East African Tech entrepreneurs have a reason to smile following the launch of a new seed capital funding.
The seed capital, Savannah Fund, will invest in early stage web and mobile startups in East Africa — from US$25,000 to US$500,000.
The accelerator fund is an initiative of Erik Hersman, Paul Bragiel and Mbwana Alliy with a network of both local and international partners.
Erik say 35 percent of the fund has been raised from local investors such as Karanja Macharia from Mobile Planet and Silicon Valley big names such Yelp co-founder Russ Simmons, Tim Draper, Dave McClure, and Roger Dickey and Dali Kilani of Zynga.
The fund outgrew from a talk Hersman had over a year ago when he met Ben Matranga from the Soros Economic Development Fund.
Erik will help find the new companies and to connect them to the businesses in the area.
The fund founders have themselves founded companies and are actively involved in angel investing.
The new fund is expected to bridge the early stage/angel and venture capital investment gap that currently exists in Africa.
Hersman said: “The idea is to bring the Silicon Valley-style accelerator model to Africa, seeing what needs to be tweaked to make it work for our region. It’s a small fund at $10m, with most of the activity focused on classes of 5 startups at a time being brought on board and invested in.
They’ll get US$25,000 for 15 percent equity, and have 3-6 months to prove themselves.
Those who fail either pivot or leave, those who gain traction have a chance at follow-on funding. A portion of the fund will be invested at the US$100,000 200,000 range where we’ll look at follow-on funding for the startups in our program, and also at other high-growth tech companies in the region.
The first group is scheduled to begin around August or September and will be based at the iHub.
Braigel says it will help spur more international entrepreneurial growth.
