SEED in collaboration with ANDE network organised the “start-up hacks” as part of the Sankalp Africa Summit that took place on 5-6 February 2015 in Nairobi, Kenya. Innovative and inclusive financing was one of the key topics of this year’s forum.

Many small and medium size enterprises (SMEs) that deliver social and environmental impact often find it difficult to secure finance since they are seen as risky investments with little or no collateral or track record. During a half-day workshop, more than 60 entrepreneurs shared their experiences and challenges in terms of financing and got advice from investors and experts on how to raise funds at the different stages of development of their business. 

The first part of the workshop aimed at providing advice to entrepreneurs who want to raise private capital from investors. ANDE and Open Capital Advisors presented a tool for entrepreneurs that guide them through the whole negotiation process from the first meeting with the investor to the closing of the deal. The presentation was followed by a panel discussion and Q&A session with successful social entrepreneurs like Ecotact and investors from Acumen Fund and juhudikilimo. The tool is available online.

In the second part of the workshop moderated by SEED, participants were invited to share their experiences and discuss solutions around four main topics: early-stage financing; growth-stage financing; investment readiness and financial inclusion. The discussions, which were facilitated by experts in the field of finance, such as Emma Caddy of Impact Capital Advisors, Lilian Mramba of Grassroots Business Funds and Linda Wamune from the solar energy enterprise Sunny Money Kenya (SEED Winner 2009), provided some valuable insights:

• Having a clear understanding of the different types of investors and funds, and their requirements upfront is key before starting the research of funds.  It is important to select the investors strategically, be flexible and invest time in building the relationship.

• Building a credible business case and show passion and confidence in an innovative idea are key aspects when approaching new funders.

• In the early-stage phase, integrating different financing instruments like grants, own equity and crowdfunding, will help to create finance history.

• Developing a network of mentors that can provide advice on specific business topics is helpful in the business plan development process. Entrepreneurs should give special attention in establishing relevant metrics on financial sustainability and impact.

• Regional and local networking events for entrepreneurs are an important tool to help entrepreneurs engage with investors, advisors and further intermediaries.

• Government need to support businesses at the Base of the Pyramid to enable better financial inclusion. Required actions include for example more public awareness-raising campaigns to support the marketing of new green products/services and incentive mechanisms (ex. Uwezo Fund in Kenya).