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January 26, 2024

How to Build Startups in a Funding Drought

If you’re wrestling with how to fund big ideas without bootstrapping, this week’s podcast is for you. We spoke to venture studio Next176 CVO Tramayne Moraghan about strategies for de-risking and building with an exit strategy.

Just the highlights

1. The state of startup funding in SA

The macro-economic reality in SA, and thus the amount of risk a funder knows they can safely take on, is starkly different to developed countries. And, as Tramayne explains here, the sentiment among funds here is really that they only want to back ventures that are generating revenue.

This naturally means getting early-stage funding is tough, and it’s not likely we’ll see much of a shift with the current economic flux we’re in. And that’s part of the reason why he believes venture studios are an important new way for founders to get their ideas built.

2. A new way to build in SA

As Tramayne discusses here, incubators and accelerators started because the developed markets had many VCs and not enough early-stage ideas to invest in. Africa has the opposite problem. And that’s where venture studios come in.

Venture Studios house a collective of really top-notch people – at Next176, for example, Tramayne has a team of people from Google, Salesforce, Tencent etc. – and they sit with founders and really build out the idea, validate, shape and start building it with you. Not over a few weeks, but in-depth and long-term.

And what’s great about bringing such an experienced team together is you create a space that is at once rigorous and creative.

3. Building to Exit

Thinking about exiting before you build is often a bit tricky for founders, as Tramayne mentions here. And where VC conversations can get a bit uncomfortable in later stages when it comes time to sell, his personal experience has been a greater sense of security since they’re corporate-backed (Old Mutual, if you didn’t know), which means there are quite a few natural exit opportunities almost baked into the process.