5 Steps to Raise Start Up Business Funding for Seed Round
April 18, 2024
Adam Wakefield

After shaking up the global tech scene with a stellar performance in 2022, start up business funding in Africa faced a bit of a reality check in 2023. 

Last year marked the first decline in funding since 2016. The number of funded ventures and total capital raised decreased. 

Startup business funding for seed round

However, the continent still boasts impressive startup funding figures. The $400 million raised in 2023 represents nearly a 10-fold increase compared to $49 million raised in 2015 when organisations started collecting startup funding data in the country.  With a staggering  224.8% increase in funded ventures since 2015, 147 startups secured a million dollars or more in 2023, proving that Africa's entrepreneurial ecosystem is still bubbling with potential.  

For visionary founders with dreams of building the next big thing, the following sections provide expert knowledge and experience-based insights on funding, with a step-by-step guide on how to raise funds.

Let’s get started. 

Seed funding 101

Seed money is the first official round of funding. It puts the startup on the map after the foundation laid by pre-seed funding. 

The different stages of startup business funding

Seed funding helps startups scale up their business operations and pay for research and development, marketing campaigns, and other vital aspects. 

Seed rounds have dominated the African startup funding scene. Some notable startup funding examples from the past year include:

  • Fintech startup Credabile raised a $2.5 million seed round to fund its expansion across Africa and the Middle East. 
  • Ramp, a financial forecasting firm, raised $5 million in seed to help businesses improve their financial forecasting and decision-making process.
  • Payday from Rwanda raised $3 million in an oversubscribed seed round that targeted $1.5 million. 

Seed funding paves the way for subsequent start up business funding rounds, such as Series A, Series B, and so on, as the startup progresses and seeks additional capital for growth and expansion.  

Benefits of seed funding for African startups 

The benefits of seed funding for startups

There are several benefits of seed funding for startup businesses. These include: 

Accelerated growth

Seed funding can provide much-needed funding to accelerate various processes, including:

  • Product development: Improve or expand your product or service offerings to meet the latest market demands.
  • Market expansion: Enter new geographic markets or target a broader customer base to increase market share.
  • Marketing and sales: Launch marketing campaigns and expand sales teams to acquire customers.

Boosts credibility 

Seed funding can strengthen your startup’s credibility by indicating investor confidence. When external investors offer financing, it validates your startup’s business model, making it more appealing to customers and partners. ‍

Better talent acquisition 

Startups rely heavily on top talent that can take them to the next level. With seed funding, you hire top talent and offer them attractive perks, such as health insurance, wellness programs, and remote work flexibility.

Access to valuable networks

Once you receive seed funding, it can open your startup to investor networks. These connections can provide you with much-needed mentorship and guidance. 

Top start up business funding options for startups at seed stage 

Top options for startup business funding

Africa’s startup funding relies heavily on a few types of funding sources. This section explores these primary funding sources and some of the key players in each one. You’ll also find insights and tips to identify and approach the right type of funding source for your seed round.


Crowdfunding works best when you can build a community around your idea. Consider exploring niche platforms based on your target industry or audience. Their targeted audience will be more receptive to your project's unique value proposition. For instance, some might focus on social impact projects and others on scientific research.

Platforms like Reddit, LinkedIn groups, or specialised online forums can be fertile ground for finding enthusiastic supporters.

To stand out from the crowd, focus on telling a compelling story that resonates with your audience's goals and desires. Emphasise the problem your startup solves and the impact it can make. Offer unique rewards or perks to backers and showcase early adopters as social proof.

Some widely used crowdfunding platforms include:


For loans, alternative lenders and peer-to-peer lending platforms are fast becoming the go-to source for start up business funding these days. They have less stringent eligibility criteria and may offer more flexible terms tailored to startup seed financing compared to traditional lenders. 

Research reputable non-traditional lenders and compare their loan offerings to find the best fit for your financing needs. Seek financing from mission-driven financial vehicles like Community Development Financial Institutions (CDFIs) and government loan programs. These sources focus on serving underserved communities and businesses. CDFIs often offer more flexible lending terms, lower interest rates, and personalised support compared to traditional banks. 

Don't overlook personal and professional networks when seeking loans for your startup. Reach out to friends, family members, mentors, and industry connections who could provide loans or co-sign on a loan to support your venture.
Some popular lending platforms for African startups include:


Grants can be a goldmine for start up business funding, especially if your startup focuses on social impact or innovation. You need to target grant opportunities that align with your startup's mission and objectives, from government agencies to foundations and corporate sponsors.

Larger grant programs are fraught with significant competition. Niche grant opportunities — grants offered specifically in your startup’s niche, are low-hanging fruits. 

Partner with universities, research institutions, or academic centres to access grant funding through collaborative research projects or innovation initiatives. This partnership also provides access to expertise, resources, and grant-writing capabilities from the university to secure funding for your startup.

Write grant applications keeping in mind each funder's startup business funding requirements. Build relationships with grantmakers through networking events, conferences, and collaborations with research institutions.

Venture Capital

Because they have an equity stake in a startup, VCs are incentivised to actively support the growth and success of their portfolio companies. VC funding can accelerate the growth trajectory of startups, fueling innovation, market expansion, product development, and scalability.

When exploring VC for start up business funding, focus on those with a track record in your niche. Attend startup events, pitch competitions, industry conferences, and online communities to network with potential investors and showcase your startup's value proposition. 

Focus on building strong relationships with potential investors and demonstrating your team's expertise, passion, and track record of execution. Showcase your market opportunity, competitive advantage, and scalability. 

Remember to highlight your startup's traction and milestones achieved to date, providing tangible evidence of your potential for growth and success.

Some key players in the venture capital space include:

Accelerators and Incubators 

In addition to funding, accelerators and incubators provide invaluable mentorship, resources, and connections to help startups succeed.

These programs typically provide access to seed funding, coworking space, training sessions, and potential investors, partners, and customers. 

By participating in accelerator and incubator programs, startups can validate their business models, refine their product-market fit, and access the resources needed to scale their ventures. 

When applying to these programs, focus on what sets your startup apart and why you're a good fit. Network with alumni, mentors, and program managers for insider insights and tips. 

Some popular accelerators include:

Founders Factory Africa

Founder Institute

DFS Labs

With these fundraising tips, you’ll be able to identify and approach the most suitable funding sources to fuel your startup's growth and success.

6 steps to raise seed funding for startup business

Securing seed funding can be the key to bringing your ideas to life. Following these steps will help your fundraising journey move towards entrepreneurial success.

1. Decide when you need the funds 

Reasons for raising pre-seed and subsequent funding rounds.

The first step in raising funds is to determine if you are eligible for it in the first place. Investors assess your product/service for a compelling business proposition. Startup founders need seed funding in the following scenarios: ‍

Product traction 

Traction can refer to many things, such as increased user numbers, more revenue, or positive feedback from early users. These factors serve as your endorsement when you seek funds. 

Financial plan

Investors often ask for this document to determine how your business is doing regarding numbers. A financial plan includes a balance sheet, income statement, financial projections, and a cash flow statement. 

Some of the metrics they compare include: 

  • Profitability metrics: Indicators of profitability, such as gross margins and net profit margins, showing how efficiently your startup can convert revenue into profit and sustainably grow.
  • Burn rate: Your startup's monthly or quarterly burn rate — the rate at which it spends existing capital, helps investors gauge how long the funding will last. 
  • Break-even analysis: The break-even point, the moment a startup's revenues start to cover its expenses, shows investors when your startup will become self-sustaining.

These critical elements of a financial plan offer startups a roadmap to showcase their financial viability and attract potential investors. ‍

2. Determine how much money you need to raise 

Every startup has a target amount of money they need to raise; cue the spreadsheet below:

A spreadsheet example of a startup's running cost.

However, most startups can’t achieve profitability with only seed funding.‍

One common rule is having enough startup business funding for the next 12-18 months. This timeframe offers a buffer for unanticipated challenges. 

‍ Calculate the following costs to determine how much money you will need to raise.

  • Customer acquisition costs: Review the expenses linked with acquiring new customers. This includes marketing expenses, advertising campaigns, sales team salaries, commissions, etc. 
  • Customer retention expenses: Calculate the costs associated with customer retention efforts, including customer support, loyalty programs, and ongoing engagement strategies. Keeping your current customer base satisfied is cost-effective and contributes to long-term growth.
  • Payroll expenses: Payroll often takes a significant portion of a startup's budget. Calculate salaries, bonuses, benefits, and any other compensation-related costs. A well-compensated and motivated team is crucial for executing your business plan effectively.

Calculating these cost factors is critical to determining the start up business funding required to support your growth trajectory. 

3.  Work out the financing options 

Startup founders often work with different startup business funding ideas. These include:

Equity Financing

Equity financing is a startup business funding approach where investors provide capital to the startup in exchange for ownership shares or equity. Investors turn into shareholders, sharing the profits and losses and having a say in strategic decisions. 

How equity funding works

Startup valuation is one of the ways to determine the percentage of equity given to the investor. Usually, the higher the valuation, the lower the percentage of equity you have to give up. 

SAFE (Simple Agreement for Future Equity) 

A SAFE is a financial instrument through which a startup can receive investment without setting an initial valuation. Instead, investors provide funds with the understanding that they will convert into equity during a future funding round when establishing a valuation. 

However, keep in mind that there can be some uncertainty in the future with SAFEs. You can’t easily predict the ownership percentage the investors will get after the funds are converted into equity, as ownership depends on the valuation. 

Convertible Debt

Convertible debt is a form of capital funding for startup businesses in which investors lend money that is converted into equity when specific conditions are met. These trigger events can be future financing rounds or specific milestones, such as when the startup reaches a certain annual revenue level or gets 5,000 paid customers. 

While the debt converts into equity, you are still responsible for making interest payments and repaying the principal if a conversion trigger event does not occur. ‍

4. Create a pitch deck

Best practices for seed funding pitch deck

A pitch deck is a visually engaging presentation that conveys a startup’s value proposition and growth prospects. 

A pitch deck contains: 

Problem Statement

The problem statement is the foundation of a startup's pitch. It discusses a pain point in the market that the startup aims to address. For example, a health tech startup might highlight the problem of inefficient patient record management in African hospitals, leading to errors and delays.


The solution outlines how the startup intends to solve the identified pain point. This is where the startup introduces its product or service and explains how it offers a better alternative. For instance, the solution could be a cloud-based electronic health record system that streamlines patient data management and reduces errors.


A demo, or product demonstration, is an effective way to showcase the startup's solution. It allows investors to see how the product works and what types of features it offers. For example, the healthcare startup could provide a live demonstration of its software via a Zoom call to hospital management, showing how the staff can retrieve patient records. 

Business model

The business model explains how the startup plans to generate revenue to support its operations. It specifies whether the startup will charge customers directly, rely on advertising, or adopt a subscription-based model. For example, a B2B SaaS startup can show different pricing tiers based on the organisation’s size.

Market opportunity

This section provides an understanding of the market the startup is targeting. It includes data on the total addressable market (TAM), served addressable market (SAM), and the target market segment. For instance, a fintech startup might identify that its target market is small and medium-sized businesses in Nigeria, with a TAM estimated at $500 million.


The roadmap talks about the startup's plan for future development and growth. It should highlight key milestones and goals. For example, a B2B SaaS startup can include upcoming product releases, expansion into new markets, or plans for fundraising rounds in its roadmap.

5. Find and meet investors 

Tips to find investors for seed funding

Finding and connecting with the right investors is vital for seed funding. Utilise online platforms like Crunchbase and Wellfound to find angel investors and venture capitalists. These platforms contain in-depth databases of investors and their investment histories. Other ways to find investors include 

  • Ask your mutual contacts to introduce you to potential investors. 
  • Attend industry-specific events and conferences where you can attempt to network with investors and share your startup vision in an informal setting. 
  • You can join incubators and accelerators. They can provide you with seed funding and offer access to a network of connections, including potential investors. 
  • Join a pitch competition. Many potential investors attend these competitions to look for promising startups. 

You should consider the following factors to choose an investor:

  • Industry expertise: Look for investors with experience and expertise in your industry(e.g., cybersecurity, edtech). They can offer relevant and valuable insights and guidance.
  • Track record: Research an investor's track record. Have they successfully supported startups in the past?  
  • Preferred investment stage: Investors often have a preferred investment stage, such as seed, early-stage, or late-stage. Ensure you find an investor who offers seed funding. 
  • Network and connections: Investors with a robust network can open doors to partnerships, customers, and additional funding sources.

Once you finalise an investor, you can initiate contact through several channels. Start by sending a personalised and brief email and brief email about your interest in discussing your startup. You can also use LinkedIn to reach out. Request a meeting or call where you can show them your pitch deck and convince them to provide seed funding. 

6. Negotiate with investors and close the deal 

Negotiation tips for closing seed funding deals

Negotiating your start up business funding is a critical skill that can significantly impact the terms and the dynamics of your financing. Some of the things you need to keep in mind include:

  • Try to build a strong rapport with the investor. Engage via honest and transparent communication to build trust. Also, take some time to understand their investment criteria to build credibility.
  • New startup founders often naively accept the first offer. Ask for time to review investors’ terms. 
  • If you find the initial offer dissatisfying, present a counteroffer you believe is fairer. However, you must research and show some data to justify your counteroffer. 
  • Often, seed funding is not the last funding round for many startups. You should give minimum equity during seed funding. Y Combinator recommends giving less than 10% of your equity during seed funding because you will surrender more in future funding rounds. 
  • Seek legal advice. Spending money on legal counsel might seem like a bad idea for a new startup. However, experienced lawyers can review your investment agreement and ensure that you receive favourable terms. For example, they might find clauses that give investors considerable control over your startup, such as veto rights on important matters. 
  • Be prepared to walk away. Refusing a deal that doesn’t align with your startup’s vision or future is in your best interest.
  • Close the deal professionally. Once you reach an agreement with the investor, complete legal documentation, transfer of seed funding, and other relevant tasks quickly. 

With these six crucial steps, you have a comprehensive roadmap to entrepreneurial success. Now it’s time to get started on your funding application. 

5 tips for start-up business funding application: Getting your foot at the door 

The startup business funding application process

The funding application process is fraught with many hurdles, and we’ve dedicated an entire section to help you overcome them.

Here are tips to execute a smooth-sailing application process.

1. Use numbers to craft a compelling brand story

Use numbers to tell a story that captivates the reader's imagination and emotionally resonates with them. Build your pitch around key metrics that showcase your business's success and growth potential. 

Quantify your achievements. Instead of vague statements, specify the percentages and amounts in figures. 

2. Highlight social impact

If your startup addresses a pressing social or environmental issue, emphasise the positive change it can bring to communities or ecosystems. Investors are increasingly drawn to ventures that prioritise social responsibility and sustainability. 

Use numbers and statistics to quantify your business's social impact. For example, instead of simply stating that your business aims to empower women, provide specific figures on the number of women you've trained, employed, or supported through your initiatives. 

Share testimonials, case studies, or anecdotes that showcase how your products or services have positively transformed lives. 

3. Demonstrate scalability

Even more importantly, investors seek startups with the potential for exponential growth and scalability. Outline clear strategies for scaling your business beyond the initial stages. Explain plans for expanding into new markets, diversifying product offerings, or innovating for efficiency.

Showcase how your operations can be replicated or standardised to accommodate growth without sacrificing quality or efficiency.

Discuss how you plan to deploy software, automation, artificial intelligence, or other technological solutions to streamline operations, reduce costs, and increase capacity.

Also, show investors that your business can quickly adapt to changing market conditions and scale operations up or down as needed.

4. Showcase team dynamics 

Investors invest in people as much as ideas. Demonstrating a cohesive and capable team can instil confidence in your startup's potential.

Emphasise how each member of your team brings unique skills, expertise, and perspectives to the table. Showcase how these complementary skill sets enable your team to tackle diverse challenges and drive innovation. 

Provide examples of successful collaboration within your team. 

Highlight the strong leadership within your team. Show how leaders effectively delegate responsibilities, empower team members, and foster a culture of accountability.  

5. Offer creative incentives

Offering unique incentives or perks to investors sets you apart from the competition. Examples include exclusive access to beta testing, personalised experiences, or recognition in marketing materials. Creative incentives add value to the investment proposition and promote a sense of community and engagement with your project. 

Also, consider personalised perks tailored to individual investors based on their interests or preferences. For example, you could offer exclusive access to industry events, personalised product demonstrations, or one-on-one meetings with key team members. 

Offer a bonus equity stake or profit-sharing arrangement based on specific milestones or performance targets in exchange for start up business funding. This will encourage investors to actively support the business's growth and success.

By implementing these uncommon tips, you can significantly enhance the chances of success of your startup business funding application, opening doors to valuable opportunities for growth and development.


How can I determine the best funding option for my startup?

You need to assess various factors such as your business model, stage of growth, funding needs, and long-term goals. Compare funding options in areas like equity versus debt and the level of control you're comfortable relinquishing.

What are the criteria for qualifying for startup business funding?

Start up business funding requirements can vary depending on the type of funding sought. Common factors include a viable business idea, a strong team, evidence of market demand or traction, and a clear strategy for growth and scalability. Additionally, factors like credit history, collateral, and industry regulations may also play a role.

How long does it typically take to secure start up business funding?

The time it takes to secure startup funding depends on factors like the funding source, the complexity of your business model, market conditions, and your networking and pitching abilities. For instance, the average time it takes to raise a series A after a seed round is 18 months

In some cases, funding can be secured within a few weeks, while in others, it may take several months of networking, pitching, and due diligence.

What are some common mistakes to avoid when seeking startup business funding?

Some common seed funding mistakes that startups make include underestimating funding needs, targeting the wrong investors, and failing to diversify their funding sources. Startups also often lack a clear and compelling business plan and neglect to build relationships with potential investors.

What resources or tools are available to help streamline the funding application process?

Several resources and tools can help you streamline your funding application process for startups. These include online platforms for connecting with investors such as AngelList and Crunchbase, and crowdfunding platforms like Kickstarter and Indiegogo. 

For due diligence and preparations, explore financial modelling tools like Excel or software applications. Talent platforms like Upwork and Freelancer provide access to relevant expertise on-demand. 

Networking events, accelerators, incubators, mentors, and consultants can help you access invaluable insights for managing the funding process.

Unlock your business’s potential with our startup business funding support

For African startups, seed funding helps accelerate growth and innovation. You can use this startup business funding to develop innovative solutions and make a difference in your industry. All you’ll need is to follow the steps outlined above to the letter. 

If you are an African startup founder looking for seed funding or any other form of startup business funding, FFA can help you raise seed funding. We have an exceptional track record of turning new startups into difference makers throughout Africa. 

Connect with us and join the ranks of visionary startups changing the game and shaping a brighter future.