Crowdfunding is the way forward for Africa technology start-ups who are having difficulty finding cash to get their businesses off the ground, according to Munya Chiura, Head of Africa Operations at Grow VC International Ltd.
Grow VC is a global, community-based platform for entrepreneurs and investors, which provides visibility to idea in the hope that the online community will come together to provide funding.
With funding gaps existing for tech startups in Africa – a gap that is only just starting to be tackled by organisations such as the m:lab in Kenya – Chiura feels that Crowdfunding is optimum way for tech entrepreneurs to drum up funds from investors. With the technology industry, and mobile in particular, leading the way in economic advance in Africa, the importance of funding technological innovation has never been more crucial.
“Crowdfunding can and should play a critical role in closing the funding gap tech startups in Africa,” he said. “Grow VC has agreed to lend its expertise having been operationally ready for the passing of the crowdfunding bill in the US. There are best practices that can be applied to the African context.”
Crowdfunding involves investors pooling their money into a trust, via the internet, to support a business. It has been used for a variety of purposes, including disaster relief, citizen journalism, political campaigns and scientific research. Crowdfunding has also been used heavily in the music industry, funding tours and albums for a variety of bands. Now Chiura hopes to fully utilise its possibilities to help develop Africa’s technology sector, with growing interest in the sector from venture capital firms, angel investors and other funding groups from outside the region.
“It is an exciting time right now in Africa,” he said. “Over the past several years, we have seen a large growth and boom in Africa, specifically in parts of East Africa. One of the industries that is leading the way in development is the mobile industry.”
“Having said that, we are cognizant that we have a long road ahead of us, particularly ensuring we have more and more angel investment in the region, which is the foundation for crowdfunding, and ensuring there is legislation in Africa to support this,” he said.
Grow VC has already been prominent in pushing such legislation in the United States, a campaign which came to fruition in April this year when President Obama signed the JOBS Act into law, allowing for a wider pool of investors in a company, with fewer restrictions. Chiura hopes similar legislation will come to pass in various African countries. The company has already agreed a link-up with Kenya’s m:lab and the World Bank in order to push forward the idea of crowdfunding in the technology sector, with competitions such as Pivot East and other events crucial to demonstrating to potential investors what quality tech innovations exist in Africa.
“We provide tools for both founders and funders to communicate more efficiently and manage what is needed for a successful outcome,” Chiura said. “Our aim is to help produce new shining stars with the right structures and resources in place to take on the world with the right confidence.”