Startups in Africa are growing and raising funds at an alarming rate. So their cap tables are growing as well. Because the majority of the venture capitalist money goes to foreign investors, it is critical for Startups in Africa to incorporate abroad, particularly in the United States.
Business incorporation seems to be a very complicated procedure, however, most founders still get to navigate the process, even though they have to risk the mistake of messing up their cap tables. For example, some Nigerian startups are guilty of issuing preferred shares in Naira and then refusing to issue the dollar-denominated SAFE when incorporated in the United States.
African Startup, Raise, is taking on the challenge, and 500 startups are supporting the development of its technology.
In 2019, Marvin Coleby, Tina Nemash and Eugene Mutai decided to develop a blockchain solution that would make it easier for people to buy and sell shares in a company before it goes public in Africa.
After several iterations, I (Coleby) found that most companies are still struggling with two concepts: Capital and Liquidity. They spend money managing corporate structures of holding companies in Delaware, Canada and Europe, but have paper-based subsidiaries throughout Africa.
Coleby confirmed that most African equity companies are still stored, tracked and updated using paper certificates, manual processes and fragmented government databases. This increases the transaction costs of running subsidiaries and issuing share options for employees. It also increases entry and exit costs for private and public companies.
That’s why they founded Raise to help startups, investors, employees, and law firms manage their transactions, limit spreadsheets, and comply with company policies.
On the platform, Raise customers can also automate due diligence, set valuations, track employee stock purchases, and regularly document license and government documents in Nigeria and Kenya. When Raise was released in 2019, it was in closed beta testing and backed by Binance Labs, the sole investor in the seed circle. That is, after moving to the public beta in 2020.
Nigerian stock trading platforms such as Chaka, Bamboo and Trove are helping citizens in Nigeria to create liquidity for local and international assets. Raise, on the other hand, seeks to create a platform that can rationalise more asset classes and investment opportunities. Raise manages and makes its own data available to African companies while continuing to operate.
The company operates in Nigeria and Kenya. According to Coleby, ” A seed round is in the works to continue growing deeper into those markets and experiment with funding and liquidity trading in the African venture capital space. Raise is building a marketplace to continually connect and educate investors, employees and founders with law firms on a single platform to transact and issue employee stock options using reliable, verified data.
