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When thinking about launching your startup, one important question is, “How do I get the funding to execute my ideas?”

Now, more than ever, entrepreneurs have a vast pool of options to source for funds, even in Africa. And all these options have their advantages and disadvantages.

Except you are getting a grant, most of the funding options will require that you demonstrate a credible path to profitability for your business. You also need to decide what you are willing to give up in exchange for funding. Find below some of the funding options you can explore.

1. Join a startup incubator or accelerator

Startup accelerators are mostly set up to help early stage startups get on their feet. They exist in a lot of African countries. Incubators and accelerators provide seed funding as well as free resources like office space, connection to industry, business development, and the internet. You can check out some of incubator and accelerator programmes to apply for in Africa here.

2. Pitch to Venture Capital investors for funding

These are professional investors who invest institutional money in startups. Most VCs have specific criteria for deciding which startups they’ll invest in. You need to determine whether a VC will likely invest in your startup before you meet them. VCs are usually interested in startups with a proven team that is addressing a huge market with a defensible product.

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3. Apply to local angel investor networks

Africa is seeing an increase in angel syndicates. These are high net-worth individuals who are interested in funding and supporting startups. The Lagos Angel Network has quarterly Startup DealDays that brings angel investors and Lagos startup ecosystem players together at an event where selected startup ventures across all sectors are guaranteed funding. There are angel networks in most African countries with active startup ecosystem. Members of these networks are usually present at demo days, looking for the next big thing.

4. Get bank loans

Banks loans might not be an option for new startups unless you have a history of good credit or high level connections in the banking industry. Consider this if you need a temporary or small injection of cash.

5. Get revenue from one major customer

A big customer may be willing to cover some of your development costs in exchange for exclusive first access, or dedicated after sales support. The quality of your network and business development team are what will determine the possibility of closing such a deal.

6. Consider crowdfunding

Crowdfunding is another disruptive innovation that has helped entrepreneurs execute their plans. Crowdfunding could involve people making pledges to your startup, and paying in advance for your product, which you’ll deliver when it’s ready. Or a large number of individuals investing in your startup via a crowdfunding platform in exchange for equity. Not every startup will fit the crowdfunding model, though.

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7. Get business grants

These are funds allocated by governments and private organisations to support sectors such as education, agriculture, medicine and public infrastructure. Safaricom’s Spark Fund is a good example of such, as well as The Tony Elumelu Foundation Entrepreneurship Programme, African Entrepreneurship Program (AEP), Africa Innovation Award (AIA) and several others. Grants usually require a stringent due process which may be time-consuming. The upside is; with grants you don’t have to give up any equity.

8. Solicit family and friends

Most founders begin their search for funds here. To get your idea off the ground, family and friends may provide you with that initial seed funding.

Most founders begin their search for funds here. To get your idea off the ground, family and friends may provide you with that initial seed funding.

9. Bootstrap

You don’t have to raise venture money to be a successful startup. There are lots of successful startups were self-funded. The key to bootstrapping is frugality and badass bargaining skills. Bootstrapping may require you to grow organically, and will see you mastering the art of accounting, no matter how much you dreaded the topic in school. It also means you get to keep all the equity and all the control.

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10. Team up with a co-founder with means and resources

Partnering up with a productive, or skilled individual will reduce your expenses considerably. Wande Adalemo, co-founder of Oxygen Broadband, understood this. Hence his partnership with a business person and financial expert. It was the same approach taken by Max Levchin when he got Peter Thiel to join as co-founder of Confinity which later became Paypal.

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