African fintech is one of the fastest growing industries in the world because of how lucrative the business is and the market that is available.

If you are a fintech entrepreneur in Africa looking for funding to grow your business or you want to know how to attract and convince investors to support your venture.

Fintech, or financial technology, is one of Africa’s fastest-growing and most promising sectors. It refers to using digital platforms, software, and services to provide or enhance financial services, such as payments, lending, savings, insurance, remittances, etc.

Fintech can improve financial inclusion, efficiency, and innovation in Africa, where many people still need access to formal and affordable financial services.

According to a report by McKinsey, the fintech market in Africa could reach $150 billion in revenues by 2025, excluding South Africa, the largest and most mature market on the continent.

The same report estimates that fintech revenues could grow eight times their current value by 2025 if the sector can achieve penetration similar to those seen in Kenya, a country with one of the world’s highest levels of fintech adoption.

However, to realize this potential, fintech entrepreneurs in Africa must overcome several challenges, such as infrastructure gaps, regulatory uncertainty, customer trust, and, most importantly, access to capital.

Funding is crucial for fintech startups to develop their products, scale their operations, and expand their markets. Fintech startups may need adequate financing to survive and compete in a crowded and dynamic industry.

So, how can you get investors for fintech in Africa? What are the best practices and strategies to pitch your business and secure funding? I will share the step guide on getting investors for fintech in Africa based on our experience and research. We will cover the following topics:

• How to prepare your business for fundraising
• How to identify and approach potential investors
• Crafting and delivering a compelling pitch requires a certain level of finesse
• How to negotiate and close the deal

Following these steps will increase your chances of getting investors for fintech in Africa and take your business to the next level.

Step 1: Prepare your business for fundraising

Before looking for investors, you must ensure your business is ready for fundraising. This means you have a clear vision, a viable product, a validated market, a strong team, and a realistic plan. Below are some questions that you should ask yourself to prepare your business for fundraising:

1. What is your value proposition? What problem are you solving, and for whom? How are you different from your competitors? What is your unique selling point?

2. What is your product or service? What stage of development is it in? Do you have a minimum viable product (M.V.P.) or a prototype you can demonstrate to investors? Do you have any patents or intellectual property rights?

3. What is your market size and potential? How big is the market that you are targeting? How fast is it growing? How much market share can you capture? What are the trends and opportunities in your industry?

4. Who are your customers and users? How do you acquire and retain them? How do you measure their satisfaction and loyalty? What is your customer lifetime value (C.L.T.V.) and acquisition cost (C.A.C.)?

5. How do you make money? Could you please provide more information regarding your revenue model and pricing strategy? How do you monetize your product or service? What are your current and projected revenues and profits?

6. Who are your competitors and partners? Who are the leading players in your market, and how do you compare to them? What are your competitive advantages and disadvantages? Who are your strategic partners and allies?

7. What are your goals and milestones? What are your short-term and long-term objectives? What shows the performance indicators (KPIs) you use to track your progress? What are the significant risks and challenges that you face, and how do you mitigate them?

8. What are your funding needs and use of funds? How much money do you need to raise and why? How will you use the funds to grow your business? How long will the funds last, and what are your expected returns?

To answer these questions, you must do your homework and conduct thorough research and analysis of your business and market.

It would also be best to have a solid business plan and a financial model that outlines strategy and projections. These documents will help you communicate your business to investors and show them that you have done your due diligence and have a clear roadmap for success.

Step 2: Identify and approach potential investors

Once you have prepared your business for fundraising, you must identify and approach potential investors interested in your venture.

There are different types of investors that you can target, depending on your stage of development, funding needs, and goals. Below are some of the most common types of investors for fintech in Africa:

1. Individuals with considerable wealth who are known as angel investors provide funding to nascent startups during their initial stages, in return for convertible debt or equity.

They typically invest smaller amounts, ranging from $10,000 to $100,000, and offer mentorship and guidance to entrepreneurs.

Some examples of angel investors in Africa are Venture Capital for Africa (VC4A), African Business Angel Network (A.B.A.N.), and Angel Fair Africa.

2. Venture capitalists: These firms invest in startups that have proven their product-market fit and have high growth potential.

They usually invest more significant amounts, ranging from $100,000 to $10 million, by becoming more involved in the management and governance of startups, individuals can take on a proactive role in ensuring their success.

They also provide access to networks, resources, and expertise. Some examples of venture capitalists in Africa are TLcom Capital, [Partech Africa], and [Flutterwave].

3. Corporate investors: These companies invest in startups aligned with their strategic objectives and can provide synergies, innovation, or market access.

They often support as part of a larger round led by other investors and may offer partnerships, distribution, or acquisition opportunities. Some examples of corporate investors in Africa are [Orange Digital Ventures], [Standard Bank], and [M.T.N.].

4. Impact investors: These investors aim to generate not only financial but also social or environmental returns through their investments.

They often focus on sectors that address social or environmental challenges, such as financial inclusion, health, education, or agriculture.

They may have different criteria and expectations than purely commercial investors. Some examples of impact investors in Africa are [Acumen], [Omidyar Network], and [LGT Impact Ventures].

To identify and approach potential investors, you need to research and network. You can use online platforms, databases, and directories to find active investors in your sector, region, or stage.

You can also attend events, conferences, and competitions to showcase your business and meet investors. You can also leverage your existing contacts, such as mentors, advisors, peers, customers, or partners, to get introductions or referrals to investors.

When approaching potential investors, you need a clear and concise pitch summarizing your business and value proposition.

You must also have a one-page executive summary or a pitch deck that provides more details about your business and funding needs.

You should tailor your pitch and materials to each investor, highlighting the most relevant and appealing aspects. You should also be prepared to answer questions and provide additional information if requested.

Step 3: Craft and deliver a compelling pitch

After identifying and approaching potential investors, you must craft and deliver a compelling pitch convincing them to invest in your business.

A pitch is a presentation that showcases your business and explains why it is a great investment opportunity. A pitch typically consists of the following elements:

• Problem: What problem are you solving, and why is it important?
• Solution: What is your solution, and how does it solve the problem?
• Market: What is your solution’s market size and potential, and who are your target customers?
• Product: What is your product or service, and how does it work? What are the features and benefits of your product or service?
• Traction: What is the evidence that your product or service works and that customers want it? What are your achievements and milestones so far?
• Competition: Who are your competitors, and how do you compare to them? What are your competitive advantages and disadvantages?
• Team: Who are the people behind your business, and what are their backgrounds and roles? Why are they the best people to execute your vision?
• Business model: How do you make money, and what are your revenue streams? What are your costs and expenses? What are your current and projected financials?
• Funding: How much money are you raising and why? How will you use the funds to grow your business? What are your valuation and terms?
• Ask: What are you asking from the investors, and what are you offering in return? What are the next steps, and how can they get involved?

To craft a compelling pitch, you need to follow some best practices and tips, as i have listed below.

• Use storytelling techniques. A good pitch is not just a list of facts and figures but a story that captures the attention and emotions of the investors. Use storytelling techniques like anecdotes, metaphors, analogies, humor, incorporating compelling visuals can elevate the impact and memorability of your pitch.
• Focus on the benefits, not the features. Investors are interested in something other than the technical details of your product or service but in its benefits to the customers and the market. Instead of describing the features of your product or service, explain how it solves the problem, creates value, and satisfies the needs and wants of the customers.
• Show traction and validation. Investors want to see that your product or service has been tested and validated by real customers and users and that you have some traction and momentum in the market. Show them the evidence of your customer feedback, user testimonials, reviews, ratings, referrals, retention, revenue, growth, and other metrics demonstrating your product-market fit and potential.
• Anticipate and address objections. As an entrepreneur, it’s natural for investors to have inquiries and apprehensions regarding your business proposal and presentation. Anticipate and address your pitch’s most common and important ones, and be prepared to answer any other questions. Show them that you have done your research, analysis, and risk assessment and have contingency plans and solutions for any challenges or obstacles you may face.
• Include a clear ask and a call to action. At the end of your pitch, you must tell the investors what you want from them and what they can expect from you. Include a clear ask that specifies how much money you are raising, what valuation and terms you are offering, and how you will use the funds. Also, include a call to action inviting investors to take the following steps: scheduling a follow-up meeting, requesting more information, or signing a term sheet.

Step 4: Negotiate and close the deal

After you deliver your pitch, you must negotiate and close the deal with the investors interested in your business. This is the final and most critical step of the fundraising process, where you must be careful and strategic. Below are some tips and best practices for negotiating and closing the deal with investors:

1. Know your worth and your walk-away point. Before you enter the negotiation, you must know your worth and walk-away point.

Your worth is the value of your business based on your market, traction, and potential. Your walk-away point is the minimum amount and terms you will accept from the investors.

Having a realistic and reasonable valuation of your business and a clear idea of how much equity and control you will give up.

You should also be prepared to leave the deal if the investors offer less than your walk-away point or demand more than you are comfortable with.

2. Understand the investors’ perspectives and interests. Negotiation is not a zero-sum game; one party wins, and the other loses.

Negotiation is a collaborative process where both parties attempt to discover a mutually advantageous accord that adequately meets the needs of both parties involved their interests and goals.

To achieve that, you must understand the investors’ perspectives and interests and try to address them in your negotiation.

For example, some investors may be more interested in the financial returns, while others may be more interested in the social or environmental impact. Some investors may want more involvement and influence in your business, while others prefer to be more hands-off.

By understanding the investors’ perspectives and interests, you can tailor your negotiation strategy and offer to meet their needs and expectations.

3. Be transparent and honest. Negotiation is based on trust and credibility. It would be best to be acceptable and fair with your investors to build a solid and lasting relationship with them.

You need to disclose all the relevant information about your business, such as your financials, metrics, risks, challenges, and opportunities.

Avoid exaggerating, misleading, or hiding any facts or figures that may affect the investors’ decision. If the investors discover that you have lied or omitted something important, they may lose your trust and confidence, and your business may withdraw from the deal or sue you for fraud.

4. Seek legal and professional advice. Negotiation involves a lot of legal and technical aspects, such as term sheets, contracts, agreements, clauses, and provisions.

These can be complex and confusing and have significant implications for your business and rights. You must seek legal and professional advice before signing or agreeing to anything.

You need to consult with a lawyer, an accountant, a mentor, or an advisor who can help you understand the legal and financial terms and conditions and advise you on the best course of action.

You must also review and verify all the documents and information the investors provide and ensure they match your discussion and agreement.

These are the steps and tips on how to get investors for fintech in Africa. Following this guide, you can prepare, pitch, negotiate, and close the deal with the investors who can support your fintech venture and help you achieve your goals. We hope you found this blog post helpful and informative.

Conclusion

Getting investors for fintech in Africa is not easy, but it is not impossible for you to do as even as a bigginer. With the proper preparation, strategy, and execution, you can attract and convince investors to support your fintech venture and help you achieve your goals.