The Norwegian Pangea Trust, through its equity crowdfunding platform Connect, is trying to unlock the influx of diaspora remittances as a source of funding for early and growth-stage startups in Africa.
Remittances from abroad reached $45 billion in 2021, with Nigeria, Ghana, Kenya, Senegal and Zimbabwe topping the list of recipient countries.
And as annual influx grows, Pangea’s country director and CEO for Kenya Anne Lawi told MovieUpdates, diaspora remittances can be tapped to increase the amount of funding injected into startups. Startups in Africa raised nearly $5 billion in funding last year, but the amount remains meager compared to the rest of the world.
“While the amount invested in startups in Africa has grown over the years, it is still negligible compared to the need. And that’s why we’re working to unlock diaspora remittances as a source of funding,” said Lawi.
“And because we’re also an accelerator, we’ve developed and validated an approach that helps us identify investable companies… we’ve also created structures that help angel investors invest in these companies in addition to VCs,” said they.
However, this requires a shift in perspective, which is why Pangea, in collaboration with the Swedish International Development Cooperative Agency and Kenya Diaspora Alliance, has has been organizing a series of events since last year to educate people in the diaspora about why startups are good investment options.
After the first public call for its first cohort last year, Pangea vetted and hired nine startups that met various criteria, including high growth potential, and long-term goals in line with the Sustainable Development Goals. The nine have investment needs of between $25,000 and $100,000.
By the end of the fundraiser, Pangea will have tied the startups with $320,000 in diaspora funding, with the additional goal of raising $1 million from the same sources by the end of the year.
Startups participating in the initial fundraising include Grow Agric, which links farmers to working capital; Ai Care, a SaaS insurance technology; Baridi, an off-grid solar conservation company tackling the problem of post-harvest loss; Damu sasa, an information management system for blood services; Ambulex, which provides emergency relief solutions to low-income communities; Funke Science, an e-learning platform for science courses; Kiri EV, makers of electric scooters; Rabbii Teecha, who offers one-on-one classes, and Benacare, a link to home nursing.
All of the above-mentioned startups were founded in Kenya, but others from Ethiopia and Somalia will be supported during the pilot phase, with plans to scale up to five more countries in the coming year, including Rwanda, Tanzania and Zimbabwe.