Ethiopia’s startup scene has welcomed a new player: weVenture, the country’s first venture capital-backed incubator.
Launched in January 2024, WeVenture, is a collaboration of local business executives, financiers, and experts, with the goal of locating, fostering, and growing the nation’s early-stage companies.
In its initial year, the incubator intends to promote a minimum of eight entrepreneurs, emphasising those that offer innovative answers to Ethiopia’s problems in fields like fintech, health, education, and agriculture.
Noel Daniel and Makeda Tsegaye launched weVenture with the goal of assisting regional companies with ground-breaking ideas in obtaining private and public finance to launch and expand their enterprises.
“The nation needs additional privately financed hubs.” The creators of weVenture stated that their goal is to support entrepreneurs and provide a formal, transparent work environment.
The introduction of weVenture is crucial because it occurs at a pivotal moment for Ethiopia’s startup ecosystem, which is still developing and confronting numerous obstacles.
Only 23% of Ethiopian businesses are in their post-early stages of operation, according to a survey released by the Japanese administrative agency Japan International Cooperation Agency (JICA). The majority of entrepreneurs in Ethiopia are still in their early stages of operation.
These firms are in desperate need of funding in order to grow, yet they frequently have trouble getting access to markets, networks, funding, and mentorship.
Given the substantial resources it claims to possess, weVenture appears well-positioned to assist these businesses in overcoming these obstacles and realising their potential.
But as it makes its way through the developing tech scene, the incubator may also run into problems including unclear regulations, inadequate infrastructure, a lack of talent, and rivalry from other companies.
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A bright future
Many participants are upbeat about the future of Ethiopia’s startup environment and the part weVenture can play in it, despite the obstacles.
Ethiopia has a thriving tech ecosystem thanks to a network of active startup hubs, accelerators, and investor networks including iceaddis, Gebeya, and blueMoon, which support the creation of a wide variety of firms.
Notable startups that have come out of the nation include:
In 2023, Gebeya—a talent marketplace that links independent contractors in Africa with businesses throughout the world—raised $2 million.
In 2023, ZayRide—a ride-hailing service with operations in Ethiopia and Liberia—raised $1.8 million.
In 2023, Kudu—a digital marketplace that links suppliers and smallholder farmers—raised $500,000.
WeVenture’s project has been praised by business executives and investors in Ethiopia as innovative for the rapidly growing startup environment in the country.
If successful, Ethiopia might follow Kenya and Nigeria as African nations with burgeoning IT scenes.
Difficulties Ethiopian startups encounter
Among the difficulties faced by Ethiopian startups are:
Lack of capital: Due to the small number of specialised and risk-tolerant investors in the nation, many entrepreneurs find it difficult to raise money from both domestic and foreign sources. Moreover, banks sometimes demand exorbitant collateral and interest rates and are not designed with startups’ needs in mind.
Lack of qualified professionals: Ethiopia has a high unemployment rate, particularly for young people, and a low percentage of literacy. The demand and supply for skilled and seasoned individuals in the domains of innovation, business, and technology are not meeting.
Limited infrastructure: Ethiopia has a low internet penetration rate and high internet access costs, which impede the development and acceptance of digital solutions. Many companies must compete with other sectors and nations for talent.
Regulatory uncertainty: Ethiopia has a complicated and dynamic legislative and regulatory environment, which poses risks and obstacles for entrepreneurs. The nation also experiences regular outages of electricity, water, telecom, and other key services, which have an impact on the operations and earnings of companies. The lack of protection for intellectual property, the challenges in acquiring business licences and permissions, the limitations on remittances and foreign cash, and the political and social instability are a few of the problems.
In order to establish a climate that is favourable and supportive for startups to flourish, these difficulties necessitate the cooperation and coordination of many ecosystem actors, including the government, the business sector, academics, development partners, and entrepreneurship support organisations.