ETHIOPIA: BUILDING CAPACITIES TO IMPROVE SERVICES FOR START-UPS, SMALL AND GROWING BUSINESSES
Within the frame of a GIZ-funded PrivateSector Development in Ethiopia (PSD-E, Output 3), GFA initiated a project to build the capacity of intermediaries and incubators in Ethiopia so that they can improve and extend services to Ethiopian start-ups and small and growing businesses. To this end, the project team held a constructive breakfast meeting to build the capacities of Intermediaries in the Ethiopian Innovation Ecosystems. The meeting brought together Angel investors in the country with the primary purpose of establishing stronger collaboration among the Angel investors - high-net-worth individuals who provide financial backing for small startups or entrepreneurs – as well as other actors in the Ethiopian innovation ecosystem.
During the breakfast meeting, the project team noted that the key challenge for angel investment in Ethiopia is finding suitable businesses that lead to high quality deals. The main factors cited were the need for more good founders, and the knowledge and capacity gap among investors and their target markets. The participants also identified social structure as a barrier to investment. They noted that cultural norms dictate how different ages interact, leading to a lack of communication between the younger people, who mainly own the intellectual property, and the capital owners, who tend to be older. Other social factors that hinder investment include the insecurity caused by conflict, and a preference for real estate and trade. Going forward, it is important to establish mechanisms and structures for collaborations that integrate digital technology as a foundation for the growth and impact of Angel investing in Ethiopia.
