Afrigather The Senegalese tech ecosystem has come a great distance. In 2017, Senegalese startups raised close to $11 million; 5 years later the west African nation boasts of attracting 10 occasions that quantity—together with producing francophone Africa’s first unicorn Wave in 2021.
This progress could be attributed to many components such because the nation’s steady political local weather; sturdy macroeconomic components, with its economic system rising by more than 6% per yr from 2014–2018; and totally different programmes by the federal government to assist entrepreneurship notably Délégation de l’Entrepreneuriat Rapide (DER).
Délégation de l’Entrepreneuriat Rapide (DER), which loosely interprets in English to Normal Delegation for Speedy Entrepreneurship of Ladies and Youth, has been described by many as one of many catalysts behind the expansion of the Senegalese entrepreneurial and tech ecosystem.
“DER has created a template for different African international locations who wish to stimulate entrepreneurship,” Haifa Ben Salem, a programme officer on the Worldwide Commerce Centre, instructed TechCabal.
The state-backed funding and assist programme, which began in 2018, has invested over 60 FCFA billion (~$10 million) in over 400 startups together with logistics startup PAPS, e-commerce platform Elmadeal, B2B agri-food platform Afrikamart, and B2B SaaS platform LAfricaMobile. What makes this programme efficient and totally different from many others?
A brainchild of President Macky Sall’s authorities, the Senegalese president has described the programme as one which “stems from an act of religion, proof of pragmatism and a perpetual quest for effectivity in public motion, draped in a republican perfect”.
A listening ear that truly listened
In 2014, when Malick Diouf began LAfricaMobile, a platform to facilitate communication between corporations in Francophone Africa, there was little to no data of startups in Senegal.
“Again then there was nothing. The totally different regulatory authorities didn’t absolutely perceive what a startup means in addition to the dangers and difficulties related to working one,” Diouf instructed TechCabal over a name. “There have been no startups, incubators or accelerators. It was solely in 2016 that the hype round startups started right here.”
After constructing an MVP model of the product and attaining product-market match, it was time to lift cash and there weren’t any viable choices obtainable in Senegal. So Diouf turned to buddies and folks in France to lift capital.
“These folks didn’t know a lot about Senegal however they trusted me. They didn’t actually give the cash to the corporate however as an alternative gave it to me, Malik,” Diouf mentioned.
The preliminary capital raised helped get LAfricaMobile off the bottom, however a number of years later the corporate wanted to lift extra money to scale.
In 2018, Diouf heard in regards to the DER challenge. Not like different programmes, he observed that one thing was totally different about this one: they listened.
“What set DER aside from others was that they didn’t come to say that is what we wish to do. They got here with a listening ear asking entrepreneurs for the obstacles we confronted, “ Diouf mentioned. “They instructed me after they got here to me that they’re not right here to earn money however to assist. Nonetheless, they requested for some type of dedication and assure from us too.”
For Diouf, who wanted further funding, it was good timing for him and plenty of different entrepreneurs with inadequate funds to scale their companies. Banks, which have been the principle supply of funding in Senegal, weren’t eager on funding startups as a result of their enterprise fashions have been unconventional, in keeping with Diouf.
Diouf’s firm acquired $40,000 in debt funding from DER which he used to develop his enterprise to a degree the place he might elevate funding from buyers.
“With the $40,000 we have been capable of meet some buyers and present them that we’ve folks investing in us. This made them take us extra critically and assist us elevate $500,000,” Diouf mentioned.
The funding was essential to constructing out the product and hiring nice folks to promote the product.
“We had constructed a fantastic product and targeted on that in the beginning of the corporate, however we realised we wanted to promote the product extra, even to purchasers in different international locations,” Diouf mentioned. “Discovering salesperson prices some huge cash and it’s a aggressive market.”
After this fundraise, LAfricaMobile, which began in Senegal, expanded to different neighbouring francophone African international locations reminiscent of Mali, Guinea Conakry, Guinea-Bissau, Mauritania, Côte d’Ivoire, and Benin. It additionally helped the corporate multiply its income by an element of six inside two years, in keeping with Diouf.
Lower than half of the startups funded have shut down
LAfricaMobile is one in every of 415 corporations that DER has invested in inside the final 5 years. The programme is sector-agnostic, investing between 1 million CFA ($1,500) to 50 million CFA ($100,000). This funding is commonly via debt at low curiosity, quasi-equity, or fairness.
“We make investments at an early stage, and as soon as these corporations get that financing, they will get different buyers with larger tickets,” Papa Mady Sidibe, an funding officer at DER instructed TechCabal.
The programme additionally offers assist reminiscent of integration into different programmes and accelerators, enterprise growth alternatives and in addition journeys to worldwide conferences like VivaTech via native companions such because the Startupbootcamp, and LaStartup Station. Firms backed by DER even have entry to make use of the organisation’s workplace area for work or occasions.
These startups could be funded a number of occasions by DER. “The one situation we require is that they pay again the cash that they got, and so they’ve made important progress for us to be snug with giving them extra money at a later stage,” mentioned Sidibe.
Fifty-four p.c of African startups based between 2010 and 2018 have shut down, in keeping with the 2020 Better Africa report. Over the previous 5 years for the reason that programme commenced, lower than half of the startups’ DER funded have shut down, in keeping with Sarietou Dieng, a enterprise analyst at DER.
“This failure charge is widespread amongst startups who generally don’t have entry to funding,” Dieng instructed TechCabal. “We attempt to assist them by giving them financing at a really early stage, but when they don’t have the capability to get additional funding from elsewhere, the startup may find yourself dying.”
A one-stop store for startups
DER’s resolution to take a position small sums in startups can be noteworthy. Regardless of the presence of the funding companies reminiscent of Partech and Orange ventures in Senegal earlier on, there was a mismatch between their providing and what the Senegalese startups wanted.
“These huge VC companies got here providing $1 million-size cheques, however for startups, in a small nation with lower than 15 million folks it was an excessive amount of for us. We didn’t want that a lot within the early days,” Diouf mentioned. “Alternatively, DER got here and rapidly supplied the $10,000 or $100,000 that many entrepreneurs have been asking for to speed up their startups.”
This gave a sign to different buyers that there was exercise within the Senegalese ecosystem and influenced them to supply smaller cheque sizes. Past funding, DER turned a one-stop store for folks with entrepreneurial concepts in Senegal.
“Now all startups in Senegal know that if they’ve an issue they will go to DER. Even buyers who’re searching for respected startups to put money into can now discover these startups via DER,” Diouf, mentioned.
For Lin Deejean Yun, a partner at Transcendance VC who’s based mostly in Senegal, one noteworthy attribute she’s looking for amongst Senegalese startups that cross via DER’s programme is a definite enterprise mannequin that’s not reliant on lavish funding.
“Whereas DER is doing an exquisite job in displaying how a rustic that desires to construct competent entrepreneurs can go about it. They should showcase a number of profitable corporations that may generate earnings and develop with out first needing to pump in some huge cash like the standard silicon valley mannequin as a result of we have already got tons of them in Asia, Europe and the US,” Dejean Yun mentioned. “Traders don’t want to come back right here to get that.”
