How COVID-19 is impacting funding for African start-ups

The COVID-19 pandemic has disrupted economies around the world, and African start-ups have not been immune to its impact. With foreign direct investments slowing down, funding for many sectors has taken a backseat, leaving entrepreneurs scrambling for support. However, amidst the challenges, there seems to be a glimmer of hope on the horizon for some players in the start-up ecosystem. In a recent interview with CNBC Africa, Charles Shyaka, General Manager at 250 Serubs, shed light on the current state of start-up funding in Africa and discussed the shifting investor landscape. Shyaka highlighted the resilience and adaptability of start-ups during these challenging times, emphasizing the importance of innovative solutions and strategic partnerships. One of the key themes that emerged from the interview was the increased investor interest in fintech and e-commerce ventures. As governments push for cashless economies, investors are eyeing opportunities in companies that facilitate digital transactions and online retail. Shyaka pointed out that start-ups operating in these sectors have witnessed a surge in investor appetite, reflecting a growing confidence in the future of fintech and e-commerce in Africa. Moreover, the pandemic has prompted a reevaluation of business models, with many start-ups pivoting from B2B to B2C models to directly engage with consumers. This strategic shift has proved successful for companies in e-commerce, enabling them to thrive amidst the crisis by establishing direct connections with customers. Shyaka emphasized the importance of resilience and agility in navigating the turbulent business landscape, urging start-ups to adapt to evolving market dynamics. Additionally, he discussed the various financial instruments available to investors, highlighting the significance of partnerships and strategic investments in supporting start-ups. Shyaka emphasized the need for collaboration between investors and start-ups to drive sustainable growth and expansion. He noted that some investors are willing to provide funding through equity or cash inputs, depending on their investment criteria and long-term goals. The interview also touched upon a recent Memorandum of Understanding (MOU) signed between 250 Serubs and Jenga Ventures, aimed at facilitating the scaling of start-ups in the region. The partnership seeks to leverage Jenga Ventures' funding and network to support start-ups in expanding their operations globally. By providing much-needed financial resources and access to new markets, the collaboration aims to bolster the growth and competitiveness of African start-ups. Overall, the conversation with Charles Shyaka highlighted the resilience and potential of African start-ups in navigating the challenges posed by the pandemic. Despite the uncertainties of the current economic climate, opportunities for growth and innovation remain within reach for start-ups that embrace change and forge strategic partnerships.