4 Smart Ways African Startups Can Outlast Grant Funding

March 8, 2024
min read

Securing ongoing funding is a major challenge for African startups. While grants provide crucial support, they eventually expire. To avoid the risk of closure post-funding, strategic planning is vital to keep the startup in operation. This comprehensive guide shares key tips for leveraging grant funding to build lasting success.

Here are strategies for leveraging grant funding to avoid running out of funding once the grant period ends:

1. Invest Heavily in Team Capacity Building

Use grant funds wisely to level up skills across your startup. Prioritize spending on training that enhances productivity and services. More capabilities mean more offerings and profits down the road. 

For instance, ErrandPay, a Nigerian fintech startup helping startups provide payment collection services to traders and merchants across Nigeria, can use their initial foundation grant to put all staff through an intensive 6-month digital skills program focused on leveraging big data, IoT sensors, and digital tools to strengthen their supply chain traceability. This can significantly enhance their capabilities to develop scalable digital solutions for managing finances. 

Solid skills strengthen startups from the inside out. They enable you to boost quality, efficiency, and output. This drives sustainability beyond grants. Specifically, invest in:

  • Digital skills training to leverage online tools and platforms to enhance efficiency.
  • Management and leadership training for founders to improve management. 
  • Customer service and communication skills to better meet client needs.
  • Technical skills that support new product/service development. 
  • Accounting and financial management skills for sharper business operations.

2. Launch New Income Streams While You Have Runway

Every startup needs multiple revenue streams to reduce risk. To scale this hurdle, a startup should diversify income with new products, digital tools, workshops, or licensing deals with grant funds. In essence, monetize your startup's special sauce before the grant funding ends.

Take for example Leky Mills, an agric startup that eliminates the traditional stress of cooking yam with a processed yam product. They can leverage their grant funding to develop more processed yam products to complement the existing Leky Yam - a chip-like product made from harvested yams. These new products can provide a new source of revenue after the grant period.

Brainstorming out-of-the-box offerings that can be developed leveraging grant funding is highly recommended. Aside from new products, potential new income streams include:

  • Digital products or tools that meet customer needs
  • Fee-based in-person or virtual workshops, training programs or events
  • Consulting or advisory services in your niche
  • Licensing intellectual property like technologies, datasets, or processes

3. Forge Strategic Partnerships for Ongoing Support

Partnerships can increase a startup’s reach and resources. Initiate collaborations with aligned startups, companies, foundations, and universities during the grant period so the partnership can remain fruitful after the grant. 

PriVida is a Nigerian startup installing solar-powered irrigation systems for rural farmers. They can consider partnering with the Nigerian government before their current grant wraps up. The Nigerian government can provide ongoing support through subsidized equipment sourcing with this partnership. 

Choose partners with complementary assets and shared values and structure mutually beneficial arrangements focused on long-term expansion. Potential partnerships to pursue include:

  • Cross-promotion partnerships that expand reach. 
  • Distribution partnerships to access new markets. 
  • Co-marketing partnerships that pool ad resources. 
  • Joint ventures to develop offerings and share costs/revenue.
  • Mentor partnerships with established companies that can provide expertise.
  • Research partnerships to access facilities, data, and funding.

4. Become a Lean, Efficient Startup

Extravagance has led to the end of many startups. An example is DASH. DASH is an African fintech company solving cross-border payment issues faced by Africans. The startup was brought to its knees following financial misappropriations. Budget constraints are the startup reality that becomes heightened post-grants. Adopting lean startup principles to maximize outcomes under grant funding can lessen the shock.

An example is DoktorConnect which provides online and offline health solution. The health startup can consider making their services fully online (click) and let partners handle the brick aspect. This will reduce the cost of maintaining a physical structure. The saved cost can be used for other aspects of the startup’s operation.  

Following lean methodology sustainably stretches resources from where it is abundant to where it is scarce. It also builds resilience to shifting constraints and opportunities over time. Specifically, startups can consider these lean procedures:

  • Establish OKRs (Objectives and Key Results) to align priorities across teams.
  • Track progress rigorously through metrics.
  • Focus on minimum viable products to reduce complexity.
  • Identify process waste through data to increase efficiency.
  • Trim expenses through frugal innovation and cost discipline.

Summing Up

With vision, agility, and smart strategy, startups can adapt to funding transitions. Grants offer a springboard to self-sustaining success. Position your startup for growth and social impact beyond grants through capacity building, partnerships, and lean innovation.

The funding rollercoaster can be daunting. But by investing strategically during runway periods, African startups can unlock new horizons. Your impact-driven solutions deserve to see the light of day. With concerted effort, resilience, and imagination, future funding constraints need not limit your potential. You have the spark—now build the engine to drive long-term change.

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