Vula is a fundraising assistant that automates the fundraising process for founders. Users input their website URL and the AI-powered platform will craft an application for selected funding opportunities. Founded by Nicholas Rawhani and Alex Goff in 2022, Vula seeks to transform the fundraising process for the continent\u2019s startups and SMEs at a time when raising funds is proving to be tough.<\/p>\n
In this episode of Ask An Investor, TechCabal talked to co-founder and CEO of Vula, Nicholas Rawhani, to get more details on how the platform works, what convenience it brings to the fundraising process, and what role platforms like Vula can play in boosting fundraising on the continent.<\/p>\n
TechCabal: Please share how Vula works.<\/p>\n
Nicholas Rawhani: Vula seeks to answer the question of how we can enable locally-owned African companies access to capital which will enable them to scale up.<\/p>\n
We spoke to more than 500 founders and realised that the process of applying for financing, whether it\u2019s for a grant, pitching to VCs, or applying for a loan, had so much friction and headache. And it takes up so much time for founders that they stop being able to focus on running their business.<\/p>\n
So I (coming from a background of helping startups traverse through funding challenges) and my co-founder Alex (coming from this background of using big data to enable automation) started Vula. We realised that if we can start to parameterise the reality of companies and really get the information of companies to be a single source of truth, then we can train an AI for every company, and help that AI to basically be a relationship banker and investment banker for each and every company on the continent. Once it understands the company well enough, it can output what the best possible route for funding is and who can actually fund it. It also helps them apply for that funding.<\/p>\n
But on the other side of this funding gap are the financiers themselves. We had this assumption that development financial institutions, pan-African banks, and others would have sophisticated processes and systems for bringing in businesses and finding opportunities to finance them. But we found that that\u2019s not the reality. So we realised that Vula needed to build for both sides of this funding gap. What makes this model amazing is that we can provide our startup and SME support tools for free to founders while making our revenues by helping these large financial institutions digitise their onboarding processes.<\/p>\n
How does Vula plan to catalyse investment into the continent?<\/p>\n
NR: In the USA there\u2019s this concept called the Common Application where when you apply for university, you do one application, and it basically filters you out and pre-matches you to the universities that suit your profile. Vula brings that same convenience to founders. Searching for opportunities one by one, going through all these different applications, filling in the same questions, and getting the same documents, is all a schlep. We have this powerful platform that not only reduces this process but also helps them engage with financiers in the best way. We believe that by figuring out the best way to facilitate investment, we can 10x the amount of investment on the continent.<\/p>\n
What challenges have the Vula platform faced and how have you conquered them?<\/p>\n
NR: I\u2019d say on the founder side, there haven\u2019t really been challenges because we\u2019re providing a free service that\u2019s super futuristic to founders and, so far, they love it. I would say however that there is a bit of slowness which comes from the side of financial institutions. You can imagine how incredible the experience would be if you log in as a founder and immediately see all of the financing opportunities that lie before you. Historically in Africa, financial institutions have been financing very large corporations in mining , telecoms, and not really SMEs and startups.<\/p>\n
Our banks make a lot of their money just from transactional banking, but what they are starting to realise is that SME financing is extremely profitable. SME financing that takes place in Europe or in the US is the single most profitable sector of any banking segment, and our institutions are becoming more cognizant of that. So, in the short term, you\u2019ve got banks who don\u2019t really want to engage with SME financing that much, which slows our uptake, but then you have these really innovative banks and financial institutions who are playing the long game and seeing the value Vula adds.<\/p>\n
On the other hand, what opportunities are Vula looking to exploit in the funding facilitation market?<\/p>\n
NR: We have a very clear three-step plan. The first step is to enable this next generation of digital tooling for financial institutions and once we hit a critical mass of those and it basically becomes a marketplace, the amount of investment inflow will grow exponentially. In the 1950s, in the US, the way that mortgages started to become popular was that instead of the local bank handling all the mortgages, all the bank would do was package up clients who wanted mortgages, and then large institutional investors like JP Morgan would buy that package as a private equity asset. We want to be able to do the same thing for companies across Africa because they\u2019re highly uncorrelated assets. And that\u2019s super promising for our future. But right now, we just don\u2019t have the tools or the data on the continent to make that a reality. So Vula also sees itself as the tool through which we can start to parameterise companies on the continent and create a united vision of what\u2019s really going on, in order to help the very large institutional players in the US or in Europe be able to invest in African businesses as an asset class. And that\u2019s where we\u2019ll really start to see liquidity flow.<\/p>\n
What role will platforms like Vula play in the future of fundraising in Africa?<\/p>\n
NR: I don\u2019t think that there\u2019s anything special about a platform in and of itself because we\u2019ve seen many platforms in the past come and go. The idea that you can just put companies up on a platform and bring financiers to the table, and it all magically works out is a bit of an urban myth in the African financing space. So it\u2019s not about a platform. I think it\u2019s about properly understanding what the real barriers are for enabling financing. In reality, the biggest barriers are trust and bankability. There are too many entrepreneurs who just aren\u2019t actually investor-ready. They have been convinced by this VC model that the only way that they can start a business is to go out and convince somebody else to give them money. And that, I think, has actually done a disservice to the continent because we have a culture of starting cash flow-positive businesses ourselves. We have a culture of hustle and grind and making it happen.<\/p>\n
So the future is not about any particular technology or any particular platform, but about ensuring that both financiers and entrepreneurs feel empowered and feel a sense of trust in the market. We want to make them feel that they can actually back ideas that they love, that they can actually build solutions that are going to solve problems, and that they\u2019re going to be able to get the support that they need to continue to do that.<\/p>\n","protected":false},"excerpt":{"rendered":"
This episode of Ask An Investor features Nicholas Rawhani, co-founder and CEO of fundraising platform Vula. He talks about how the platform is enabling fundraising for African startups and SMEs.<\/p>\n","protected":false},"author":12963,"featured_media":36388,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,21],"tags":[7,26,22],"class_list":{"0":"post-36391","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"category-technology","9":"tag-apie-project","10":"tag-news","11":"tag-technology"},"yoast_head":"\n