Day One! I am excited to introduce Day One, a new monthly segment that spotlights emerging startups building great products within the tech ecosystem in Africa.
I’m introducing
GetEquity, self-styled as “a private marketplace for investors and companies to trade digital securities and assets privately”, for the first edition.
By the numbers: GetEquity services 7,500 registered users and raised $500,000 for about 25 listed startups. The company operates in Nigeria, Tanzania, Uganda, Rwanda, Kenya, and recently in the US through a recently announced partnership with Wefunder.
Inspiration: Jude told me GetEquity was inspired by the Web3 ecosystem, mainly how communities provided liquidity in cases where traditional investors overlooked certain asset classes.
In the early days of the Nigerian startup scene, startups had marginal funding. Nigerians interested in angel investing could not afford the minimum deal size ($5,000-$10,000) and could not risk big amounts to invest in startups, leading to the rise of local syndicates.
Jude says:
What I built was from my understanding of how web3 ecosystems had always worked. I have new knowledge in the idea of angel syndicates, and mirrored that into a product, which we called GetEquity.
Solving the liquidity gap: Startup investors hardly make bank on their investments without a liquidity event, which takes several years to attain and creates a barrier in attracting local investors.
For GetEquity, this presented an opportunity. Borrowing a leaf from the Web3 playbook, it tokenised the investments and made it possible for the investors to trade them.
We [Africans] are usually short term investors. The typical investing period for most Africans is two to three years on average. But the typical angel investment period is about five to seven years, and sometimes for larger states about 10 years. So how do we take out what is the norm in the West, but tailor that towards the African markets. That’s where we came up with what we called secondaries – to allow shareholders trade equity outside liquidity events. - Jude.
Dealing with regulation: GetEquity is currently in the process of obtaining a crowdfunding licence in Nigeria and in “close contact with regulators” from other countries it operates – it begs the question of how the company decides on which startups to list to ensure it protects its registered users.
Jude says the GetEquity Investment Committee (IC) leads a scouting process that screens startups that apply to get funded on the platform.
It’s the standard venture capital format. They fill in a couple of details and we have our venture team give an internal memo or advice. So, the IC files a report on their findings on whether this company is a good fit or not.
Business model and revenue: Besides its retail investing platform GetEquity, the company has B2B offerings tailored towards institutions looking to raise privately. Other features include an Employee Stock Ownership Plan (ESOP) management platform for startups and a syndicate management plan to allow syndicates to manage their members.
So how does GetEquity make money?
We have a commission, which is 5.5% of what the company raises. I mean, the global average from global competitors is about 7%. We’re still quite cheaper than other crowdfunding platforms around the world. We also do a 0.5% transaction fee on the investor side. - Jude.
Final thoughts: For now, GetEquity is focused on bringing early-stage African startups to the secondary market. The company lists an average of $20,000 worth of equity in startups with valuations between $1 million to $3 million.
With its recent successes, GetEquity is set to define how to invest in African startups – so
sign up on the website and acquire some equity in your favourite African startups.
It’s still Day One.
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