The rebranding is part of VC evolving its business model to better support transformative technology ventures across the continent through catalytic capital and value-add support through its Venture Success Platform.

54 Collective, builds on its exceptional track record of investing in and scaling early-stage ventures in Africa.

The new name, 54 Collective, reflects the firm’s ambitious pan-African vision, aspiring to help entrepreneurs grow their businesses to serve all 54 African countries.

The firm is a commercial-first investor and embeds impact in everything it does. 54 Collective invests in ventures from idea to Pre-Series A stage by offering catalytic capital, and value-add support through its Venture Success Platform.

“Our catalytic capital and value-add support to founders, through our Venture Success Platform, signifies our evolution and ongoing mission to support entrepreneurs across Africa and enable them to build without boundaries to drive commercial and impact returns. Our name change to 54 Collective communicates our continued commitment to African founders. We are more supportive than ever of unlocking opportunities for entrepreneurs and ensuring a level playing field for youth and women founders,” commented Bongani Sithole, 54 Collective CEO.

Investment strategy 

54 Collective, offers equity and non-dilutive capital up to a total of $500k, enabling founders to scale their ventures across the continent. To break barriers of access, female founders receive an additional $150k, to their male counterparts, in the form of a non-dilutive capital.

The Venture Success Platform is made up of a team of highly experienced venture specialists who provide tailored support.

This is in the form of product, growth, commercial relationships, business strategy, talent, technology and data to build ventures for scale. The team also ensures that founders have access to the right funding by preparing them for investor readiness, investor access, fundraising strategies, unlocking debt and impact capital.

The Venture Success Platform empowers founders to succeed globally by facilitating networking and community building opportunities.

This unique combination of significant funding and comprehensive support distinguishes 54 Collective as the only Venture Capital firm in Africa offering early-stage founders with the highest amount of catalytic capital and support from the largest Africa-based venture capital team with over 70 staff members in Kenya, South Africa, Nigeria and the UK.

The firm has evolved from investing only in the Agtech, Fintech, and Healthtech sectors to being sector-agnostic in its investments, supporting more founders across many sectors on the continent. ​​

54 Collective helps founders navigate complex challenges to achieve commercial success and make an impact on the continent through economic growth and job creation.

In 2023, Founders Factory Africa was named one of the top venture capital investors in Africa, with an active portfolio of over 50 ventures across 10 countries.

To date, the firm has supported more than 70 ventures across Africa and helped its portfolio startups to raise nearly $140 million in follow-on capital.

A future of empowerment

With seven of the world’s fastest-growing economies in Africa, the continent’s venture capital sector is rapidly expanding, with $6 billion invested annually. However, this represents less than 1 percent of global venture funding, indicating a significant unmet need for smart capital.

“We are pursuing opportunistic investments in different sectors across the continent where there are uniquely large opportunities for startups to scale and create sustainable impact in these sectors. Our goal is to invest in 105 startups across Africa in the next five years, enabling entrepreneurs to provide solutions to the continent’s biggest challenges and transforming lives and industries,” concluded Sithole.

The firm is well on its way to achieving many of its five-year goals which range from enhanced financial inclusion, improved healthcare access, and creating dignified and fulfilling work to creating a gender forward portfolio.

54 Collective is targeting a portfolio where 50% or more of its startups are founded by women. Currently, from the 17 investments made between January 2023 and July 2024 in its portfolio, 45% of them are founded by women.

The firm’s investments are also creating social economic impact in the wider economy. For example, Asaak, a vehicle asset financing company has improved financial inclusion for over 11,000 bodaboda drivers.

An impact study uncovered that 79% of these drivers improved their quality of life significantly and 80% increased their income after receiving credit from Asaak.

Speaking on the significance of the brand evolution and future ambitions, 54 Collective’s Executive Chairman and UTOPIA CEO Roo Rogers said, 

“54 Collective is a powerful economic and social force in the African economy. It is anchored with strong roots on the continent and exceptional network and reputation across the globe. Together with our sister funds, we continue our mission to  redistribute investment and knowledge pathways towards a more inclusive, relevant, and equitable future for the Global South.”

54 Collective’s vision is to create a future where African entrepreneurship drives generational progress and prosperity across the continent.

The firm’s new name, catalytic capital, and value-add Venture Success Platform offering, marks a new era for the venture capital ecosystem.

The post Venture Capital firm Founders Factory Africa Rebrands to 54 Collective  appeared first on Tech | Business | Economy.

Few, however, would have forgotten how bad things were just a few months previously.

In February, the local currency hit a record low, having depreciated 44% against the dollar since the start of 2024.

That depreciation did not just impact Nigerians, who had to pay more at the petrol pumps and in shops.

It also impacted local startups, particularly those reliant on funding and investment. As most funding is delivered in dollars, even the healthiest balance sheets can look underwhelming when translated from naira to the US currency. As a result, those startups can find it challenging to retain and attract investment.

As agritech startup Winich Farms proves, however, challenging does not mean impossible.

Backed by investors including Founders Factory Africa, Winich Farms is an inventory supplier and organiser which connects small and medium-sized factories with a pool of more than 40 000 small-scale farmers.

By staying true to its vision, utilising technology effectively, and leaning on the available support, it’s grown successfully, even in an incredibly challenging economic environment.

“Winich Farms is one of the leading companies in our agritech portfolio. We were among Winich Farms’ earliest investors and backers, with their progress in serving small-scale farmers exceptional,” says Sam Sturm, chief portfolio officer at Founders Factory Africa. “What it’s managed to achieve through a carefully considered approach shows what’s possible for African startups, even in challenging economic environments.”

Addressing real problems

According to Riches Attai, Winich Farms co-founder and CEO, one key component of that success has been its ability to address a real and locally relevant problem, something which has been baked into the company from its inception.

“My first startup, which I founded while still in university, involved the packaging of beans,” he says. “One of the major challenges we experienced while in that business was the high cost of procuring beans from the local market. This was worrying, because at the time Nigeria was the largest producer of beans in the world. We even discovered that beans were cheaper in London than in Nigeria.”

After some investigation, Attai and his co-founders realised that a big part of the problem ilayers of middlemen. These middlemen add three or four layers to the supply chain before products arrive at market for purchase by the consumer, with prices increasing at each layer.

They also realised that these layers meant that small-scale farmers were not getting fair prices for their goods, making it more difficult for them to make a living and stay on their farms.

Further down the line, processors and retailers were also being harmed by the presence of middlemen, stunting their ability to grow and scale.

The solution? A mobile platform that uses mobile technology to help informal processors and retailers access their inventory directly from smaller farmers without the activities and added margins of middlemen.

Utilising technology in ways that make sense locally 

As Attai points out, success on that front made the Winich Farms team realise that there were other opportunities to help its customers, particularly when it comes to financial inclusion.

“We realised that we could use the data we have on our customers, many of whom are unbanked to access financing,” he says. “So we built an algorithm that helps build their credit score and access financing, insurance, and other services that are so important in the world of business.”

It’s something, he says, that works especially well in a market like Nigeria.

“Nigeria has a population of more than 200 million people,” he says. “Of those, around 35 million are smallholder farmers. It would be untenable to expect them to move to the city and find better-paying jobs – although many do. It’s much better to ensure that they can more effectively make money doing what they know best.”

Farmers, Attai adds, are receptive to this approach too.

“A lot of people say farmers are very resistant to change,” Attai adds, “and that they’ll reject any new technology you try and show them. But that’s not the case. If you can show a farmer that a new method, process, or technology will help them increase productivity and, in turn, income, they happily embrace it.”

The right support matters  

According to Attai, it would have been significantly more difficult for the company to achieve what it has without the support of venture capital investors like Founders Factory Africa.

Particularly key, he says, is the fact that Founders Factory Africa (FFA) has the expertise necessary to give African companies the support they need to succeed.

“I cannot speak highly enough about FFA and how its support has helped us,” he says. “It understands the local context, what’s obtainable in the market and when it offers solutions, it doesn’t take a one-size-fits-all approach. Instead, it provides the kind of backing that allows companies to achieve what’s obtainable in that local market.”

Authentic success 

As a result of these and other factors, Winich Farms moves an average of over 3 billion naira (approximately US$3 million) worth of produce every month.

Additionally, it closed the year with over US$30 million worth of transactions and about US$1.9 million in revenue.

When asked how other entrepreneurs can achieve similar levels of success Attai says it’s important for Nigerian founders to realise that they’re all in it together and to lean on the entrepreneurial community. But, he adds, there are fundamentals everyone should get right.

“Build for your customers,” he says. “To do so effectively, you have to keep engaging with them. It’s important to keep that engagement up as you iterate and evolve your product. If you understand what customers want and build according to their feedback, you stand a much better chance of building solutions that will be resilient and pass the test of time.”

The post Agritech startup Winich Farms Shows How to Stay Dollar-positive Amid Nigeria’s Currency Challenges  appeared first on Tech | Business | Economy.

The effect on consumers is obvious. We all feel it every time we go to the shops, and we despair at the fact that a bag of groceries costs as much as a trolley full did just a few years ago.

Businesses, meanwhile, face spiralling wage bills and (in the worst instances) a customer base that can no longer afford its products.

While central banks and governments are doing everything they can to bring those inflation rates down, there are interventions that private sector organisations can take to lessen the impact of inflation too.

Effective logistics and fulfilment solutions, for instance, can help small and medium-sized enterprises (SMEs) overcome some of the supply chain issues that drive inflation.

“Logistics and fulfilment are essential to a successful e-commerce landscape,” says Eunice Wambui, Investment Principal at early-stage startup investor Founders Factory Africa. “Beyond that, logistics combined with innovation can unlock solutions that lower the cost of doing business for entrepreneurs, companies and customers alike, allowing limited capital to be deployed elsewhere.”

One company that’s helping them overcome those challenges is Renda.

Founded in 2021, the logistics fulfilment startup has, with the backing of organisations including Founders Factory Africa (FFA), provided tailored fulfilment and distribution solutions for over 400 small, medium and large businesses, processed over 200 000 orders and helped e-commerce businesses reach more than 50 000 retailers across Nigeria.

“At Renda, we provide flexible storage solutions that allow companies to adapt to fluctuating demand patterns by scaling their storage capacity accordingly,” says Eniola Salami, VP of Growth and Partnerships at Renda Africa. “This flexibility also optimises inventory levels without necessarily tying up capital in unused storage spaces. Just to add to that as well, outsourcing fulfilment operations is really, really a big thing which Renda offers, such that we’re able to streamline the order processing, reduce the lead time, and also improve overall supply efficiency for businesses.”

Implemented correctly, all of that should allow African businesses to minimise any cost increases they have to pass on to their customers. More than that, such solutions can help African companies maintain revenue and profitability, even in an inflationary environment.

As Salami explains, the fact that Renda gives businesses a data-driven view of their logistics network can be immensely beneficial too.

“Renda brings you to a point where you have visibility into your logistics network and you’re exposed to the data analytics that you require,” he says. “That, in turn, helps your business and your brand make proactive, informed decisions. When brands do this, they begin to see how they can optimise efficiency and then are also able to minimise their logistics costs and overall improve inventory management.”

That’s not the only area where Renda offers value, either.

“Brands can also benefit from Renda’s end-to-end logistics capabilities, including storage, inventory management, order fulfilment, last mile and haulage,” Salami says. “That simply means that if you come to Renda with any logistics or fulfilment challenge you might have, you can be rest assured that Renda has a solution to cater for it.”

But the enhanced logistics and fulfilment offered by a company like Renda aren’t just important for helping businesses ride out inflation.

They’re also going to become increasingly essential as e-commerce continues to grow across the continent.

As a stakeholder deeply connected with business conditions on the ground, Wambui agrees. “As the sector keeps growing, the role of logistics and fulfilment and companies only become more important. As an investor, it’s our responsibility to support high-quality innovators like Renda who are moving the dial for businesses and customers on the ground,” Wambui says.

According to the International Trade Association, Africa is set to surpass half a billion e-commerce users by 2025. As a result of this growth, Statista says, African e-commerce revenues will pass US$51 billion by 2028.

Even with that kind of logistical support provided by companies like Renda, African businesses will still need to embrace a spirit of collaboration and focus on some specific fundamentals to succeed. Regardless of sector, Salami points out, these fundamentals can be pretty simple.

“It’s simple,” he says. “You are solving problems, right? Listen to your customers, understand their needs, and then solve the pain points. When you do that, growth will follow.”

The post Better Logistics Can Help Businesses, Consumers Beat Inflation – Experts appeared first on Tech | Business | Economy.

The Gen F Entrepreneur In Residence Studio puts forward a unique opportunity guided by experts and supported by venture funding to validate your innovative ideas. This program seeks to bolster the African startup sector and facilitate sustainable change.

Benefits

The program offers the following benefits: 

• Venture Design Studio: Participants will take part in a 12-week sprint with Venture Design Studio, where innovative concepts will be shaped and refined into viable business models
• Experimentation Budget: Receive a competitive test and learn budget to validate your ideas, allowing you to explore market dynamics and consumer insights with confidence
• Up to $250,000 Investment: Upon internal approval, qualify to pitch for up to $250,000 in further funding to take your startup from ideation to implementation
• Targeted Support: Receive targeted support from FFA’s expert team, leveraging their wealth of experience and industry insights prepared to help in scaling through complexities faced by startups.

Eligibility

Applicants with relevant backgrounds and VC-backable startup ideas are eligible, including former startup founders, domain experts, corporate professionals, and senior operators. Added to this, the following criteria must be met to qualify:

• Founders with a well-researched concept solving a deep African problem in a large market
• Outstanding professionals and domain experts looking to transition from corporate to entrepreneurship.
• Founders with tech solutions addressing critical African challenges with high potential for commercial success and impact.
• A keen eye for local market gaps and a strong desire to make a difference
• Applicants with previous startup experience or unique insights into the problems they aim to solve, committed to a full-time engagement with the Gen F initiative
• Founders who can commit full-time to refine and validate their concept for 10-12 weeks, and then move full-time into their startup
• Ideas with high potential for commercial returns, with embedded impact
• Founders who are at the earliest stages of building their startup idea (pre-revenue)

How to Apply

If you possess the passion, drive, and determination to positively impact the African startup sector, seize this opportunity to join the Gen F Entrepreneur In Residence Studio while applications are ongoing.

The post African Startups: Gen F Entrepreneur In Residence Studio Transforming Concepts into Reality appeared first on Tech | Business | Economy.

TUNL, founded in 2022 by CEO Matthew Davey and COO Craig Lowman, aims to enhance cross-border shipping for e-commerce merchants. The platform, claiming to save merchants between 50% and 80% on international shipping costs, plans to utilise the funding to expand within its primary market, South Africa, and prepare for launch in other key African and emerging markets.

CEO Matthew Davey, inspired by challenges faced in importing South African engineering materials into Europe, founded TUNL to address the widespread issue of high shipping costs, particularly for smaller businesses in emerging markets. The company’s mission is to mitigate the estimated $50 billion annual cost incurred by African businesses due to current challenges in cross-border shipping.

TUNL has formed partnerships with courier services such as UPS and FedEx, securing favorable rates and subsidising SMEs’ shipping costs by 50% to 75%. The platform enables merchants to offer various shipping options during checkout, including an “economy” option with shipping costs included in the product price, allowing free shipping via TUNL’s courier service.

The company has experienced significant growth, with a 35% month-on-month increase since its launch. Over 700 merchants are now part of its “shipping club,” and the platform has facilitated the shipment of over 8,000 international parcels in 2023. TUNL plans to enhance sales and the onboarding process for new merchants with the seed funding. Monthly revenue is currently approximately $60,000.

The platform also aims to further streamline its services, focusing on merchant success and international growth. It seeks to empower merchants to tap into larger consumer markets overseas, signalling a positive impact on the ecosystem.

The post Parcel Shipping Startup TUNL Secures $1 Million Funding appeared first on Tech | Business | Economy.

It’s all too easy to think of startup founders as young, vigorous, and touched with immortality. But the sector is full of stories of founders dying before their time. Such deaths are always tragic but can be even more so when there isn’t a clear plan in place.

Without that plan, conflicts can quickly arise between the family of the deceased, investors, business partners, and other interested parties.

Often, the source of this conflict is the founder being subject to a “deemed offer” or “deemed sale” clause.

This clause leads to an automatic forced sale of the deceased’s shares.

When a deemed offer is in place, the deceased’s family can lose access to that person’s stake in the business, even if it’s earmarked for them in the will.

Knowing that, how can founders safeguard the interests of their businesses and investors while protecting their family legacy?

The answer relies on mastering the detail and being diligent in execution.

Understanding deemed offers 

A deemed offer provision stipulates that under specific predefined circumstances — generally described as ‘trigger events’ — a shareholder is ‘deemed’ to have offered their shares to the company and/or the remaining shareholders for purchase. In agreements where a deemed offer focuses on a sale to the company and the company fully or partially turns down the offer, the remaining shares are then offered to the other shareholders proportionate to their existing shareholding.

When such a clause is triggered, the venture’s other shareholders are generally given first option on the shares at a  pro rata rate in relation to their existing shareholding. In the absence of an agreed-upon price for the shares, the shares would generally be offered at their fair market value.

The offer will then need to be accepted for it to be binding on the other shareholders. If the offer is not accepted, the deemed offer would fall away, meaning that the affected shareholder (or their legacies) would have full title to the shares.

Most shareholder agreements would generally contain a list of events concerning shareholders that would trigger a deemed offer. These events generally include, but are not limited to:

• Death
• Shareholder disability or incapacity
• Insolvency
• Sequestration in the case of natural persons
• Liquidations/business rescue/administration in the case of juristic shareholders
• Criminal convictions, etc.

For the purposes of this article, we’ll focus on death.

From the perspective of co-founders, shareholders, and external investors, deemed offer provisions play a vital role in maintaining an efficient capital structure. This framework ensures that, among other things, significant ownership stakes are held by active contributors who play a pivotal role in the company’s ongoing growth, as opposed to passive stakeholders. By doing so, these provisions prevent the dilution of ownership concentration and safeguard the overall ownership stake of existing shareholders.

In the case of a shareholder’s death, the estate’s executor, often unfamiliar with the business, can disrupt operations and risk business continuity, especially when the deceased held a significant stake in this business. Executors generally prioritise the liquidation of a deceased estate, potentially leading to the sale of the deceased shareholder’s shares (typically to the highest bidder) to external buyers.

A more favourable outcome for surviving shareholders and/or the company is having the first option on whether they wish to purchase the deceased’s shareholding or not.

Navigating the crossroads of business and personal estate legacies

While a forced sale of a deceased founder’s shares may intend to secure business interests through a seamless transfer of ownership to surviving key stakeholders, the business’s interests don’t always align with those of the deceased founder’s personal legacy.

However well-intentioned, a forced sale triggered by a founder’s passing can harm the value of the founder’s personal estate.

As such, it becomes crucial for founders to equip themselves with robust financial planning knowledge, striking a balance between business pursuits and the preservation of their personal estates.

Maintaining family interests during business succession requires skillfully balancing ongoing business operations and protecting the founder’s estate. It is, therefore, of paramount importance that the terms of shareholder agreements are crafted in a manner that protects both the founder’s interests and the company’s path forward.

To achieve this balance, active and intentional discussions between founders, other stakeholders, and investors must be had.

Negotiating deemed offer provisions: practical considerations

Within these negotiations, there are a number of options that founders can explore when it comes to keeping a deemed offer clause in place while doing right by their families.

One option is to explore partial deemed offers. Here, founders can negotiate for only a portion of their shares to be available for sale when a deemed offer occurs following their death.

This measured approach ensures that the founder’s estate retains a stake in the business, allowing it to share in the venture’s future prosperity.

The portion of shares subject to a forced sale can then be negotiated with the remaining stakeholders. From an investor or existing shareholder’s perspective, the real risk in agreeing to such a compromise could be if, post-sale, the deceased estate continues to hold a significant portion of the venture’s shares, complicating voting etc.

If a deceased estate holds just a passive or non-controlling interest in the business, it shouldn’t be that much of a concern.

Another option is to explore non-discounted deemed offers. It is quite common in deemed offer clauses for  the remaining shareholders and the company has the first option to purchase the deceased’s shares first at a certain discount.

While this can feel cold, it may be a necessary incentive for them to take advantage of the offer, simultaneously increasing their ownership and offering liquidity to the departing deceased shareholder’s estate.

This approach streamlines the sale process and mitigates the need to involve new third-party buyers.

The discount generally varies from one transaction to another, depending on the influence held by the requesting shareholder (usually an investor and/or majority shareholder) and the bargaining power of other shareholders.

While there is no guarantee that an investor would agree to a zero discount on a forced sale, a founding shareholder may attempt to negotiate for one or in the worst case, a reduced discount.

Needless to say, negotiating these options requires a sound understanding of the law and/or corporate transactions in general.

As such, it is always recommended that founders seek the help of legal counsel to offer guidance tailored to individual circumstances.

Exploring alternative approaches

From a personal estate planning perspective, there could be other ways in which a founder can plan their affairs such that in the event of their death, there is business continuity and that the surviving shareholders are not prejudiced.

While the below does not constitute legal nor financial advice, here are some possible thoughts that could be unpacked with the help of a qualified finance or legal professional:

Buy-sell agreements

In this type of agreement, co-shareholders can take a life insurance policy to cover the lives of each other. In the unfortunate event of a co-shareholder’s passing, the life insurance pay-out can then facilitate the purchase of the deceased shareholder’s interest by the surviving co-shareholder.

Keyman insurance

Companies can opt for life insurance policies on key shareholders’ lives. In the event of an insured shareholder’s death, the insurance proceeds (generally payable to the company) can then fund the company’s repurchase of the shares held by the deceased shareholder.

The protective shield these products offer, by ensuring seamless transitions and business continuity, aligns well with the heightened responsibilities and higher stakes of more advanced startup phases.

Therefore, while the cost factor might be a challenge initially, as startups grow and their financial capacity strengthens, these insurance products become strategic tools that warrant some consideration.

It pays to plan ahead

In the world of startups and visionary founders, balancing business success with family legacies requires careful planning.

Deemed offer provisions in shareholder agreements play a vital role in this process. By negotiating thoughtfully and seeking expert advice, founders can chart a path that preserves both their business and personal legacies.

The post Balancing Business Success and Family Succession appeared first on Tech | Business | Economy.

Without a firm grasp of Product-Market Fit and acute customer value, founders and their teams risk squandering precious resources and time on endeavors that might not significantly impact the viability of their venture.

According to Steve Waidelich, and many others within the tech ecosystem, there is only one thing founders should focus on: duct market fit (PMF).

“We are often shocked by how many founders lose sight of the most important thing they should be trying to do. Founders focus on what their logo looks like or their office space or their website or the latest conference or their business cards, any kind of distraction apart from the most important thing. That is building a solution that meets their customer’s needs,” Waidelich, Head of Growth at Founders Factory Africa, told a group of early-stage founders on Wednesday, 4 October.

He was speaking at The Path to Product Market Fit: A Founder’s Toolbox to Scaling Success event, co-hosted by Founders Factory Africa and Google Cloud for Startups at Founders Factory Africa’s Johannesburg office.

Quoting Marc Andreessen, the founder of venture capital firm Andreessen Horowitz, Waidelich told the audience, “For new startups, the only thing that matters is getting to product market fit.”

PMF is so vital to a startup’s future, as Waidelich explained as he walked the audience through Paul Graham’s now canon-like Startup Curve, “Product market fit is this incredible inflexion point for your business.”

“What we have discovered at Founders Factory Africa is that many founders are focused on generating scale, increasing revenue, and growing their customer base. They think they should be raising more venture capital to fund scale, and many venture builders are focused on helping founders at that point,” Waidelich said, pointing at ‘scale’.

“Even investors are pushing founders towards the scale trajectory when actually this here, the path to scale, is littered with the gravestones of endless startups that didn’t fund product market fit and ran out of many. We see far too much attention on the ‘scale’ part and not enough tangible frameworks, actions, and tools to navigate this precious path.”

Defining PMF and How Operators Have Changed VC

While the importance of PMF within the ecosystem is understood, its definition is contested. Waidelich told the audience that “there is little content and material describing what product market fit is.”

“At Founders Factory Africa, we believe the narrative around PMF has evolved. There are a number of factors that contributed to the definition of PMF. I put a lot of emphasis on ex-operators-turned-investors, like Allan Chan, former Head of Growth at Uber and now a partner at Andreessen Horowitz,” Waidelich said.

“It was these operators that understood the nuances of product market fit, who knew how hard it is to find product market fit and the timely signals that they are able to identify building businesses. They have evolved the narrative to be more definitive and concrete, embedding how important metrics and quantitative measures are.”

In Waidelich’s view, PMF is about finding a level of satisfaction measured through retention that will drive customer retention. Where PMF is concerned, retention is its “ultimate measure” since it shows that a founder is building something customers love to use every day.

Metrics to measure and plot Product-Market Fit success

While retention is a vital measure of PMF, as described by Waidelich, it was but one of three ways to measure PMF success. From Founders Factory Africa’s point of view, a combination of these three metrics or “key measures” shines a light on how close founders are to attaining PMF. In addition to retention, Waidelich listed acquisition/growth and active usage + engagement as measures that provide “evidence” of PMF.

“Acquisition/growth is a really interesting signal of PMF. We like to call it the ‘magic’ metric because a metric like organic acquisition, for example, if you are getting more than 60% of new users getting on your platform, it means that your platform has some kind of natural pull or value that is pulling them to your products,” he said.

“Another factor is your viral factor or viral coefficient. If you have users telling other users about the platform, that is another quality signal. If you have a viral coefficient of more than 0.5 — one current user is helping you to acquire ‘half a person’ — that is a good magic metric or natural indicator that people using your product want to tell others about it.”

As Waidelich went into more detail about each measure, he stressed that the combination used on each startup differs and that founders applying the measure should do so in such a way that it acknowledges their startup’s particular market, service, product, and operating model.

The theory of Product-Market Fit is linear but in practice, it’s messy

In wrapping up his presentation, which also covered the different stages of PMF and Founders Factory Africa’s Traction Framework, Waidelich noted that while the frameworks he’d presented were linear, neat, and orderly, in practice, finding PMF is “messy and highly iterative”.

“The touchstone will always be your metrics so you can navigate the PMF maze into a structured, step-by-step process,” Waidelich said. “The number one superpower of world-class founders is the ability to focus. Too many founders get distracted and forget about building value for their customers. Build value for customers and focus on finding product-market fit.”

The post Soft Skills Necessary for the Success of Startups appeared first on Tech | Business | Economy.

After years of growth, the global technology sector entered a downturn in the second half of 2022, thanks to a combination of inflation, rising interest rates, and faltering supply chains. As a result, companies that just months before hadn’t been able to hire fast enough suddenly had to shed jobs en masse. 

In fact, Crunchbase estimates that there have been nearly 160,000 layoffs among US tech companies so far in 2023 (in addition to the 93 000 that were lost in 2022).

In Europe, meanwhile, tech startups laid off some 40,000 workers between March 2022 and March 2023. 

Many of the companies behind these layoffs also have operations in Africa, meaning that the continent hasn’t been spared the impact of the global tech downturn. With funding and investment now more difficult to come by, the worst may not be over either. 

But that doesn’t mean skilled African tech ecosystem workers can’t build the resilience necessary to ride out the current downturn and come out the other end thriving.

Whether they do so by expanding their skillsets, starting their own businesses, or (for those who remain employed) finding new ways of adding value to the companies they work for, it is possible to acknowledge the very real difficulties of this period while also seeing the potential for new opportunities. 

Growing out 21st Century skills 

One of the most important things any tech worker can do right now is build out their 21st Century skills. That’s been important for a while, especially as linear career paths become less and less common.

A few years ago, for example, someone might have started out in the product operations team of a company before becoming a product specialist, product manager, and then head of product.

While that occasionally does still happen, an employee may be asked to fill different roles in their time with a company and develop skills accordingly. 

But developing diverse skills is even more critical if you’re looking for a new position (or are likely to be in the near future). More particularly, tech workers should look to build the most transferable skills possible.  

For candidates looking for work, those transferable skills mean a much wider range of potential positions. Those that are still in employment, meanwhile, can fill another position within the organisation if theirs is no longer tenable. 

Be entrepreneurial

At the same time, developing an entrepreneurial mindset is important. For some workers that may mean starting their own business. And there certainly isn’t any shortage of available inspiration on that front.

Some of today’s biggest tech companies, including Airbnb, Square, and Uber were started in the wake of the 2008 financial crisis. Even if the business doesn’t turn out to be a runaway success, it’s something a candidate could use to show a prospective employer that they have a greater business understanding than other prospective employees. 

But you don’t necessarily have to build a business to demonstrate an entrepreneurial mindset. Participating in bug bounty programmes or building your own portfolio website, for example, shows prospective employers that you’ve kept your skills sharp while looking for work. 

Those still in employment, meanwhile, can demonstrate an entrepreneurial mindset by looking for and identifying new revenue opportunities for the companies they work for. You’re a lot less likely to be laid off if, for example, you’ve helped the company land a new client or identified a new sector it can pivot into. 

Take care of your mental health 

As important as practical steps are in surviving a tech downturn, it’s vital that workers look after their mental health. The first step on that front is to acknowledge the gravity of the situation. Having been laid off before, I know how big of a loss it can be. So let your grief out. Don’t try and hold it in. 

It’s also important to be realistic about the situation. Chances are, you aren’t going to find a new job in five days.

Even three months may not be realistic, in some instances. Having come to terms with the situation, it’s also important to lean on your support networks. Go to the friends and family that you can trust and be completely open with them.

As the work of renowned researcher Dr Brene Brown has shown, embracing vulnerability can be vital to building resilience.  

At the same time, hold your boundaries. If someone asks you how the job search is going and you’d rather not say, there’s nothing wrong with saying something like, “I’m not really in the right headspace to talk about that right now. Can we talk about something else?” If distractions what you need most at that moment, there’s nothing wrong with it. 

Over time, you’ll find that this helps remind you of your worth. So, even if you do have to rebuild from a lower salary, you’ll be less likely to feel that you can’t get back to where you were before. 

This too shall pass

While it’s incredibly difficult to do in the thick of it, it’s important for tech workers in Africa and around the globe to remember that the current downturn won’t last forever.

New companies will start and they’ll find new ways of funding their growth. And when they do, the workers who’ve built professional and personal resilience will be at the top of their hiring lists. 

The post How can African Tech Talent Build Greater Resilience during the Global Tech Downturn? appeared first on Tech | Business | Economy.

In the startup universe, one of the most valuable (if not the most valuable) finite resources you have at your disposal, as a founder,  is equity. This is because startups generally don’t have the capital to scale in market or products developed significantly enough to leverage in order to fund ongoing enterprise growth.

This makes your startup’s capitalisation table (cap table)  an integral representation of how your venture is funded from an equity perspective (including convertible notes, warrants, and equity ownership grants). The cap table represents how much of a claim each party has on the value created by the business and what they paid for their ownership stake. 

Managing the cap table well is therefore  a strategic imperative for any startup founder. As a startup scales, the evolution of its cap table has serious implications on how easily the venture can attract and raise new investment.

Cap tables and investor risk tolerance

At the beginning of a startup’s journey, the founding team owns 100% of the company. Depending on the resources they have available, founders tend to self-fund the venture as much as possible (called bootstrapping) up to, and including, the pre-seed stage in order to protect their equity value.

At some point, however, the resources they have can only take them so far and they need to raise external capital.

At the pre-seed stage, a startup hasn’t necessarily found product-market fit and its revenue is often not the best measure of its potential because founders are honing their minimum viable product.

At best, the venture has signals of product market fit, i.e. user growth, engagement and active usage and retention. The lack of product market fit, and bankable recurring revenue is typically a deterrent for investment by later-stage investors due to their inherently lower risk tolerance.

This is where angel investors and early-stage venture capital (VC) firms step in. Angel investors are high-net-worth individuals who are highly risk-tolerant and have the financial means to invest in startups and their potential future returns, at the right price. That “right price” is usually an ownership stake in the business, ranging anywhere between 5 and 15%, with that percentage being a symbol of the risk angel investors accept in return for their capital and operational expertise.

Early-stage VC firms, on their end, typically provide additional institutional capital, operational and governance support as well as credibility to ventures.

Angels and other types of early-stage investors, like Founders Factory Africa, play a vital role in the VC ecosystem. Without the high-risk tolerance these investors bring to the table, most early-stage startups would not break out of the pre-seed stage due to a lack of funding.

The role of a term sheet at the point of investment

Given the importance of a startup’s cap table in its future trajectory, it’s worth highlighting the vital role a VC term sheet performs at the point of investment.

A VC term sheet is a document that outlines the terms and conditions of a VC investment. It includes details on the amount of money to be invested, the equity being granted to investors, the timing of investor liquidity, and investors’ rights in the venture.

Some of the key terms founders and investors must be familiar with when reviewing this document include:

• Valuation – The value of the company which is being used as the basis for the investment.
• Pre- and post-money valuation – The pre-money valuation is the value of the company prior to the investment, with post-money valuation the value of the company after the investment.
• Voting rights – A representation of how much say investors have in the future strategic direction of the business.
• Liquidation preference – This is a clause that determines the order in which investors and founders  are paid back in case of a liquidation or bankruptcy. Be aware: liquidation preference typically relates to any liquidity event, not just a liquidation.
• Anti-dilution-provisions – These clauses can help protect investors from dilution because of a future financing round of financing. They can have the effect of decreasing a founder’s shareholder value.

An alignment of interest with the future in mind

As both an investor and a venture builder that helps startups improve their product and find product market fit, at Founders Factory Africa, we often advise founders to be extremely careful when exchanging equity for capital.

When an investor decides to invest in a startup, they are looking for an alignment of interests where the founders can make a meaningful return for starting and scaling the venture, thereby providing a higher chance of a successful exit for the investor.

Some of the errors we typically see include founders raising their initial funding at too high a valuation. This creates unrealistic expectations for future funding rounds.

At times, founders ask for too much capital without deep thought into what metrics and milestones they would like to achieve with the capital, leading them to give up too much equity very early on without considering the need for future funding rounds.

These scenarios, in turn, stunt the venture’s ability to raise funding and scale, due to the lack of alignment of financial interests with investors.

As a startup matures and goes through its different funding rounds, the equity allocated to founders is diluted as larger sums of investment are raised at Series A, B, or C. If the cap table is not thoughtfully constructed, the startup may find it increasingly difficult to raise capital as questions around incentives for later-stage investors increase.

The startup ecosystem is binary. Either a business grows and succeeds, or it fails. There is no in-between. The value that a startup places on its equity, the partners they choose on its journey and collectively creates is the golden thread that runs through every startup’s success or failure.

A thoughtful cap ensures that a startup can become successful. A badly designed cap table can do the exact opposite.

The post A Thoughtful Cap Table is Crucial to Startup Success appeared first on Tech | Business | Economy.

BuuPass will invest in growth activities as the fund aids its market share increase in East Africa, with a focus on Kenya and Uganda. The company will also leverage the fund to expand its team including growth and technology experts who will focus on building systems for scale as BuuPass plans to become a pan-African infrastructure for long distance transportation.

Investors in the pre-seed round were Founders Factory Africa, FrontEnd Ventures, Adaverse, Gullit, Five35, Renew Capital, Changecom, XA Network, Ajim Capital, Artha Ventures, Daba Finance, Google Black Founders Fund, and several angel investors.

Founded by Sonia Kabra and Wycliffe Omondi in 2016, BuuPass is a B2B2C full-stack marketplace that provides a bus management system (BMS) for operators to manage operations, inventory and sales. With this, they can manage their fleets and businesses better, gain access to data they can use to draw insights from, and reduce cash leakages, while increasing their sales from online bookings. It also connects them to its marketplace, where passengers search, compare and book their tickets using different channels, including websites, apps, and USSD codes.

The company affirms processing about 12,000 transactions per day across its booking channels, and has recorded over 9 million ticket sales so far. Its Gross Merchandise Value was slightly over $30 million in 2022. Supporting a total fleet size of 1,200 vehicles from over 25 bus companies, including one of the oldest, Easy Coach, BuuPass enables travelers book flight and train tickets, incorporating convenience and affordability in the system.

The post Kenya’s BuuPass Raises $1.3 Million Pre-Seed Funding to Ease Transportation Supply Chain appeared first on Tech | Business | Economy.