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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 Earn Bitcoin by Playing Online Games

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Playing Online Games

There are many ways to earn bitcoin without making a single deposit of just a unit of Satoshi. You can earn bitcoin from taking online polls, playing new slots, after the delivery of a freelance job, or even from faucet sites. Many platforms are now adopting bitcoin as their legal tender; China is in this race, too. A lot of these outlets pay in BTC, and you can easily earn bitcoin from them if you can work hard for an extended time.

But there is an alternative way of earning bitcoin. You guessed it right! By playing video games online using your PC or SmartPhone. This online casino real money Canada slots are some of the best you can think of, and the fact that you can earn bitcoin while playing your favourite games is enough a reason why you should try it!

SparkProfit 

SparkProfit is one of the go-to Bitcoin games just like many of the games in Mr. Bet. You have to learn how to stay away from your Top Ramen in your grandma’s basement. With this, you are good to go in this game.

It is a trading simulation that gives you the courage to make predictions in the forex and cryptocurrency marketplace. Bitcoin casino Canada is the leading cryptocurrency for online casino deposits. More points will be available to you when you make more accurate predictions. You can withdraw from this platform using bitcoin anytime you like.

Altcoin Fantasy 

This is another virtual platform where you trade games. This platform can also teach you the art of trading in an environment void of risks. It features a competitive leaderboard environment that does not allow you to lose your precious money.

You can trade altcoins on their site using their mobile app or on their website. You can play their games using both iOS and Android devices. Pitching their tents only in Canada and the US for now, the company wishes to extend their tentacles to Hong Kong, South Korea, and Japan very soon.

Tremor Games 

Tremor is a web gaming site that provides you with a plethora of games, similar to what you have in another distinctive flash arcade. But then, it is dissimilar to a standard run-of-the-mill gaming site in that you’ll get your payment through “Tremor Coins” as you keep progressing in the game. You can get the equivalence of the tremor points you’ve accumulated over time in Bitcoins when you exchange them for withdrawals.

Bitfun.co 

BItfun is a standard faucet site. It allows you to play a plethora of games for about three minutes. For each win you make, you’ll earn some bitcoin.

Satoshi Quiz 

This is an exciting and engaging game that awards you a thousand Satoshis for each question you answer correctly. Don’t expect it to be all the questions to be all rosy. There are both easy and tough questions that you have precisely one minute to answer. If you are good with this quiz, you stand the chance of winning up to a million Satoshis.

Quiz BTC 

This quiz is a competitive styled quiz, and it lets you win free bitcoin when you right answer one question. The faster you are on answering these questions, the more Satoshis you stand to gain. New questions are posted every minute, and the winner of the quiz goes home with Satoshis.

Storm Play 

Storm Play is a straightforward and refreshing way of earning free bitcoin, Ether, and STORM when you use their services and products. You can deposit your earnings your wallet, Exodus, or to your Coinbase account.

This guest contribution was written by Loyd Pelto. He is a professional freelance writer. From his posts, you can learn about online casinos, crypto casinos, and how to make predictions on sports betting. 

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How To Get Started With Web Staking

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black man macbook

Staking is one of the easiest ways to earn investment income with cryptocurrencies. In this guide, we explore how to get started with web staking to earn income on your digital asset holdings. 

How PoS Staking Works

The proof-of-stake (PoS) algorithm deployed by a large number of cryptocurrency networks involves participants “staking” digital asset holdings in order to secure the network. In exchange for staking, these validators receive staking rewards. 

To stake cryptocurrency, you will have to reserve large sums of a particular cryptocurrency in your wallet and connect it to the blockchain as a delegate/staker by holding it in the network’s official wallet. After this, you will begin to receive rewards on a (usually) daily basis for your service on the blockchain. The higher the number of cryptocurrency staked, the higher the validation power and staking reward.

For instance, on the Tezos blockchain, transactions are validated when bakers (individuals with large sums of tezzies (XTZ) reserved) watch the network and create blocks. These delegates are then rewarded with newly minted tezzies (XTZ).

Ethereum, the second-largest blockchain network, is currently using a proof-of-work (PoW) consensus algorithm but plans to move to proof-of-stake soon as its developers recognise the value of this alternative method of securing a decentralised blockchain network and rewarding participants.

Recently, third-party providers have launched staking-as-a-service, allowing users to stake cryptocurrencies without having to handle the technical aspects of it themselves. 

Another new development is web staking, a concept that intends to open up staking opportunities to more people. 

Web Staking CREDIT

Terra Credit

Web staking refers to performing staking on a web platform or application. It is a less demanding method of earning passive income with cryptocurrencies as it requires very little activity from the user. An example of a web staking platform is the Terrabit Staking web application.

Terrabit markets the platform as a “service to CREDIT holders as a new and convenient way to earn staking rewards.”

The platform allows users to stake CREDIT, the native token of the TerraBit blockchain. CREDIT is a utility token that enables users to access special features on Terrabit.

CREDIT holders pay zero-fee transactions, faster payments, and web staking. Users can earn up to 100% ROI by staking CREDIT on the Terrabit staking application. The staking collateral threshold for Terrabit is 10,000 CREDIT. This means that you need at least ten thousand coins to start staking and receive rewards.

Top features on the Terrabit staking app include:

  • Web-based CREDIT staking up to 100% per year
  • Hourly rewards
  • No lock-in period
  • Intuitive interface

Terrabit is a South African cryptocurrency trading platform that offers fiat-to-crypto services for five African countries. What’s more, CREDIT is trading on Bitforex, allowing users to change the cryptocurrency for others on an external exchange.

Additionally, CREDIT’s developers already recognised the trend of PoS staking over 18 months ago when they decided to opt for PoS as their network’s consensus algorithm. 

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How to Choose the Best Broker in South Africa

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Best Broker in South Africa

If you’re interested in forex or CFDs trading, you’ll need to find yourself an online broker. With so many brokers in South Africa to choose from, it can be hard to decide. That’s why in this article, you will learn how to find the best trading platform in South Africa.

Trading in South Africa

South Africa is one of the leading countries for forex trading, alongside the UK, Australia, and the USA. That’s why many brokers are now offering their services to South African residents.

The best thing about online trading though is that you can do it from any location. There are many traders from all across the world, selling and buying assets each day. Many brokers now offer mobile trading apps too, letting you trade directly from your smartphone. A great idea if you want to trade on the move.

Other points to check when choosing a broker include:

  • the minimum deposit
  • assets available
  • regulation licences

Out of these three things, the most important to check is regulation. All good forex and CFD broker platforms should be fully regulated and licenced.

Regulation

Regulation means that a platform is authorised to function as a broker service and monitored by an official regulatory body.

Some important regulation authorities include CySEC, the FSA (Seychelles Financial Services Authority) Financial Services Authority, and the United Kingdom’s Financial Conduct Authority (FCA).

South Africa also has an official regulation board, known as the FSCA (Financial Sector Conduct Authority.) All of these authorities set financial rules that brokers must follow. These rules are designed to protect traders from fraud and scams.

That’s why it’s important that any broker you choose holds at least one licence from one of these authorities. Selecting a regulated broker is the key to trading securely.

eToro South Africa

tradingeToro is a leading broker with millions of clients worldwide, including South Africa. The broker is known for offering a social trading platform which comes with unique tools, such as the CopyTrader tool.

This feature lets users automatically copy the trades of other successful traders. It’s a great option if you’re new to trading and want to learn from others. Other social features include the eToro newsfeed where you can discuss trading topics with members. It’s a great way to keep track of the latest market news.

Most importantly, eToro is a regulated broker, and they hold licences from CySEC and the FCA. So they’re a secure broker to open an account with.

Talking of the trading account, the platform is self-developed by the broker and is known for being very easy to use. It has a clear layout and comes with a great selection of forex and CFD assets to trade with. Some CFD instruments listed include cryptocurrencies, commodities stocks, and indices.

To start trading, you’ll need to open an account with the broker and fund your account. The broker only accepts USD, so if you deposit in ZAR a small conversion fee will be charged. The first minimum deposit amount is $200, but all deposits made after this start from $50.

IQ Option South Africa

Another great broker that we’d like to tell you about is IQ Option. Like eToro, they are also a major broker with many clients from various countries.

The broker was launched in Russia in 2013, and it has grown to be a very respected platform. Currently, the companies headquarters are based in Cyprus, and they hold regulation licences from both CySEC and the FSA. The main thing that IQ Option is known for is its incredibly low minimum deposit.

To start trading with this broker, you just need to deposit $10 to your account. Or if you wish to deposit in ZAR, the amount is 150 ZAR. This is a great amount if you want to start trading with a smaller percentage of funds.

It’s possible to make the deposit using a wide range of payment methods. For instance credit cards, wire transfer and electronic wallets like Skrill and PayPal are all accepted methods. The fact that you can deposit and withdraw in ZAR is great if you don’t want to pay currency conversion fees.

The platform is available for desktop or online use. There is also a free trading app available for iOS and Android devices. Instrument wise, IQ Option offers forex and CFD trading. Stocks, cryptocurrencies, options, commodities, and indices are available for you to trade as CFDs.

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