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Top 10 Ways African Tech Startups Can Fund Themselves in 2019

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African tech startups

African startups often fail to take off or make it big due to a lack of funding. In this guide, you will discover ten funding options for African tech startups that could help you to kickstart your company and turn it into a raging success in 2019.

Bootstrapping

Bootstrapping is the first funding option every tech startup should consider. This means that as an entrepreneur you will solely rely on your money and company resources to scale and run your business operations.

Bootstrapping is beneficial because it saves your company from debt and makes your business more attractive to potential investors and lenders. Another advantage that comes with bootstrapping is that you will become more business savvy as you get better at creating revenue and boosting your profits without external financial help.

Here are the possible options you can use to fund your tech startup through bootstrapping:

  • Let the customer pay for your initial job. This simply entails asking the customer to pay for the money you will use in building a tech solution for them.
  • Reduce expenses through sharing your workspace with other businesses to reduce the cost of office rent. You could run your company remotely to alleviate office costs entirely. You might also consider sharing employees and office equipment or hiring consultants instead of hiring people permanently.
  • Offer your employees the option to work for equity instead of cash.

Unfortunately, without an efficient marketing technique to bring in customers quickly the business might fail. Moreover, it will take longer to grow your company without investment.

Small Business Loans

startup fundingOnce you have successfully grown your startup through bootstrapping, then you can move to the second funding option which is applying for a small business loan to expand your business.

Loans for startups and small businesses are not easily accessible in Africa but with a strong business plan, an existing customer base, and adequate cash flow, banks, micro-finance institutions, savings and credit co-operatives, and mobile app lenders may lend you money to grow your business. However, these loans often come with high interest rates. Hence, it is important to ensure beforehand that you will be able to repay the loan plus interest in full and on time.

You will generally need the following to secure a small business loan:

  • A business plan
  • A good credit score
  • A record of your business financials e.g. tax income returns
  • Business licenses and other legal documents
  • Collateral

Angel Investors

An angel investor is a wealthy person who is looking to make investments that could potentially result in high returns. If an angel investor believes in what you are doing and they believe that your business will succeed, they may inject capital into your startup in exchange for ownership equity or convertible debt.

Financing your tech startup through an angel investor is beneficial because it is less risky than debt financing. Additionally, angel investors also offer mentorship to founders, thereby, enabling them to run their businesses more effectively.

Angel investors can be wealthy individuals, groups, family members, or friends. Examples of angel investor groups in Africa include Jozi AngelsAngel Investment Network, Team Africa Ventures, and Ghana Angel Investor Network.

To attract an angel investor, your business needs to be:

  • Innovative
  • Scalable
  • On the path to profitability

Additionally, your startup should also have a strong business plan and a strong team of founders because investors generally invest in people and not ideas.

Venture Capital

African startupsVenture capital firms invest in businesses that have a high potential for growth. VC generate a return on their investments when the company they invested in gets bought up, goes public or they can sell their stake to another investment firm.

Unlike angel investors, venture capital companies generally invest larger amounts of capital into a business. However, VC investment tends to come with conditions that are not always favourable to the startup founders so potential VC investments need to be looked at in detail to see whether they truly benefit the business and its owners or primarily the VC firm.

While some angel investors are motivated to help startups grow through mentorship and capital, venture capitalists are often interested in finding the best business that can make them the most money.

Before approaching a venture capital firm:

  • Do your research
  • Evaluate the growth potential the current target market offers your business
  • Talk to other startups that have raised funds through venture capitalists and learn from their experiences
  • Build your idea and gain traction
  • Create a short and catchy pitch deck
  • Consider bootstrapping, small business loans, and angel investors first

Some of the top venture capital firms in Africa include Matamba Anonaka Technology Holdings (MATHs) and Adlevo Capital.

Startup Incubators/Accelerators

Startup incubators concentrate on innovation while accelerators focus on growth. Tech startups have to apply to be accepted into an accelerator or an incubator program. Once they are picked, startups are given a small amount of seed funding in exchange for a small equity percentage.

Accelerators offer startups a mentorship network which they leverage to grow their businesses. In addition, accelerator programs help startups to build their businesses over a short period of time. Incubators are often characterised by a co-working environment, mentoring, networking, and some connection to the local community. Once a startup joins an incubator program, it gets the opportunity to polish up its idea, create a business plan, and work on a product that fits the target market.

Accelerators and incubators are important because:

  • You receive mentorship
  • You get access to future investors
  • You develop your skills
  • You are able to manage the risk associated with your concept
  • You are able to establish the next growth level of your business
  • You get access to a free or low-cost working space

Accelerators and incubators are ideal for startup founders that want to start their businesses on the right foot. Some examples of accelerators and incubators in Africa include Injini, Google Launchpad Accelerator Africa, FB Start Accelerator, iHub, and MMH Accelerator.

Business Grants

african startup fundingBusiness grants are non-repayable funds that come with attached conditions. As long as you fulfill these conditions, then you will not have to repay the money.

Governments, foundations, organisations, large corporations, and trusts are often the givers of business grants. African tech startups simply have to look for a grant that fits their needs before making an application.

The upside of receiving a business grant is that you do not have to repay it or give up any shares. Moreover, you can use the fact that a large corporation or a government has given you a grant as a promotional mechanism.

Examples of organisations that offer grants include Shell LiveWire, Africa Women’s Development Fund, Jack Ma’s Africa Netpreneur Prize Initiative 2019 and Miss.Africa Initiative.

Pitching Competitions

Startup contests and pitching competitions are other ways of funding your tech startup. These opportunities enable a startup to pitch its ideas to potential investors while interacting with a wide network of people that could contribute positively to the growth of its business.

Other perks are competition prizes, support from incubators or accelerators, mentorship, and free access to industry events.

To win a pitching competition, you need to:

  • Follow the rules
  • Know your material
  • Open with a close and catch the attention of the audience

Examples of pitching competitions for African tech startups include MEST Africa Challenge, Seedstars World Competition, and Sanofi in Africa VivaTechnology Challenges.

Online Crowdfunding

Online crowdfunding entails raising small amounts of money on the Internet from a large number of people. There are two types of online crowdfunding: equity and rewards-based. Equity-based crowdfunding entails offering shares in exchange for capital while in reward-based crowdfunding, “investors” are given an incentive or a reward.

Online crowdfunding platforms offer an efficient way to raise money and access thousands of potential investors.

Here is how you participate in online crowdfunding:

  • Determine the type of online crowdfunding you want
  • Research crowdfunding platforms
  • Choose the best platform for your business and post your campaign
  • Use social media to promote your campaign

African crowdfunding platforms include Uprise.Africa, Thundafund, M-Changa, and Afrikstart.

Initial Coin Offering (ICO)

ICORaising money through an initial coin offering (ICO) is another funding option that has been gaining popularity over the recent years thanks to the emergence of blockchain technology and cryptocurrencies. During an ICO, tokens are sold to the public as a means to raise funds.

ICOs were very popular in 2017 but have since lost their appeal as regulators across the globe have made it clear that companies will no longer be able to raise millions without having to adhere to any regulations. Hence, there is regulatory risk involved in launching an ICO.

To launch an ICO, do the following:

  • Research ICOs and the regulations guiding this type of funding in your country
  • Decide on what type of token you want to launch and how it will fit into your product or service
  • Put together a team of skilled people and advisors
  • Create a project roadmap, whitepaper, and website
  • Engage with the crypto community
  • Market your ICO
  • List your token on exchanges

Security Token Offering (STO)

The final funding option on our list is the security token offering (STO). An STO refers to the process of offering tokenised securities for sale, i.e. tokens that are representations of securities such as bonds and stocks.

In an STO, the value of the security tokens is dependent on the value of the company or the underlying asset. In addition, there is more regulation in an STO than in an ICO since securities are regulated.

However, the STO market is still young and has not been tested in the long-term. This means that there is a risk for both startups and investors. Furthermore, STOs require a startup to create its own tokens and a platform to manage them which is costly.

What to do before launching an STO:

  • Understand the compliance regulations in your country
  • Create an STO business plan
  • Seek the consultancy services of an STO development company to create and manage your security tokens
  • Market your STO to reach as many investors as possible

With these ten funding options to choose from, you could be on the path to ensuring that your startup will turn into a success story.

Guides

How to Cash Out Bitcoin to Naira Using Cryptofully

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Bitcoin to Naira

Over the past few months, Nigeria’s central bank has made it difficult for traders to cash out bitcoin to naira, restricting crypto companies from having a Nigerian bank account. But there is now a cheap and efficient way to cash out your bitcoin to naira.

In this guide, you will learn how to convert your BTC to NGN and receive the money in your bank account within minutes using Cryptofully.

Getting Started on Cryptofully 

Cryptofully is a peer-to-peer payments app that allows you to easily convert bitcoin to naira and automatically settles into your Naira bank account.

Using Cryptofully, you can cash out your bitcoin from anywhere in the world into any Nigerian bank account. The platform also supports US dollars and payment options, including Visa, Mastercard, Google Pay, and Apple Pay.

Cryptofully leverages a local network of peer-to-peer (P2P) traders, enabling it to convert BTC to NGN within minutes. With this P2P system, you are not looking for a peer to buy your bitcoin. Cryptofully automatically matches your trade to the best peer and makes it seamless for the user.  

All that’s needed to cash out bitcoin to naira using Cryptofully is to sign up, complete the KYC, add a bank account and convert your bitcoin to cash.

How to Cash Out Bitcoin to Nigerian Naira

You can cash out your bitcoin to your Nigerian bank account using either the Cryptofully website or mobile app. 

Download the Cryptofully App

mobile app

Step 1: Create an account

  1. Get the app on iOS or Android.
  2. Open the app and register with your email address and verify the email address.
  3. Start the KYC process. Visit Profile, click to Add bank, and add your BVN. You can also add your bank account in this section.

Step 2: Cash Out Your Bitcoin to Naira

  1. Type in the amount you want to cash out.
  2. Then choose to send via bitcoin.
  3. On the following page, you can add your bank account details in the recipient field.
  4. On the last page, you can see a Bitcoin wallet address. Send your bitcoin to that wallet address and within a few minutes, the equivalent amount in naira will settle in your bank account. 
  5. Cryptofully matches you to a peer instantly who sends the money to your naira bank account.

Visit the Cryptofully Website

Cryptofully Platform

You don’t need to sign up or log in with any details on the website to start using it

  1. Go to the Cryptofully website at www.cryptofully.com.
  2. Specify the amount of bitcoin you want to cash out to naira. You can use either the Floating Rate or Fixed Rate. The Floating Rate means the exchange rate can change based on changes in bitcoin prices, and the Fixed Rate means you can lock in an exchange rate for your transaction.
  3. The naira amount equivalent you will get in your bank account will appear below.
  4. On the following page, you will see a space to fill in the preferred bank account you want to receive your money.
  5. Then, you will be shown a Bitcoin wallet address. 
  6. Copy the wallet address and do a transfer to the address. The Cryptofully system matches you immediately to a peer.
  7. The peer sends the money and the money settles in your naira bank account.

Since the Central Bank of Nigeria enacted draconian measures against crypto companies, preventing them from having banking relationships, the peer-to-peer bitcoin trade has flourished in the West African country.

Peer-to-peer payment apps, like Cryptofully, are enabling Nigerians to continue using bitcoin for remittances, payments, and as an investment.

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How to Trade Cryptocurrency on Sikix.io

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Sikix Dashboard

Sikix is a decentralized exchange that allows users to have full control over their funds while trading digital assets. In this guide, you will learn how to trade cryptocurrency on Sikix.

Opening an Account on Sikix

To start trading on Sikix, you have to create an account.

Here are the steps you will take:

  • Visit the Sikix website
  • Click “Register Account”

Sikix

  • Enter an account name and password
  • Hit “Confirm”
  • Save the seed file to your computer and click “I’ve Backed It Up.” You should store your seed phrase safely because the platform cannot restore it for you.
  • Click the settings icon to verify your email address and phone number

Sikix.io

  • Next, go to “Balance” to deposit crypto or fiat into your account. For instance, if you want to deposit BTC, go to bitcoin on the list, click “Deposit” and copy the address provided. Transfer bitcoin to the address and click “Confirm.” Note that the minimum amount of BTC that you can deposit is 0.01.

Sikix Dashboard

  • Once the bitcoin hits your account, you should see the total balance and the USD equivalent displayed on the balance page.

On Sikix, the most common base currencies are USDT and the Nigerian naira (NGN). You can deposit both of them before you start trading. But that does not prevent you from depositing any of the other supported cryptocurrencies.

Depositing Local Currency to Your Account

To deposit naira, follow these instructions:

  • Go to “Balance”
  • Search for NGN on the list and click “Deposit”
  • Enter the amount you want to deposit. The platform will display the fees and the amount you will deposit.

Sikix Exchange

  • The platform will redirect you to a new page where you will enter your card details. Alternatively, you can use any of the other payment methods listed.

Sikix Trading

  • Once the transaction is complete, you should see your newly deposited funds on the balance page.

How to Trade Cryptocurrency on Sikix

Assuming that you deposited USDT in your account, here is how you can trade on Sikix:

  • Go to “Trade”
  • On the left-hand side of the screen, select a trading pair from the drop-down menu. For instance, you can choose the ETH/USDT trading pair. That means that you can buy ether with USDT. Note that the graph shows how the price of ETH is changing against USDT. You can view this change over different periods.

SIKIX DEX

  • On the right-hand side of the screen, select the green box. This box represents the bidding price, which is the maximum amount that you are willing to pay for ETH. The red box represents the asking price, the minimum price that a seller is willing to accept. You can choose to trade at these levels.
  • Alternatively, you can make your purchase through a limit or market order. The limit order allows you to buy ETH at a fixed price. Conversely, a market order enables you to buy ETH at the best market price.
  • Once you have entered the amounts, click “Buy ETH” to open your order. If you placed a market order, your purchase will take place immediately. However, you will have to wait to get a match if you placed a limit order.
  • When your order goes through, an ETH balance should reflect in your account.

Presently, the exchange supports BTC, USDT, ETH, BCH, XLM, XRP, NGN, and CMT with a plan to add more digital currencies in the future.

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The Complete Beginner’s Guide to TerraCredit (CREDIT)

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TerraCredit

Ever come across TerraCredit or TerraBit and wondered what they are? In this guide, we explore the TerraCredit ecosystem and provide an in-depth beginner’s guide to one of the fastest-growing crypto projects in Africa.

What is TerraCredit (CREDIT)?

CREDITTerraCredit (CREDIT) is a decentralised cryptocurrency at the heart of a digital payment ecosystem. The developers behind the cryptocurrency built CREDIT as a “viable replacement to cash and a rewarding option” – especially for users in developing markets.

CREDIT is the native currency of the TerraBit platform, a payment platform tailored towards the unbanked.

At the time of writing, the cryptocurrency is in the top 1,000 coins by market cap on CoinGecko. At the time of writing, CREDIT was trading at $0.00614 per coin.

Highlights About CREDIT

  • Name: TerraCredit
  • Ticker/Symbol: CREDIT
  • Max supply: 86,000,000
  • Blockchain: Native
  • Consensus mechanism: Proof of Stake (POS)
  • Established: 2017**

The cryptocurrency is built on a native Proof-of-Stake blockchain, requiring less from network validators, allowing more people to participate in the network. Currently, the Terracredit blockchain has over 12,000 individual network validators. The decentralised nature of validators makes it difficult to perform a 51 % attack on the blockchain.

What’s more, transaction fees on the Terra blockchain are very low. In contrast, most of the top cryptocurrencies have become very expensive to use due to fees. TerraCredit allows you to transact with fees as low as $0.00000003.

Moreover, CREDIT transactions are fast. They confirm in seconds Quicker transactions are made possible because of the low fees and the availability of several validators.

TerraCredit can be stored on native or third-party wallets. The native CREDIT wallet is available on desktops running Windows, Linux, and Mac OS. You can also download the mobile application for Android. Conversely, if you prefer third-party applications, there are many options like MyCointainer to choose from. 

What is TerraBit?

TerraBitTerraBit is a global payments platform that allows you to store cryptocurrencies and exchange them for fiat on a single app. It is also the native wallet of TerraCredit.

TerraBit supports CREDIT and bitcoin (BTC). It also supports fiat currencies like the naira (NGN), rand (ZAR), and peso (COP). You can deposit these currencies directly on the app to purchase cryptocurrencies.

Besides buying crypto, you can also sell crypto in the app and withdraw it to your bank account. This feature has made it very popular in developing markets like Nigeria, Colombia, and Kenya.

TerraBit also has a merchants interface that makes it possible for you to accept crypto payments. If you are a business owner, you can accept crypto payments in person via the app. It is extra easy doing the same online by just sending your crypto address.

Finally, the app comes with extra features, such as web staking.

Highlights of TerraBit

  • Trade cryptocurrencies on-the-go
  • Support for fiat currencies: NGN, ZAR, COP
  • Merchant interface to accept crypto payments
  • QR payments

Future features coming to TerraBit includes more fiat options for markets like Ghana. Virtual credit cards are also on the roadmap. These cards will make it possible for you to spend your crypto wherever bank cards are accepted.

TeraCredit Features

TerraCredit has several features that have seen an upgrade after the latest hard fork. As mentioned earlier, TerraCredit deploys the most modern blockchain technology. This makes it decentralised, fast, private, and easy to use. Here is a deeper look at the leading features of TerraCredit:

Proof of Stake: TerraCredit runs on a Proof of Stake (POS) consensus algorithm. Compared to other consensus algorithms like Proof of Work, POS is more lightweight and easier to participate in. Easy participation allows more individuals to play a role in confirming transactions. Without a broader pool of validators on a network, it becomes centralised.

The few validators get to control the affairs of the project. Also, bad actors can take advantage of this to attack the blockchain. You can participate in securing the TerraCredit network via staking or masternodes. Securing the network also rewards you through the creation of new coins. 

Decentralised Autonomous Organisation (DAO): The latest TerraCredit hard fork brought a new governance model. Masternodes operate the TerraCredit DAO. Aside from helping secure the network, masternodes contribute to the governance of the project. The DAO gets funds directly from the blockchain, which are allocated to approved proposals. Anyone can submit a proposal that masternodes vote on. Each masternode has one vote. Having a DAO with funds directly from the blockchain ensures the development and marketing of the project.

Swiftx: TerraCredit (CREDIT) enables swift transactions using the masternode infrastructure. Swiftx ensures “near-instantaneous” transactions. This feature aims to put TerraCredit in the same league as major payment processors like Visa and MasterCard. 

Coin mixing: Mixing makes transactions private. Instead of sending transactions directly from your wallet to another, coin mixing takes the coins through several transactions (mixing) before the final destination. This feature gives CREDIT privacy utility.

Ways to Earn CREDIT in 2020

TerraBit

There are two main ways to earn CREDIT in 2020. Both methods allow you to earn passive income since they require only a simple set up at the initial stages.

Web Staking

You can stake CREDIT via the native wallet. All you have to do is load your wallet with CREDIT and turn on staking to get started. It is simpler than mining and lowers the barrier of entry. You can stake 0.000000001 CREDIT and above. Rewards are paid daily into your wallet after you begin web staking.

Masternodes

Masternodes, on the other hand, come with more requirements. You need to hold at least 50,000 CREDIT as collateral for your masternode. After, you have to set up a node with the wallet. You can do this using a hosting service or do it yourself using basic hardware like Raspberry Pi.

Masternode owners receive rewards every block for securing the network and participating in the governance process. 

The Bottom Line

TerraCredit continues to grow beyond the TerraBit platform. CREDIT has been added to several exchanges, payment processors, and wallets recently, while its web staking functionality offers users a way to generate investment income on their CREDIT holdings. 

To learn more about TerraCredit, check out the project’s website.

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