VC4Africa is building a leading peer-to-peer network that connects African based entrepreneurs with the resources (network, knowledge and capital) they require to realize their potential. By our definition, every entrepreneur we engage creates value in the areas of people, planet and profit.
Problem Statement
Innovative early stage ventures with the potential to yield high social and environmental impact - and requiring less than USD $1 million in financing (the 'S' in SME) - are the most difficult segment of the SME pipeline to reach. This is especially true in the context of Sub-Saharan Africa. Often times early stage ventures have a limited track record and lack the collateral needed to secure debt capital from a local bank. Moreover, local banks and traditional financiers too often do not appreciate the dynamics of the entrepreneur’s specific business and therefore cannot add value beyond financial capital. The cost and complexity of due diligence is one of the limiting factors for those interested and able to invest in this segment. It simply costs too much to find genuine entrepreneurs with a solid business idea and plan—just ask anyone with an SME fund and they’ll tell you how ‘hard it is to find qualified deal flow.’ As a result, most existing SME funds seek larger deals and the highest margin businesses. At the same time, micro-credit is limited in its ability to support high growth businesses beyond small-scale enterprise and leaves entrepreneurs with potential standing on the sideline. This dynamic creates an early stage “vacuum” in which a large number of potentially thriving, innovative companies are either constrained to be micro-enterprises, and hence have a limited impact on economic growth and job creation, or don’t come into existence at all. This tends to shut out promising entrepreneurs in the sub-$1 million financing range indiscriminately, or raises the cost of capital to prohibitively high levels—above the already-high rate of return on capital exhibited by many SMEs—making financing uneconomical.
Our Objective
VC4Africa exists to fill this vacuum. As the largest network connecting African entrepreneurs, angel investors and early stage VCs, VC4Africa seeks to reduce the barriers to investing in small and growing businesses with high potential to contribute to innovation and economic growth throughout Africa. But we are more than a social network. We seek to leverage our data in meaningful ways to increase access to resources and facilitate successful business and investment connections to African entrepreneurs with currently limited access. VC4Africa develops tools that work to efficiently connect members and, in our community’s drive to fuel innovation, create jobs and bring rapid economic growth to communities throughout the continent.
14. A FEW FACTS
»
We
have
screened
over
1200
applica5ons
and
more
than
600
entrepreneurs
have
successfully
published
their
venture
online;
»
The
ventures
on
VC4Africa
are
early
stage
and
require
investments
between
USD
$10K
and
USD
$1
million;
»
The
primary
sectors
include
mobile,
web,
energy,
health
care
and
agriculture,
amongst
others;
15. A FEW FACTS (cont)
»
Each
venture
is
scalable,
makes
smart
use
of
technology,
or
is
disrup5ve
in
their
applica5on
of
a
business
model;
»
Thirty
percent
of
the
registered
ventures
have
some
form
of
social
mission
and
could
be
qualified
as
a
social
enterprise;
»
Listed
entrepreneurs
have
access
to
free
online
tools,
mentorship
opportuni5es
and
private
deal
rooms.
16. EXTENDED BITS
A
joint
venture
and
funding
resulted
in
the
launch
of
a
SoWware
TesAng
facility
in
Somaliland.