Africa’s tech startup ecosystem has been rapidly growing in recent years — attracting the attention of local backers and investors worldwide. However, securing funding for your tech business in Africa can still be daunting, thanks to complex regulatory requirements and other issues. Still, there’s a surefire way to approach it.
You can get investors for your tech business by talking to angel investors, pitching to venture capital firms or crowdfunding your idea. You can also take a more traditional route by taking a small business loan or applying for government grants.
In this comprehensive guide, we’ll explain how to attract investors for your tech business and help you navigate Africa’s investor landscape.
How to find investors for your startup
Finding investors for your startup might seem complicated, but we have some tips to help you connect with amazing backers.
Here are five of the top ways to find investors for your African startup:
- Join startup incubators and accelerator programs.
- Research your competition to know how they got funded.
- Network like crazy and use familiar contacts.
- Create a great business plan and pitch it everywhere and anywhere.
- Use the power of social media.
Let’s explore how exactly these strategies can translate to startup funding.
1. Join startup incubators and accelerator programs
Startup incubators and accelerator programs provide valuable resources, mentorship, and networking opportunities for tech startups. They often have connections to investors and can help you refine your business pitch.
When you join a startup incubator or accelerator program, you become part of a vibrant community of like-minded entrepreneurs. These programs offer a supportive environment to learn from experienced mentors and industry experts. They provide access to specialised resources and facilities such as co-working spaces, prototyping labs, and legal as well as financial advice.
Moreover, these programs often organise events and workshops where you can network with potential investors. They bring together investors, successful entrepreneurs, and industry leaders, creating a platform for valuable connections and partnerships.
By joining a startup incubator or accelerator program, you can increase your chances of finding investors and gain valuable insights and guidance on growing your business.
2. Research your competition to know how they got funded
Take a close look at successful tech startups in your industry and region. Research how they secured funding and learn from their strategies. This will give you valuable insights into the investor landscape and help you tailor your approach.
When researching your competition, delve into their funding journey.
Look at the investors they attracted and the funding rounds they went through. Analyse the factors that made their pitch successful and try to identify any patterns or commonalities. Understanding how your competitors navigated the investment landscape can provide a roadmap for your fundraising efforts.
Additionally, don’t hesitate to contact successful founders and ask for advice. Many entrepreneurs are willing to share their experiences and insights. By learning from those who have already succeeded in attracting investors, you can refine your strategy and increase your chances of securing funding.
3. Network like crazy and use familiar contacts
Networking is crucial in the startup ecosystem. Attend industry events, join tech communities, and build relationships with influential individuals. Use your existing contacts and ask for introductions to potential investors.
Networking events (such as conferences, meetups, and industry-specific gatherings) provide excellent opportunities to connect with investors since venture capitalists, angel investors, and other funding sources often attend these events.
But don’t just be an attendee!
Engage in meaningful conversations, share your vision, and listen to others’ experiences. Building a solid network can open doors to potential investors and mentors who can guide you through fundraising.
Don’t underestimate the power of your existing contacts! Reach out to friends, family, former colleagues, and mentors who may have investor connections. Personal introductions can be highly effective in grabbing the attention of potential investors, as they come with a level of trust and credibility.
4. Create a great business plan and pitch it everywhere and anywhere
A compelling business plan and pitch are essential tools for attracting investors. Craft a concise and persuasive pitch deck — highlighting your unique value proposition and growth potential. Pitch your tech business to investors at every opportunity, including pitch competitions, demo days, and investor meetups.
Investors receive countless pitches, so making yours stand out is crucial. Your business plan should communicate your product or service, target market, competitive advantage, and financial projections. It should also show investors that you have a deep understanding of your industry and a solid growth plan.
When pitching, be confident and passionate about your startup.
Practise your pitch until it becomes second nature, and be prepared to answer tough questions. Remember that every interaction with a potential investor is an opportunity to showcase your business and make a lasting impression.
5. Use the power of social media
Establish a strong presence on social media platforms (like LinkedIn, X, and Facebook). Share updates about your tech business, engage with the startup community and leverage these platforms to connect with potential investors.
Social media has become a powerful tool for startup founders to build their brand and attract investors. By sharing valuable content and insights about your industry, you can position yourself as a thought leader and gain credibility.
Engage with relevant communities and participate in discussions to expand your network and catch the attention of potential investors.
Additionally, consider using social media advertising to target specific investor groups. Platforms like LinkedIn allow you to create targeted campaigns that reach investors with relevant interests and backgrounds. By leveraging the power of social media, you can amplify your reach and increase your chances of finding the right investors for your tech startup.
What type of investor does your tech business need?
Identifying the type of investor that aligns with your tech business is crucial. Consider your business model, growth stage, and long-term goals.
For example, angel investors or venture capitalists (VCs) might be a good fit for a tech startup in the early stages. If you are working on a social impact project, impact investors or development finance institutions might be more interested in your business.
Still, it’s essential to understand the different strategies various investors employ.
Angel investors, for instance, typically target small businesses — offering capital and valuable industry expertise.
On the other hand, VCs like Ingressive Capital (who manage funds from institutions or high-net-worth individuals) tend to invest more significant amounts of money in exchange for equity in the company. They also play a more hands-on role in guiding the business towards growth and profitability.
Some VCs even focus on a specific funding stage.
For example, we at Ingressive Capital focus on pre-seed and seed-stage tech-enabled companies across Africa. We typically target 10% ownership and provide financial backing (up to $500,000!) as well as world-class support to audacious founders solving pan-African problems.
What do investors look for in a tech business?
Investors are businessmen. Like all good businessmen, they want to make money on their investments — even if it takes a while to get returns. You can woo them by knowing exactly what they want.
Investors look for several key factors when evaluating tech businesses, including:
- Market potential: Investors want to see the potential for a significant return on their investment. Research your target market thoroughly and demonstrate its growth potential.
- Strong team: Investors pay close attention to the founding team. Highlight your team members’ expertise and track record.
- Innovative technology: Your tech business should offer a unique and creative solution to a problem.
- Scalability: Investors are interested in businesses that have the potential to scale rapidly and have a large addressable market.
- A clear business plan: This plan is essential to attracting investors. It should outline your value proposition, target market, marketing strategy, and financial projections.
When it comes to market potential, investors look at the current size of the market and its projected growth. They want to invest in tech businesses that operate in industries with high growth potential (such as artificial intelligence, cybersecurity, and e-commerce).
A robust intellectual property portfolio can also be a plus for your company.
Patents, trademarks, and copyrights can provide a competitive advantage and protect your tech business from potential copycats or infringement issues. Local and global investors are more likely to be attracted to companies with a solid IP strategy.
How has Ingressive Capital supported funding rounds in Africa?
Ingressive Capital is a $50 million fund II VC firm focused on investing in Africa’s pre-seed and seed-stage high-growth tech startups. We’ve supported numerous funding rounds across the continent, and our investments have helped fuel the growth of promising African tech startups and provided them with the necessary resources to scale.
Some of the companies we’ve backed include Paystack (which exited for $200 million in October 2020), Bamboo (a fintech that allows Africans to buy, hold, and sell stocks), and SeamlessHR (an HR tech firm that provides modern end-to-end HR solutions for firms of all sizes).
How to apply for funding with Ingressive Capital
If your tech business aligns with Ingressive Capital’s investment criteria, you can apply for funding through our website. The application process typically involves submitting your business plan, financial projections, and other relevant information.
Here’s a step-by-step guide to applying for funding with Ingressive Capital:
- Visit the Ingressive Capital founder application page.
- Fill out the founder application form.
We can’t wait to receive your application!
The bottom line
Securing funding for your tech business in Africa requires thorough preparation, strategic networking, and a compelling pitch. By understanding Africa’s investor landscape, optimising your tech startup for investment, and employing effective networking strategies, you can increase your chances of finding the right investors to support your growth journey.
Want backing from a VC who’s as passionate about your tech business as you? Then you want Ingressive Capital. Head over to our founders’ application page and apply for funding!
