Startups
In nearly a decade, hundreds of entrepreneurs have emerged with innovative startups across the African continent. We provide insights on their experiences and highlight the activities of investors who fund them.
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Key deal docs: Term Sheet (initial terms), Letter of Intent (preliminary agreement), Purchase Agreement (legally binding). Understand their roles and when to use them for successful negotiations in Switzerland. Seek legal counsel.
Founder vesting: Gradual equity earning over time (common: 4-year plan, 1-year cliff). Protects company, incentivizes commitment. Key terms: grant date, vesting period. Legal counsel advised for fair agreements.
Debt financing: borrow, repay with interest. Use collateral. Unlike equity, keep control. Types: loans, lines of credit, bonds. Pros: ownership, tax-deductible. Cons: repayment pressure. Assess revenue, cash flow, & market before deciding.
VC IRR: High-risk, high-reward, aiming 30%+ for seed, less for later. IRR measures profitability over time. Factors: market, stage, exits. Use with TVPI, DPI, RVPI. Diversify, target growth. IRR vs. ROI: annual vs. total return.
Accelerated vesting: early access to stock options upon termination or acquisition. Single/double-trigger types exist. Benefits employees with financial security, but may cause tax issues. Employers attract talent but risk dilution. Negotiate terms carefully!
Patent your invention in Nigeria! Secure exclusive rights & prevent theft. Ensure novelty, application, & compliance. Use the Trademarks, Patents, & Designs Registry. Consider a patent attorney for smooth registration. 20-year protection!
Advisory vs. Equity Shares: Advisory for expertise, equity for ownership. Advisory shares lack voting rights, equity grants them. Dilution & tax differ. Choose based on advisor role & company stage. Consult experts for tailored agreements.
ESOP pools: reward & retain talent. Plan pool size, get valuation, & legal approval. Align with growth stages. Avoid common mistakes like over/under allocation. Communicate transparently & consult tax experts.
Equity in startups: balance funding & control. Valuation, stage, & investor value matter. Seed: 10-20%, Series A: 20-25%. Plan for dilution, negotiate terms, & seek legal advice. Retain at least 50% through Series A.
Flutterwave powers African payments. Offers diverse tools, but watch for delays & security issues. Compare with Paystack, Monnify, etc. Assess fees, features, & security to pick the best fit.
Pre-Series A funding bridges seed & Series A, fueling growth. Investors back potential, product traction. Challenges: valuation, market, fit. Secure funding with clear pitches & strong metrics.
Track equity changes with roll forward. Crucial for startup transparency & investor confidence. Manage dilution, funding rounds, & compliance. Use tools for accuracy. Vital for growth.
Incentive units (LLCs) vs. stock options (corps): Units grant ownership, options offer purchase rights. Units: flexible, taxed at vesting. Options: ISOs (capital gains), NSOs (income). Choose based on company type & goals.
Leaving a job? Calculate vested shares: know vesting schedules, FMV, taxes. Vested shares are yours; unvested are forfeited. Options: hold, sell, diversify.
Angel networks like Rising Tide Africa, FirstCheck Africa, and ShEquity are helping bridge the funding gap for female-led startups in Africa by providing capital, mentorship, and strategic support.
Nigerian retail automation startup, Bumpa has announced the death of its Co-founder and CTO, Adetunji ‘TeeJay’ Opayele.
After facing high loan defaults, Decagon, a Nigerian tech training institute, is pivoting from tech education to helping students secure admission into international master’s programmes.
AltSchool Africa now has a partnership with two of the largest crypto exchanges in the world, Binance and ByBit to offer scholarships to Africans. While the Binance deal exempted Nigerians, the Bybit scholarship is open to all Africans.
Leta, a Kenyan logistics startup, has raised $5 million in seed funding to enhance its AI-driven platform that aims to make the transportation of goods more cost-effective and efficient across Africa.
Vendease restructures employee pay with a performance-based system and shifts focus to software solutions, aiming for profitability while phasing out logistics operations.