In the second week of April 2019, the Early Stage Startups Investment Conference (ESSIC) came to a close in Cotonou, Benin. The conference brought together in excess of 120 participants representing the Benin government, NGOs as well as bilateral and multilateral organizations. Also in attendance were foundations, investors and startups.
The main draw for this gathering of business minds was the search for ways to free startups from the financing shackles that hinder their development. From the various deliberations, two developments stood out from the rest.
The first was that local entrepreneurs, investors and professionals – as well as those from the diaspora – came together to form the Benin Business Angels Network (BBAN).
The network will invest in the startups and their events and also open up their networks to the fledgling companies.
Secondly, the conference also saw the announcement of Noru Capital – an impact investment fund zeroing in on early-stage startups. EtriLabs lead the charge in founding this evergreen fund which will provide financing in the form of equity and quasi-equity.
Promising Benin-based startups that have great teams will receive funding. These startups should have achieved product-market fit as well as business models poised for rapid growth in Benin and beyond.
However, EtriLabs will only assume limited partner position in the fund. An independent and professional fund manager will be at the helm of Noru Capital.
Two-pronged approach
According to EtriLabs, it was necessary to launch an angel network as well as a fund because the two entities fulfill different missions.
The BBAN is geared towards providing seed money to promising startups as well as molding emerging entrepreneurial minds in the Benin startup space. 15 of the founding members also pledged to invest at least $4300 annually.
The network is hoping to invest in the first startups by the end of May 2019, focusing on business entities in spheres encompassing fintech, edutech, agribusiness, and renewable energy. With a minimum ticket size of $2500, BBNA will make investments as syndicates. Three startups are already on hand to receive the first investment.
On the other hand, the impact fund will single out early-stage startups with young and female founders who are looking to solve local problems, create jobs and reduce poverty as well as risky migration.
With plans to raise $10 million – $800,000 of which have already been secured – in an evergreen fund available to Beninese startups, the fund will readily support startups in their bid to become viable and formulate scalable business models.
Not only will the fund inject the right amount of funds into the startups, but it will also ensure that the investees are ready for subsequent investments. This incremental disbursement approach – with tickets ranging from $25,000 to $500,000 – as well as the low management fees will stand the startups in good stead.
Before the formation of EtriLabs, the startup space in Benin was in a nascent state. A few years on and the increased internet last mile access has seen the number of tech startups increase. EtriLabs, as an accelerator, is perfectly poised to steer these startups through the choppy waters of early entrepreneurship.
With the introduction of the Benin Business Angels Network and Noru Capital, Beninese entrepreneurs are set to make their mark on the West African tech space – if not the entire continent.