Fundraising: Demystifying the Local vs Expat Funding Gap (Part I)
Part I – Investment Readiness.
Over the past few months, there has been increased discussion around the funding gap between expat and locally founded companies. To explore this further, this is the first episode of a three-part series on fundraising with a specific focus on demystifying this gap.
In this episode, we talk about what makes expat founders more investment ready and how local founders can attract more funding with Joshua Kibera, a local founder of The Pathology Network, and Emilian Popa an expat founder of Ilara Health.
– Income disparity – Expat founders have the advantage of getting the very early stage seed money (bootstrap capital) from friends and family who are more culturally inclined to invest in ideas.
– Connections and relationships are important in fundraising. Companies with strong relationships with funders have a higher chance of raising more funds compared to companies with fewer connections.
– Relationships are built from visibility and access to information. Most foreign founders have a background in business schools like Harvard and MIT where information is accessible and relationships are easier to make compared to a founder sitting in Mombasa trying to raise funding from the same pool of funders.
– Information is however becoming more accessible with more virtual competitions and pitches taking place. Investors have also become more accessible compared to the past when one had to travel to pitch or meet them.
– Socio-cultural factors – culture is also a major factor, expat founders are more articulate in communicating their Big Hairy Audacious Goal while local founders tend to downplay their achievements.
What Investors look for in an Innovator
– The team – the quality of people, their motivation, and their skillset.
– The market dynamics – the size of the market, the need, potential expansion, and whether the product can be replaced.
– Communication – Are they able to communicate their Big Hairy Audacious Goal well?
Thank you for joining us today for this episode on bridging the funding gap between local and expat founded companies. In the next episode, we will discuss the role of team dynamics in fundraising.