Nigerian online payments and lending company, Carbon, has set up a fund to support African tech entrepreneurs. The Disrupt Fund will finance tech-driven startups on the continent to the tune of $100,000, enabling them to expand beyond their native countries into new territories.
Details of the initiative were revealed by the fintech in a statement it released earlier in the week. They indicate that Carbon will be investing $10,000 in a number of startups for a 5 percent stake in each of them. Businesses that qualify for the fund will also be granted access to Carbon’s large customer base, as well as the growth tools on its platform.
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Speaking about the initiative, cofounder at Carbon, Ngozi Dozie, said that it would help emerging tech companies in Africa surmount the difficulties they face in getting growth finance. According to him, startups were struggling with high customer acquisition costs; he expressed the view that they could reach more customers at lower costs by working with other local companies.
The fund is targeted at startups in Nigeria, Ghana, Kenya, Uganda, Cote d’Ivoire, and Egypt. Carbon is currently active in two of these countries, Nigeria and Kenya. Through the initiative, the company’s officials hope to impact more markets outside its existing markets.
Small businesses and startups looking to access the fund should have a live, viable product, have a record of revenues, and plan to expand into several countries. Although it’s open to enterprises from many sectors, the initiative is aimed especially at startups in education, health, and insurance.
Despite being vital for economic growth and development, startups in the fund’s preferred niches have not received as much investment as sectors like fintech. Nigeria-based fintech companies got over 62 percent of investor startup funding in 2019.
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While a number of qualified enterprises will eventually benefit from the initiative, Carbon could be making a few wins with it as well. Besides the 5 percent stake that it plans to get the promising enterprises, it could also be riding on the collaborations and investments that result from it to expand across Africa.
Since its rebranding in 2016, it has had over 2 million users on its platform. As a payments system, it has processed transactions worth more than $140 million. The fintech also provides financial services to SMEs and offers investment opportunities to financially savvy individuals.
Featured image source: The Nerve Africa
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