ programme which will follow the same programme as the core curriculum, however, in order to assist with the unique challenges of developing a space-related business, Star Fellows will receive additional mentorship and support throughout the programme, such as access to Star Fellow Mentors and other global star fellows.
“Many leaders of the world’s fastest-growing companies have used our programme to transition from employee to entrepreneur, test their start-up ideas, build a team, get their first customers, raise funding, and more. In addition, our global partners include Amazon Web Services, FbStart from Facebook, Girls in Tech, LivePlan, Google Cloud Platform, KPMG, and many more,” she added.
She noted that the Founder Institute works with Ghanaian entrepreneurs before they even have a team, company, validated idea, product, strategy or plan, and provides them with a structured process, expert mentorship, and a global network to launch their company or push their idea forward.
“At the Founder Institute, we believe that our reach should always exceed our grasp, because this is how we achieve the impossible. Since we first launched in 2009, this philosophy has extended to our graduates who have gone on to reach quite impressive milestones year after year in every corner of the globe. Some of our global success stories include Udemy,RealtyMogul, TravelCar, and Peerby.
In Ghana, our first class graduatedrecently and we expect that they will join their fellow Founder Institute graduates by becoming very impactful and successful global companies. The Ghana cohort includes the following companies: AkooBooks Limited; Jariar; EazyWaste Services Limited; TrustFarm LLC; TeraCargo; Crowdtrader Limited; Signaleats; Origma Technologies; and Newsbag.”