Seeking an 'angel': African startups face funding challenge

Friday July 07 2023

Workers work at the construction site of Kubik's first daycare building site in Addis Ababa, Ethiopia, on June 19, 2023. PHOTO | AFP


Kubik is proud of its pioneering, climate-friendly technology that recycles one of the world's environmental curses -- plastic waste -- into construction blocks.

But for the award-winning Ethiopian startup to achieve liftoff has been no easy task. It has had to fight tooth and nail to raise funds, says its youthful boss.

Kubik takes in bundles of discarded plastic and sorts them into piles. Selected plastics are mixed, melted and combined with additives, and then moulded into the desired shape.

The result: black beams and interlocking blocks which today are being assembled in a pilot project -- the building of a daycare centre in the capital Addis Ababa.

Read: Funding dries up as tech start-up businesses falter

The site has no cranes or cement mixer, just a concrete floor on which four workers make a wall by fitting the blocks together like Lego, tapping them with a mallet to ensure a good fit.


There's no glue or cement.

The beams, bolted together on all four sides of the walls, hold the structure up.

"The idea’s for it to be super simple," said overseer Hayat Hassen Bedane, a 34-year-old structural engineer.

"You have a manual, and the whole point is to get it done with inexperienced workers, obviously under supervision.

"You can... build 50 square metres (540 square feet) of a building in just five days, so that's super-fast compared to other forms of construction," she said.

"We’ve done tests, tension-stress tests and compressive tests, so it’s durable and very strong."

Speed and the smart use of unwanted plastic aren't the only benefits.

The recycling generates just a fifth of the carbon from cement making. If Kubik's plant processes 45 tonnes of ditched plastic each day, that's 100,000 tonnes of carbon dioxide (CO2) averted each year, the company says.

There's a trickledown socially, too, boosting the country's many informal waste pickers, many of whom are women.

Read: Why scaling up actions for women empowerment is inevitable

Funding challenge

But Kubik's CEO, Kidus Asfaw, 36, said he battled to get seed money for his company.

He received a lot of knock-backs from wary investors, he says, before catching a break.

He has just completed a round of funding for several million dollars to scale up production -- a success that coincided with the prestigious AfricaTech award for the company, which boosted visibility.

The Ethiopian previously worked for Google, the World Bank and Unicef after studying in the United States.

"He then took the plunge to become an entrepreneur," he said.

"There's a really large network that I already had within my professional sphere that I could tap into in the beginning," he told AFP last month in Paris, where he went to pick up the award.

Even so, "having that did not make it any easier" to raise funds.

"I've met over 600 people in two years. Out of those 600 people, about 20 of them have become investors."

Startups in Africa face myriad hurdles, from laws and regulations and lack of infrastructure to a fragmented continental market.

Read: Agriculture, health startups lag behind in seed capital

But funding, in a continent that lacks intrepid individual investors to provide support, is a persistent and major headache.

"There are very few 'business angels' in Africa," said Sergio Pimenta, Vice President for Africa at the Societe Financiere Internationale (SFI), a private-sector unit of the World Bank that has just launched a $180-million fund to help provide a financing source.

"Out of $415 billion in risk capital deployed around the world, just over one percent -- $5.4 billion -- goes to Africa," he said.

And of this sum, 80 percent goes to just four countries: South Africa, Kenya, Nigeria and Egypt.