Turning an idea into a successful and profitable venture requires hard work, persistence and sheer resilience, and more than all these, it requires access to the right type of funding.
Most startups fail not because they don’t have the credibility and technical know-how, they fail because there was no means of funding for them at the initial stage where it is needed mostly.
This is most notable in Africa and most less developed nations of the world.
Finding investors to believe in your idea and cough out their hard-earned money to sponsor such an idea could be a daunting task. And sometimes, when they do, their terms and conditions could be very unrealistic.
When it comes to investing in any company, there is equity funding and equity-free funding. So what do these means, what are the differences and how can startups in Africa especially take advantage of the latter?
This article talks extensively about the list of equity-free funding available to startups in Africa.
What is equity-free funding?
Equity-free capital is nothing but funds granted to businesses without any exchange of equity. At the initial stage of their business, founders mostly prefer to raise capital without diluting any equity. This results in having full control over decision-making and no interference of investors in the financial decisions.
Equity funding means seed capital provided by private incubators, government organizations, and other organizations without an exchange for equity. Although, it could come with some strings or conditions attached to it like detailed and frequent reporting, and sometimes a condition for mentorship.
This is in stark distinction from equity funding, where individuals, venture capitalists, and business entities invest an amount of money as a seed for your startup in exchange for equity. By equity, we mean a share of the company.
However, most venture capitalists and investors are quite careful with their money and may not willingly be quick to put their money into any startup, no matter how promising it may be. And as such it becomes nearly impossible for most founders to secure the funds necessary for the growth and development of the business.
And in this case, they must look to equity-free funding. However, they must be able to prove themselves beyond doubt as not everyone who applies for such grants is awarded.
List of equity-free funding for African startups
1. SeedStars World
SeedStars World is one of the business grants offered to entrepreneurs from Africa. Seedstars Africa is an organization actively offering SME grants in over 53 countries in the world, especially regions like Africa, Asia, the Middle East and South America.
To access business grants from Seedstars, you will need to apply for the annually offered Business grant competition, a competitive grant for young business owners and emerging markets.
These business grants for entrepreneurs from Africa help to identify promising business owners, organizations and companies in very need of capital.
They support Entrepreneurs who have a business in any African country, and their main priorities are to build and support online businesses in Africa and fund web and mobile tech startups in Africa.
2. Schwab Foundation
The Schwab Foundation actively searches for company owners who are social entrepreneurs in a variety of industries, including agribusiness, tech, health, and education, to promote social entrepreneurs throughout the world.
The Schwab Foundation, a social entrepreneurship organization based in Geneva, Switzerland, was founded in 1998 to offer business grants to entrepreneurs across the African continent. The application process is extremely competitive, and successful applicants will be awarded grants for their ventures.
3. Ford Foundation
The Ford Charity is a private American charity whose mission is to improve human welfare. The organization’s goals are to enhance global human achievement, increase international collaboration, reinforce democratic ideals, and lessen poverty and injustice.
The New York City-based foundation focuses on nine areas: gender, racial and ethnic justice, government and civic engagement, creativity and free expression, disability inclusion, future of work, international cooperation, missions and investments, technology and society, natural resources, and climate change.
These areas help leaders and organizations propel social change globally. Ford Foundation grants have gone to several Nigerian companies, including CcHub and BudgIT.
4. The Tony Elumelu Foundation
The Tony Elumelu Foundation launched the Pan-African entrepreneurship initiative known as the Entrepreneurship Grants Programme (TEEP), a multi-year program of training, funding, and mentorship that aims to develop the upcoming generation of African entrepreneurs.
The programme was founded by a wealthy investor from Nigeria. With a $100 million grant, the Tony Elumelu Foundation hopes to boost Africa’s economy by $10 billion annually and generate one million new employment. African entrepreneurs with feasible, creative concepts for their enterprises or businesses are the primary beneficiaries.
5. Savannah Fund
Giving African entrepreneurs access to startup and business grants is another great option offered by the Savannah Fund. Since it concentrates on high-growth, nursery-stage technology entrepreneurs and businesses in Africa, Savanah Fund has over $8 million in income throughout the years.
Since it began offering business incentives to entrepreneurs. Documents from Kenya, Nigeria, Ghana, South Africa, and other surrounding nations attest to its assistance to African business owners.
6. Miss Africa Seed Grants for African Women in Tech Businesses
A US$5,000 business grant will be awarded to the winner, and finalists will receive a $1,000 grand prize. Miss Africa Seed investment helps female and female African entrepreneurs run innovative businesses. Female scientists might receive financial help through the DCA Academy’s Business Grants for African Entrepreneurs project.
If you presently reside in any African nation and have the ability to lead as a corporate representative or in a social enterprise based in Africa. Then take into account that these funds promote STEM fields and associated subjects.
7. MEST Africa Challenge
Are you a young tech entrepreneur just starting in the tech sector? Every year, the MEST Africa Challenge hosts a wide-pitch competition throughout Africa, offering businesses a business fund of $50,000 in equity investment.
The MEST Africa Challenge is an excellent funding program for ICT entrepreneurs operating in any of the following countries: Tanzania, South Africa, Rwanda, Sénégal, Ethiopia, Ghana, Kenya, Nigeria, and Côte d’Ivoire. The difficulty lies in conducting a special search for African tech entrepreneurs to provide them with startup funding, business coaching, and extensive networking opportunities.
8. Innovation Prize for Africa
One of the awards for African business owners is the Innovative Prize. The purpose of the business grants is to promote creative, practical solutions to Africa’s problems. Possess a notion or a fix for a pressing issue facing nations in Africa.
An avenue to assist you spread the word about your creative solutions to problems encountered is the Innovation Prize for Africa. If you have an idea for a business or a solution that will benefit Africa, apply for the Innovative Prize for Africa if you require money.
9. Unilever Young Entrepreneurs Award
The worldwide sustainability goals are among the issues that these business grants assist creative entrepreneurs in addressing. The Unilever Young Entrepreneurs Award may be the ideal grant for you if you’re a socially conscious entrepreneur in need of financial assistance to grow your enterprise and business.
By sponsoring and supporting numerous firms, these business grants for African entrepreneurs have reached a significant number of young entrepreneurs.
10. Africa Enterprise Challenge Fund
The Africa Enterprise Challenge Fund was established to support private-sector entrepreneurs in Africa. It is a US$ 207 million fund capitalized by bilateral and multilateral donors (the AECF donors). Australia, Denmark, the Netherlands, Sweden, and the United Kingdom governments, along with the International Fund for Agricultural Development (IFAD), back the AECF.
Funding is made available by the AECF through contests. By submitting their fresh and creative company concepts to a specific AECF competition, private-sector businesses are invited to compete for AECF money. Up to US$1.5 million in grants and interest-free loans are given to the top proposals.
Conclusion
Equity-free funding is a reliable way to get your business starting as a founder. It acts as a springboard without necessarily sacrificing any part or equity for the business.
However, not everyone who applies for these grants is awarded. The process can be quite rigorous and competitive. And if you must be awarded, then you must prove and show your business beyond reasonable doubt among other competitors.
