Foretia Foundation Takes On Funding Challenges For Startups

By Boris Esono Nwenfor

YAOUNDE, Cameroon – Starting a business is an exhilarating venture, but it often requires significant financial support to turn ideas into reality. Entrepreneurs in Cameroon, like in any other part of the world, face the challenge of securing funding to kick start or expand their ventures. 

Startups are actively seeking ways to raise funds to support their growth. Although a variety of funding opportunities exist, navigating the fundraising landscape is overwhelming for startups. In 2021, only 15% of Cameroonian startups had access to formal funding options, while the majority relied on personal savings or informal funding sources.

In a bit to identify the fundraising constraints of startups in Cameroon and develop strategies for Cameroonian startups to easily raise funds, the Nkafu Policy Institute of the Denis & Lenora Foretia Foundation on Wednesday, April 17, 2024, organized an Operational Working Group on “Fundraising by Startups in Cameroon.”

The operational working group was tasked to examine the fundraising challenges faced by startups in Cameroon and shed light on how they can leverage available opportunities to improve access to finance, foster public-private partnerships, and ultimately shape the future of startups in Cameroon.

“The main aim was to put together stakeholders, startups, and decision-makers, to brainstorm on ways startups can raise funding in the country, and also how to improve access to financing,” Dr Adeline Nembot, Economic Policy Analyst at the Nkafu Policy Institute told Pan African Visions.

“I am totally satisfied. It is even above expectations because I saw the stakeholders participating and sharing experiences. I am sure most of them took back home some advice they could use in their businesses.”

Dr Adeline Nembot added: "The startups should go above the traditional means of financing that we have. We know that the Cameroonian financial ecosystem will not permit them to raise funds. We know that there are so many constraints that the banks will ask them to bring. They should go above some of the traditional means to embrace the technological and emerging funding channels that exist and are suitable for startups."

According to the Central African Startup Finance Report 2022, funds raised in 2022 by startups in Cameroon remained stable year-on-year at 7.3 billion francs CFA ($12 million). In 2023, the Africa Platform's report showing the breakdown by country of funds raised by young African startups revealed that Cameroon attracted fewer investors, raising just $4 million, far behind Côte d'Ivoire ($17 million), Senegal ($44 million), Benin ($71 million), South Africa ($410 million), Egypt ($640 million), and Kenya ($88 million). Limited access to capital hinders startups' potential to innovate, create jobs, and contribute to economic growth.

Makoudem Tene Mirienne, a researcher at the Ministry of Research and Scientific Innovation said: “The main challenge that startups face is about funding. Though there is money, there is a question of trust; how people can trust them to give them that money. Most startups do not have enough experience and guarantees, which will make the funders reluctant to give them (startups) money.

“The bottom line is how we convince funders to give startups money to produce better services or better products. That is where the government can be useful or institute better strategies. Though the government will play its part, the startups need to develop strategies to convince the funders that they can be trusted and receive funds."

Raising capital to fund their business idea has been one of the deterrent factors entrepreneurs in the country have been facing. How then do the few entrepreneurs that have their businesses running get finance to start? This is something many people don't talk about. In reality, most of these entrepreneurs go in for debt financing in the form of borrowing from family members, friends, thrifts and loan societies or from Njangi houses – which is very common.

"I am going back extremely satisfied because a lot of burning issues have been discussed. We have been able to identify a lot of things that can help startups raise funds and make their enterprises more successful," said Ngezem Fortsomo, GM Mmockmbie Credit Union.

“If you want to be a good startup, you must have a business plan that is detailed and is time-bound. With such think tanks, we are going to have a better country in the future because we will have more funds raised to satisfy the growing needs of the investors. Apart from the business plan, the startups need to unite themselves and create a network where they can share experience and grow their businesses.”