Traditional Capital Raising - Ethiopia

The country in Ethiopia is projected to witness a Total Capital Raised in the Traditional Capital Raising market market reaching US$72.87m in 2024.
Venture Capital is set to dominate the market with a projected market volume of US$72.63m in 2024.
When looking at global comparisons, the United States is expected to generate the most Capital Raised, with US$159.0bn in 2024.
Ethiopia's Traditional Capital Raising market is witnessing a surge in interest from local investors seeking to support domestic businesses.

Definition:

The Traditional Capital Raising market relates to venture investment in startups and emerging companies that are not yet generating positive or significant revenue but have high growth potential. The capital is mostly raised from venture financial institutions, and minorly from banks.

Structure:

The market consists of two segments:
- The Venture Capital market refers to private equity funding that is offered to startups and emerging companies.
- The Venture Debt market refers to the combination between equity and debt financing, which is used to finance the early stage and growth stage capital-backed companies.
The market data comprises of the amount of capital raised, number of deals, and average deal size.

Additional information:

Although the Traditional Capital Raising market is highly competitive in investment opportunities due to the rapidly high growth rate of startups and emerging companies, it has become more popular for these businesses who cannot get traditional loans from banks, to develop and grow their businesses or projects.
Key players in this market are companies such as Sequoia Capital and Hercules Capital.

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Venture Capital
Venture Debt

Traditional bank loans
Digital capital raising

The Traditional Capital Raising market in Ethiopia is experiencing significant growth and development.

Customer preferences: Ethiopian investors have traditionally relied on traditional capital raising methods such as bank loans and personal savings. However, there is a growing interest in alternative forms of capital raising, such as crowdfunding and angel investing. This shift in customer preferences can be attributed to several factors, including a desire for more diverse investment opportunities and the increasing availability of digital platforms that facilitate these alternative forms of capital raising.

Trends in the market: One of the key trends in the Traditional Capital Raising market in Ethiopia is the rise of crowdfunding. Crowdfunding platforms have gained popularity among entrepreneurs and investors alike, as they provide a more accessible and inclusive way to raise capital. These platforms allow individuals to contribute small amounts of money towards a project or business, thereby democratizing the investment process. This trend is driven by a combination of factors, including the increasing use of technology, the desire for greater financial inclusion, and the need for alternative sources of funding in a country where traditional banking services may be limited. Another trend in the market is the emergence of angel investing networks. Angel investors are individuals who provide capital to early-stage businesses in exchange for equity or ownership stakes. In Ethiopia, there is a growing number of angel investing networks that connect entrepreneurs with potential investors. This trend is fueled by the desire to support local businesses and promote entrepreneurship, as well as the potential for high returns on investment.

Local special circumstances: Ethiopia is experiencing rapid economic growth and has a young and dynamic population. This creates a favorable environment for the development of the Traditional Capital Raising market. The government has also implemented various initiatives to promote entrepreneurship and attract foreign investment, further contributing to the growth of the market. Additionally, the country has a vibrant startup ecosystem, with a number of successful companies emerging in sectors such as technology, agriculture, and manufacturing. This ecosystem provides a fertile ground for traditional capital raising activities.

Underlying macroeconomic factors: Ethiopia's economy has been growing at a steady pace in recent years, driven by investments in infrastructure, agriculture, and manufacturing. This growth has created opportunities for businesses to expand and attract investment. Additionally, the government has implemented policies to liberalize the financial sector and encourage private sector participation, which has further stimulated the Traditional Capital Raising market. The country's large population and increasing urbanization also contribute to the growth of the market, as they create a demand for new businesses and investment opportunities.

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on the amount of capital raised, the average of deal size and the number of deals.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use data from OECD, annual financial reports of key players, industry reports, third-party reports, publicly available databases, and survey results from primary research (e.g., the Statista Global Consumer Survey). In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, CPI, number of small and medium-sized enterprises (SME), new businesses registered (number) . This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. For example, the S-curve function and exponential trend smoothing are well suited for forecasting digital products and services due to the non-linear growth of technology adoption.

Additional notes:

The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic and the Russia-Ukraine war is considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

Venture capital is the term used to call the financial resources provided by investors to startup firms and small businesses that show potential for long-term growth. It has become a very important source of capital for entrepreneurs, who often have problems with financing their needs through risk-averse banks. Venture capital investments incorporate a high level of risk as only some of the VC-backed companies develop into successful and highly profitable businesses. In 2020, the leading venture capital backed company worldwide was the Manbang Group, which based in Nanjing, China.