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5 Lessons Learned From Fundraising for a Startup in Africa

AUTHOR: Yannick Lefang, Chief Financial Officer, Gebeya

Like many folks of my generation (X), I’ve watched every Rocky movie and fondly recalled the scene where Rocky climbs the 72 stone steps leading up to the entrance of the Philadelphia Museum of Art and puts his hands up as a sign of victory. This scene has always been a perfect metaphor for an underdog or a regular joe rising to a challenge. On this rainy afternoon of February 2020 as I land in Philadelphia, Gebeya has just raised $2M seed investment from global investors and as the CFO, I am reporting on duty to acknowledge receipt of the funds and some other paperworks with the co-founder and CEO Amadou Daffe. It’s been a long and grueling process leading up to Philly and I am sharing a few lessons learned along the way:


1. Fundraising is not fun so raise when you really need to

I am no fan of the fundraising and I am probably the most unlikely CFO to raise a seed round in Africa. And here is why: If you are an African entrepreneur trying to raise, the odds are stacked against you. In 2019, several reports show that around 427 startups raised funding while a platform like VC4A lists a total of 13,500 startups in Africa. As a startup, you have 3% chance of raising money. If you raise a seed round, it’s even worse because less money goes to early stage startups. It is important to have a good rationale for fundraising because it is going to take time, energy and resources. I always go by the rule of thumb that you will most likely raise when you don’t need capital to operate. It means it's better to show revenue or some sort of market fit at minimum before you engage with investors. 


2. The fundraising process is grueling but it doesn’t have to be

I had never raised money from investors before the Gebeya seed round but as a founder myself and a finance professional with over 15 years of experience with global financial institutions, I had the foundation and skills necessary to tackle the challenge. It was still a long and challenging process. A couple of things I learned along the way: 


Put together the right team before you raise. The entrepreneurs who have raised money will tell you that it's more than the pitch competition or the shark tank presentations. You need a team with legal, technical and financial expertise. Make sure you have someone with project management skills, fundraising is a project and has to be managed as a project.


Have a clear understanding of the process. First, you need to get to know the investors and what they stand for (officially and unofficially), you need to really understand the terminology (term sheet, cap table, business model, spa, etc.), you need to take charge of the process and stay on top of things. While this is a do or die for your startup, investors have many deals they manage at once. 


Be organized. This goes a long way in boosting investor confidence and also speeds up the fundraising process. Get your documents in order (contracts, agreements, licenses, etc.). You can create a virtual data room ahead of time so you are ready when you fundraise. It may sound easy but it's not.


3. Your financials are important even if you are not making money 

If you are like many African founders or founders in general, you are probably a developer or a techie who decided to follow the footsteps of Mark Zuckerberg (I hate this example but it’s what founders related to) and that may well be the reason you won’t be able to raise funds. For all the glorification of the tech founders you see on the media, a business is a business. The easiest part of the fundraise at Gebeya was the technical due diligence. The hardest part by far was the financial due diligence. So what should you do to make it easier?


Adopt best practices for financial reporting very early. Whether you are making money or not, you need to have decent financial reports. It gives you clarity as an entrepreneur and that clarity will boost investor confidence.


I was surprised by how simple the investor’s mind is when it comes to assessing business opportunity especially in the tech space. It boils down to how scaleable is your value proposition. If you are enabling transactions and taking a percentage along the way, how scaleable is that process? It’s better to think about your business model in layman terms. Forget your product, focus on the business.


The most important thing good financials do for your startup is telling your story better than you can. I am a data geek and one of the reasons I love data is it allows you to shape and convey messages effectively, provided it’s well organized and structured. Your startup may not show fast growth but amazing margin - get your data to tell that story for you.


4. Fundraising takes time so expect the unexpected 

It took a year or more to complete the seed round for Gebeya, it felt like 3 years! You will need hard work, perseverance and a pinch of luck to make it through alive. Be prepared to spend more money because of the fundraise costs (legal, travel, project management, etc.) so you may actually run out of money during your fundraising.  It is important to plan and anticipate these events and be transparent about it with your investors, especially if you already have a term sheet. You may request a SAFE or a bridge loan to stay afloat while the process is ongoing. Note that running out of cash doesn’t mean you have a bad business and investors will quit because of it. You may simply have receivables that are delayed or unexpected expenses. Ultimately, you have to plan for the worst and hope for the o.k. Best is not an option.




  1. Ultimately, it’s a human experience

When Amadou called me early January 2019 to ask me if I could help with his fundraising effort, I said no because I disliked fundraising and VC - the whole narrative in Africa was wrong for me. I still believe that raising VC money may not be the best way to start and grow a business in Africa. The exit options are just very limited. Where are you going to IPO? I understand why entrepreneurs want to raise VC, it is definitely an accelerator if you have the right business and strategy. The other reason I said no, was the fact that I had never raised VC money in the past except a few bad experiences with pitch competitions. But I knew one thing: I love challenges and I know a thing or two about finances. Most importantly, I know Amadou and fully embraced the vision to make Africa competitive by sourcing and nurturing Africa’s best talent. 


When I agreed to take the challenge in March, I went through a grueling interview process with investors and had to immerse myself into the business. Then I came up with a plan to get the startup to a place where investors will have the confidence needed to invest. It was a total team effort, a unique and humbling human experience. I got to know an amazing group of investors along the way. 


When I started to work on the fundraise, I agreed to get paid only after the round was completed successfully. I was confident that with my skills and experience I could make it happen but more importantly I had a shared vision with Amadou and his team. Lastly, I don’t believe money is a good motivator/driver. At least not for me.


Back in Philly, as Amadou and I were getting ready to walk into the bank and close the round, we couldn’t help but think of the journey that got us there, a perfect metaphor for an underdog or an everyman rising to a challenge. We quickly ate our McDonald’s in the car and rushed to the bank.


Two weeks later, COVID-19 took the world by storm.


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