OXFORD, England – Peris Bosire has been running FarmDrive, a Kenyan fintech business focused on agriculture, for about five years. Despite her own deep local knowledge, she has struggled to find flexible investors and found herself being told to seek advice from western entrepreneurs.
She is not alone. Philanthropists, donors, and investors often talk of the promise of investing in social entrepreneurs as a way to tackle critical development challenges and drive change, but the system designed to support them is flawed, several entrepreneurs at the Skoll World Forum told Devex.
Many entrepreneurs, both for-profit and nonprofit, in low- and middle-income countries, lack access to the knowledge, venues, and organizations that can help them get the capital to grow. Those lacking some tie to the West — be it an education, a fellowship, or a co-founder — rarely get access to capital.
Beyond this hurdle, several entrepreneurs from the African continent told Devex they sometimes find themselves having to sacrifice some of their identity in order to connect with potential investors and raise capital.
Barriers to entry are high. Some sort of status marker is typically required, and often, the funding available doesn’t match the need or provide flexibility based on the context.
The challenges are identifiable — and changeable, even if that change may be difficult, some of the entrepreneurs said.
More funders should look to invest in local leaders and recognize the strengths that locally led organizations and solutions possess, even if the leaders of the organizations aren’t presenting information using the language of donors, Bosire told Devex.
The vast majority of capital flowing into African countries is going to expat-led companies, Bosire said: “The imbalance of power dynamics is not working favorably for women-led companies and local-led companies,” she said. “They need to change the bias and change how they get a pipeline.”
Funders need to be more proactive about identifying local companies with local founders rather than leaning on the excuse that they can’t find them, Bosire said.
“If you change the lens of how you’re finding companies, you’ll find them,” she said. “The only way to stop bias is to find a way around it.”
Entrepreneurs shouldn’t be disqualified, for example, if they’re not referencing the “right words” — buzzwords such as AI or machine learning — that investors are often looking for, Bosire explained.
Many entrepreneurs may not be able to talk about a “theory of change,” but can confidently discuss their impact and growth path, said Linda Kamau, founder of AkiraChix, a 9-year-old nonprofit organization working to educate girls for careers in tech. Funders should think about conducting information sessions locally to allow organizations to gain a better understanding of what finance looks like, she suggested.
Sometimes donors’ requirement or preference for some type of badge that makes an entrepreneur investible means they spend time chasing fellowships or other opportunities rather than focusing on building their businesses, Kamau said. Kamau took a course in January at Stanford University, although she spent most of her time juggling work meetings rather than focused on classes. Still, she can now list it on LinkedIn and her CV.
“I needed it for my portfolio, you need to speak the same language,” she said, adding that it was a way to “get street cred so people will actually listen to you.”
Sometimes trying to find those commonalities and creating ways for investors to identify with you means giving up some of your identity, Kamau and others said.
Eugene Boadu, the head of corporate affairs at mPedigree, one of this year’s Skoll awardees, said that entrepreneurs from Africa feel they have to strip away their “Africanness.”
African countries are socially, politically, and culturally different from the west, Boadu said. “That difference begets different ways of doing things, different results,” he said, adding that as long as progress is assessed from a western perspective, there won’t be true localization and there will be missed opportunities.
The need for an endorsement or validation means you need to adapt, and “you end up burying convictions and beliefs,” he said. “It’s a concern we need to find creative ways to confront.”
Donors need to reevaluate the criteria they use to identify businesses and changemakers and consider local collaboration with institutions and agents on the ground who are better in touch with the local actors, Boadu said.
Fit for purpose
Even if entrepreneurs from the global south are able to access potential funders, sometimes the investment requirements or policies leave entrepreneurs out or don’t match their needs, several entrepreneurs told Devex.
Donors are often set on only making investments of a certain size, even for nonprofits, which may not align with impact, or may not be what an organization needs or what might help it to grow effectively, entrepreneurs told Devex at Skoll.
“The system is broken,” Kamau said.
Kamau, for example, is seeking $30,000 to hire an employee to focus on finding job placements for graduates of AkiraChix. She’s determined that none of the young women receiving tech training from her organization will graduate without a job, so she sees hiring for that position as critical to her ability to scale. But few donors have expressed interest in funding that need, and one contact she met at Skoll said the minimum they could give was $600,000, which doesn’t align with her needs.
In a separate conversation, a donor she was hoping would support her organization told her they could only offer her support if she also had a local Kenyan investor, which Kamau found ridiculous considering there are so few local investors. She would be thrilled to be introduced to some, she said.
Another challenge that arises is that investors often turn to their friends when considering investments, which results in a handful of businesses getting the majority of the financing as investors pile in. Sometimes those businesses don’t need all the capital they have raised so they put it in the bank, where it sits as other companies fail due to lack of capital, Bosire said.
Education and local convenings
Local entrepreneurs don’t only face challenges in accessing finance. Sometimes their needs are much simpler, such as access to information about how the system works.
Kamau said before support and a fellowship with the Segal Family Foundation, she didn’t know how donors found organizations, was not aware of how to utilize conferences or do donor research, and thought it was just about writing online proposals.
“Social entrepreneurship is not something in the education system,” she said, adding that there is a need for more local education efforts.
“It’s hard to get to these spaces,” she said of Skoll, adding that the Segal Family Foundation paid for her to attend and she could not have afforded a Skoll ticket, which costs about the same amount as a year of education for a student in her school.
Boadu echoed this thought, adding that Skoll should hold a version of its forum in Africa. The connections could give local entrepreneurs a major boost and help them push back against the social pressure in most communities to conform and get jobs to support their families. More efforts are needed to nurture ambition, he said.
Editor's note: The reporter’s travel was supported by the Skoll Foundation. However, Devex retains full editorial independence and responsibility for this content.