6 tips to prepare your fundraising in French-speaking Africa

Fund-raising is an almost unavoidable process for developing a young company. Are you an entrepreneur with a fast-growing African start-up? To accelerate its development, you will seek financing from business angels or investment funds. Without proper preparation, such an adventure can be long and perilous. Why, when and how to raise funds? How do I find an investor? Here are our 6 tips for preparing your fundraising in French-speaking Africa.

1. Raising funds for a good reason

Before embarking on fundraising, ask yourself the right questions:

• am I gradually creating value within my company?
• is it really worth raising money at this stage?
• what is my start-up’s growth strategy?

Fundraising is not an end in itself. It’s a way for the company to continue taking risks and growing. All this while being able to face up to existing and future competitive risk. You’ll need to be particularly lucid, and have a clear and precise vision of your company’s future.

2. Anticipate your search for financing

It’s best to start looking for financing as soon as possible. This can be a lengthy process, from the negotiation phase to the receipt of funds in your company’s bank account. So when should you start? At least 6 to 9 months before your start-up faces a cash flow shortfall.

You also need to define your financing requirements carefully. Why? To determine how much money your start-up needs to take on new challenges over the next 12-18 months. This will enable the company to recruit, acquire a new market, or undertake research and development projects. This is essential to avoid the need for further financing, for example, 6 months after a round of financing.

3. Designate a fund-raiser

It’s essential that your start-up continues to earn money throughout the financing phase. Raising funds for a start-up in Africa is a lengthy process, due to the multiple meetings with potential investors.

So it’s a good idea to appoint a contact person to be in charge of fund-raising negotiations. This mission will generally be entrusted to the CEO (Chief Executive Officer). That way, the rest of your team can stay focused, and keep working to generate revenue.

4. Develop a network to target investors

Master the mapping of investors, because identifying them is a prerequisite for successful fund-raising. First, find out who the relevant players are, based on the :

• business sector ;
• stage of development ;
• amount to be raised ;
• commitment period ;
• geographical area ;
• and portfolio composition.

You can then draw up a precise list of players likely to match your start-up, and the objectives you need to achieve.

The relationship with the investor must be simple, intelligent and based on trust. Find out more about its ecosystem, for relevant information, feedback and advice from other industry players. Investors receive many files, so it will be easier to build a relationship if you get a recommendation from other companies.

5. Present your African start-up with clear information

The key to successful fund-raising lies in the clarity of the information made available to the investor. That’s why it’s so important to get to grips with your figures and key performance indicators (sales, number of customers, conversion rate).

Present a clear financial plan, meticulously describing :

• expenses ;
• income generated ;
• financing requirements ;
• how the money raised will be spent to increase the start-up’s revenues and create a viable project.

Work on your pitch and your storytelling: knowing how to tell a story, embodying a mission and a vision, will help you stand out from the crowd. Keep in mind that professional communication tools (logo, press kit, executive summary, etc.) give the investor a better image.

6. Have determination and a good entourage

The best entrepreneurs raise funds by being resilient and determined. They never give up, they know how to withstand stress, accept criticism and take it on board when it’s justified. As with any important event, make sure you’re well surrounded, and talk to experienced people.

A successful fund-raising strategy can significantly boost your start-up’s growth. So make sure you get the right advice to reduce your risk. And train yourself to master the process and content of investment documentation(term sheets, shareholders’ agreements).

To support you in this adventure, we offer a training course on preparing for fund-raising in French-speaking Africa.
Contact us for further information.