The development of Africa is hinged on the deliberate collective effort of people and cooperate bodies, taking strides that yield positive results in the continent. One of these positive strides includes building businesses and supporting the growth of startups that provide major solutions to the problems inherent and inimical to the growth of Africa.
This was evidently showcased on the Demo day of Itanna – an innovation lab by Honeywell Group. The day was packed with industry influencers like Deji Oguntonade, Head Fintech & Innovation, Guaranty Trust Bank, Lola Ekugo, Head Digital Innovation Lab, First Bank, Obi Emetatom, Managing Director, Appzone and Seun Faluyi, Managing Director, Uraga Power Solutions, partners, mentors and of course, the four cohorts who were given a platform to pitch their businesses to potential partners.
These cohorts were admitted into the acceleration lab in August 2018, and in four months have registered tremendous progress. Trade Buza, an online platform for managing and brokering commodities sourcing and outgrower scheme started out with two co-founders, at the end of the program, they currently have three employees, making a total of five people in the team; PowerCube, providers of affordable power supply using renewable energy started with three cofounders, and currently have six people employed; Accounteer, providers of online accounting services for SMEs across Africa, as well as Kolopay all have been incubated in the lab, provided free and conducive working space, constant electricity, business management classes, a long lasting access to a host of experienced industry mentors as well as an exposure to potential partners and an investment of $25,000.
The African technology and innovation ecosystem has been thriving exponentially in the last couple of years. Africa is gaining a large place on the global tech startup ecosystem, owing to the number of startups that have sprung up in diverse parts of the continent which have to an extent, improved the quality of lives that have come in contact with them. Africa has also been a destination for global tech companies like Google and Facebook who have recently opened hubs and launched accelerator programs on the continent.
With the prevalence of numerous startups – especially tech startups – in Africa, solutions to the indigenous problems of Africa have in turn been provided. However, fundraising is a crucial part of many startups’ journeys. While there are a few lucky entrepreneurs who can rely on funding to come from their own savings, or have wealthy friends or family members who can afford to inject capital, most business owners will need to go out of their way to raise funds from investors.
Also, the most important decisions that African entrepreneurs need to make when raising money is deciding what type of capital they need. There are a number of funding opportunities that are available to these startups which include grants, debt financing, equity investments and mezzanine financing. Grants are a great way of raising capital, but they don’t usually come as often as is needed for the rapidly growing startup ecosystem. Getting loans could prove herculean due to the high collateral requirements and procedures posed by banks to avoid the risk involved in entrepreneurship. Not only do African startups face financial challenges, there are also infrastructural challenges – inadequate power supply, limited access to technology, and sometimes, a conducive and affordable workspace – as well as limited knowledge on business management, networking, financing, etc.
Considering these challenges, Venture Capital funding appears the most effective choice for startups in Africa. Not only do they provide funding for startups, they also provide infrastructural support in the form of incubation and acceleration labs, mentorship and business education as well as introduction to a network of potential partnerships and other successful founders. Globally, venture capitalists have been behind the success of great tech companies like Facebook, Twitter, PayPal and Uber.
Thus, the value they bring to the startups they invest in cannot be overemphasized and the risks are also reduced because venture capitalists look for a strong management team, a large potential market and a unique product or service with a strong competitive advantage. They also look for opportunities in industries that they are familiar with, and the chance to own a percentage of the company so that they can influence its direction, thereby creating more possibility of success for these companies. Therefore, they play a major role in the success of startups by not only alleviating the financial constraints, but also providing other essential support vital to their growth
Startups in Africa have played a major role in creating businesses and new businesses create jobs, provide services and products needed in the continent, strengthen market competition and increase productivity. The ability to turn ideas into new products and services that people need is the fount of prosperity for any developed country. Economic growth, generally speaking, is driven by new technologies and their creative applications. Periods of rapid innovation historically have been accompanied by periods of strong economic growth. Thus, the growth of entrepreneurship in Africa is critical to its survival. If we’re going to develop economically we need to find employment for the millions of young people who make up the majority of our population. More than 11 million job seekers are entering the market every year. Startups are essential to driving employment growth, and enabling both economic and social development.
With these invaluable contributions of startups to the economy, providing support to enable them scale into successful businesses becomes a necessity. Hence, the need to create more acceleration labs, provide adequate funding and knowledge needed for these startups. Itanna can therefore be said to have arrived on time and has come to stay. Coming to the realization of how technology is a core part of its sustainability, Honeywell birthed Itanna, provided it with the financial acumen needed for sustainability and empowered it to transform the tech ecosystem in Africa.
Startups from six countries in Africa had put forth their applications and four of them were chosen. Itanna will however be set to take up ten or more startups in sectors such as finance, power, agriculture, Ecommerce, education, healthcare, insurance, Software-as-a-service (SAAS), drone technology, hospitality, logistics and blockchain, in more countries in Africa this year.
What inspires Itanna is the belief that Africa is going to be at the forefront of the next industrial revolution. And for Africa to live up to this, investments have to be made in the tech entrepreneurs, who would be the drivers of this revolution.
Itanna contributes to this revolution by finding the best promising entrepreneurs that need funding, giving them funding with the belief that they would create jobs for unemployed graduates and drive sustainable development in Africa. Itanna is motivated by the goal that in the next five years, they would have created over six African business unicorns who had gone through the accelerator program and have been able to have vibrant businesses that would change the African story in terms of impact as well as the amount of money raised, jobs created and problems solved across the continent.