On the continent, the above numbers may look a little different. Startups also benefit the recognition of being part of the accelerator’s selection. Most of the accelerators offer a strong network of alumni and investor contacts. In this model, a large number of hand-picked startups - usually tens of startups per batch and between 1–5% acceptance rate - benefit from mentorship and education during a few months. Acceleratorsįirst, accelerators - provide a more substantial amount of money (between $20k and $100k) in exchange for equity (usually around 5–10%). This section borrows and adapts the definitions laid out by Thibaud Elziere, a Founding Partner of the European startup studio eFounders, in this Medium post. To understand the merits of the high-touch, human capital intensive approach requires us first to begin with definitions and categorization of the types of investors and entrepreneurship support programs on the continent. The difference between accelerators and venture builders, then, becomes how bespoke those resources are, with the latter offering more hands-on services than the former. Meanwhile, the core value proposition of accelerators and venture builders is that they provide varying amounts of non-financial resources to their companies. While the level of post-investment, hands-on support from angel investors and venture capitalists differs depending on the individuals and the firms, their primary value to their investees is in the financial capital they provide. There are two types of capital that early-stage investors provide to their portfolio companies: human capital and financial capital. Rather than raising funding from investors to solve these problems, they can work with GreenTec to find the solutions. Startups that are attempting to scale need funding but also need talent, time, people, access to networks, access to investors, access to devs, and so on. What do early-stage startups need funding for?, he questioned. ![]() GreenTec is unique in that they employ a “results for equity” model, which they believe enables startups to achieve certain objectives without equity dilution. This view was corroborated by Maxime Bayen of GreenTec Capital Partners, another Africa-focused venture builder, during a podcast interview I had with him a few months later. This model has merit in Africa in particular, they argued, where human capital, particularly of a certain caliber or skillset, can be more impactful to an early-stage startup than financial capital itself. Instead, they’re co-builders - FFA co-builds products with their portfolio companies as an extension of the team. What struck me about that evening and still resonates with me today, in particular, was the zeal with which FFA evangelized their investment model: the venture building model.įFA is not a typical accelerator, they said. In May 2019, I was invited to the launch event for Founders Factory Africa here in Johannesburg, where I had the opportunity to meet the team, as well as some of the founders of their first African cohort.
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