Ivan Mandela is the Co-founder and Vice President of Finance at Unreasonable East Africa - an accelerator for early-stage startups in East Africa.
Working at Unreasonable East Africa, Ivan Mandela has been able to work with various startups as well as help them secure funding through Unreasonable East Africa.
In his own estimates, Unreasonable East Africa has helped startups secure over $5 Million in funding since its inception in 2013. Of which, some have raised either grant or venture capital or both.
In a conversation, Ivan was able to explain why and when one considers either grant or venture capital.
First all, Ivan makes it clear that the type of funding one should opt for depends on what particular need that entrepreneur or startup has. For example, if one is looking to pilot a solution in an early phase, Ivan advises that a grant is ideal for that person.
According to Ivan, "grant is the cheapest capital one can get, so if there's an opportunity to raise it, then you should".
"However, it doesn't mean that any business model qualifies for a grant. Some models are suitable for equity investment or what you may refer to as venture capital," Ivan adds.
He also highlights that there are businesses whose model qualifies for equity but also has a strong social impact story.
"Such startups can then consider taking up grant opportunities," Ivan says.
Another thing that one should look at is the cash flow - if it is strong or not. For strong cash flow, equity investment is advised.
Yet, if you have a strong impact story combined with strong cash flows, automatically you stand a chance to easily access grant capital.
Ivan also notes that before you can consider any of the above, be ready to inject in your own capital - which may be from personal savings or friends and family.
"Because there are very few research and development grants around, not forgetting that very few people are willing to bring in equity funding unless one has a minimum viable product," Ivan says.
Alternatively, for people that may not be able to afford the initial start capital, he advises they consider going for competitions that focus on ideas solely.