Norway’s Pangea Trust, through its equity crowdfunding platform Connect, is unlocking diaspora remittance inflows 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 leading the list of recipient countries.
And as annual inflows grow, Pangea’s country director and CEO for Kenya Anne Lawi told TechCrunch, 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 when compared to the rest of the world.
“While the amount of funding invested in startups in Africa has grown over the years, it is still negligible compared to the need. And that is why we are working towards unlocking diaspora remittance as a source of funding,” said Lawi.
“And because we are also an accelerator, we have created and validated an approach that helps us identify investable businesses… we also have created structures that help angel investors invest in these businesses alongside VCs too,” she said.
However, a perspective-shift is required for this to happen and that is why Pangea, working in partnership with Swedish International Development Cooperative Agency and Kenya Diaspora Alliance, has since last year organized a series of events geared towards educating those in the diaspora on why startups are good investment options.
After making the initial public call for its first cohort last year, Pangea vetted and onboarded nine startups that met several criteria, including high-growth potential, and long term goals aligned with the Sustainable Development Goals. The nine have equity investment needs of between $25,000 and $100,000.
By the end of the fundraiser, Pangea will have connected the startups to $320,000 of diaspora funding, with an additional objective of raising $1 million from the same sources by the end of the year.
Startups participating in the initial fundraising include Grow Agric, which connects farmers to working capital; Ai Care, a SaaS insurtech; Baridi, an off-grid solar preservation business addressing post-harvest loss problem; Damu sasa, a blood services information management system; Ambulex, which is taking emergency health care solutions to low income communities; Funke Science, an e-learning platform for science courses; Kiri EV, makers of electric scooters; Rabbii Teecha, which is offering one-on-one tuition service, and Benacare, a link to home nursing services.
All the aforementioned startups are founded in Kenya, but others from Ethiopia and Somalia will be supported during the pilot phase, with plans to scale to five more countries including Rwanda, Tanzania and Zimbabwe over the next one year.