“That is the simplest way to put it,” Fundz founder and CEO, David Mark tells TechCabal.
It’s difficult getting funding for startups in Africa, and sometimes what startups really need is mentorship to help clarify their products. Fundz is a platform that wants to help address both these challenges at one go.
David talks to TechCabal about how their “recurring sponsor model” might be better suited than taking equity positions in fledgling startups, and the potential for collaboration between Israel’s tech’s community and emerging startup ecosystems in Asia and Africa.
Bankole Oluwafemi: I’ve been looking up Fundz.co, and initial features in the press. But I’d like you to tell me in your own words what Fundz is and what you are looking to achieve
David Mark: Sure. Fundz is an outgrowth of our consulting company that has been working with a variety of equity crowdfunding platforms around the world. For months we received messages from startups in the emerging markets about getting help in terms of fundraising. Most of them seemed like hard working and driven entrepreneurs that had little experience in building out a meaningful business plan let alone an MVP. Our wheels started turning about creating a way to help these startups and get them funding.
We shifted Fundz to focus on emerging markets because we saw this as an open frontier in terms of being able to be involved and impact startups when they are young and still driven. I had been toying with the model and started realizing that the equity model would not work for most startups and these startups deserve a chance, so we adopted a recurring sponsor model.
I was in fact going to ask about the “recurring sponsor model”, what exactly does that mean?
Say you join our community. You can fund or sponsor if you will a startup for let’s say $50 or even $10 a week or month. Its not a lot for the sponsor but it is recurring so the startup knows they have something coming in on a regular basis. Obviously sponsors can put in more, but small amounts will most probably make up the bulk in the beginning.
Startups will actually get a chance to get to the next level with people who believe in what they are doing. The sponsors get to interact and help guide the startups they have sponsored. I believe the beginning model will lead to something more substantive and that is corporate sponsors seeking to deploy small money…$5k or $10k to see how potential prospects would use it and grow.
So this a kickstarter for startups? We’ve seen quite a few projects get funded by people who just want to see an idea work, and not necessarily expect a reward or return on their “investment”.
Yes it is a kickstarter for startups. That is the simplest way to put it. I agree many people will fund something because they believe in the idea.
Westerners are very careful about investing in the emerging markets. They like the idea of impact investing but they think they will lose their money. Its unfortunate, but that is the mindset I have bumped into. This takes that issue away and gives teams a chance to get to the level where they are investment worthy at an angel level.
You’ve given me the perfect opening to my next question. Emerging markets are still opaque, and without actual presence on the ground or the proverbial local partner, it’s hard to make good decisions. How exactly does Fundz intend to get around the information asymmetry that makes foreign investors skeptical? Bearing in mind that the social network concept is not new, VC4Africa is built on a similar premise
Because we are not dealing with large sums of money the barriers of entry are far lower. We are also not talking about accredited investors necessarily, but really anyone who wants to impact the future. That being said you are 100% correct on having a presence on the ground. Sean Obedih is on board and we are busy building partnerships with organizations like Ampion as well as VC4Africa. The challenge as I see it for African startups is not the lack of capital, but being ready to receive that capital. I believe there needs to be a stage before angel investment to get the ecosystem up and running. Ampion is doing great things on the ground, but there still needs to be small money to push people forward.
The platform is not quite live yet, so it’s not quite obvious how the experience is designed. How is the platform architected? Forums? Project pitches? I’m trying not to get ahead of myself here. I’m signing up right now though
Oh, it’s live. You can join now, but it is still a work in progress. There are groups you can join and the ability to instant message one another. There is a voices section which will be blog posts from various authors like our mentors. In a sense that is where the mentoring is going to be. The funding section is not live though.
And you expect it to all be ready in another month or so?
Somewhat yes. I envision it like anything else to grow organically. There will be changes like anything else. I am a big believer in launching an idea before it is too cooked. There is a small time frame in the kitchen between being just right and over cooked. With startups if something is over cooked it is not able to pivot and grow in an organic way.
That makes sense. So at what stage would you say a startup is ready to “pitch” to the Fundz community? Powerpoints? MVPs? Traction?
For sure they have to have a powerpoint. Traction is not necessarily needed, but they need to show how they would get traction. I have talked to one that already has a working product and two sales, and an excellent idea. The key for me is they need to understand that they can do a lot with a little and they need to move and be focused on getting to the next level.
Will there be some sort of filter/curation, to determine the pitches that get seen?
Yes we are very big on that. Startups have to apply and we usually tell them we will get back to them in 48 to 72 hours. Startups that don’t get accepted should still join the community. Networking is key and learning from others is key. Eventually we will be doing webinars for the community and I envision meetups in Africa.
Interesting. Speaking of mentorship, you are based in Israel, Israeli entrepreneurs and startups are renowned for building some of the most advanced technology and internet solutions in the world that regularly get acquired by Silicon Valley unicorns. I am aware of Nigerian entrepreneurs that have go as far as to outsource their technology to Israeli companies, but it is not common practice
No its not. I believe African startups and Nigeria in particular can learn a lot from Israeli entrepreneurs.
Do you think there might be opportunities for technology transfer and collaboration between the Israeli tech community and emerging market entrepreneurs?
Yes. We are working on a spin off project, but it is not ready yet. When it is, it will be obvious how it’s connected to Fundz. It touches on a variety of subjects you just mentioned. The idea at the core of all of this is to use our startup model here and help others in the emerging markets learn from it. You know we are really a coffee shop culture. Wifi is everywhere and the country is super small and well connected. Networking flows and ideas can be put into an MVP fairly quickly. Israelis like getting things out there and just going for it.
I see a similar vibe in many of the African startups and even other emerging markets that I have spoken with. Another key similarity is hometown pride. Its not just about the money. In the West, you don’t see that anymore.
Indeed. Should be interesting to see the shape the interactions on the platform take. One last question. We’ve seen similar initiatives evolve over time from an ideas pool into actual investment vehicles. Do you think Fundz is content to stay as a sourcing platform (I suppose sponsors and other members of the community will be free to reach out and take equity positions in startups independent of Fundz), or will it eventually participate in funding events?
I see it moving in the direction of an actual fund. Or that will be an additional component. In the meantime it really will be an excellent sourcing vehicle for interested impact investors. I actually envision the middle stage to be quite powerful. An investor comes on and sponsors through the platform 10k or let’s say 2k for 5 months. Its an excellent exploratory amount to see if off the platform it would be worth to invest a real round for equity.
Good stuff. Thanks for taking out the time to talk to TechCabal.