Pan-Africa startup building Africa's Carta Raise gets backing from 500 startups

Raise, a startup building Africa's Carta which is dedicated to seeing African startups expand their cap tables, grow and raise more money, is tackling the challenges of complications associated with incorporation. Because the processes involved in incorporation tend to be complicated, most founders risk messing up their cap tables, even though some eventually get a hang of it.

A common example among Nigeria startups is that many of these startups are guilty of issuing preferred shares in naira and eventually cancel to issue dollar-denominated SAFEs when they get incorporated in the United States.

Raise has so far received the backing of 500 startups to tackle these challenges and scale its technology, according to TechCrunch.

In 2019, Marvin Coleby, Eugene Mutai, and Tina Nyamache found a blockchain solution that would make it easier for people to buy and sell shares in pre-IPO companies across Africa. After much research and tests on the solution, the trio found out that most African companies struggle with the concept of equity and liquidity. These companies pumped more cash into managing corporate structures for holding companies in Delaware, Canada, and Europe, but only maintained paper-based subsidiaries in Africa.

Raise was launched in a private beta, and was backed by Binance Labs, a sole investor in its pre-seed funding round.

Coleby said a larger percentage of the equity in Africa is still stored, tracked and updated using manual processes, paper certificates, and fragmented government databases. As a result, this increases transaction costs to manage subsidiaries and the issuance of employee stock options. In addition, it inflates costs to enter and exit positions in private and public companies, TecCrunch reported.

The three of them started Raise to help startups, investors, employees, and even law firms appropriately manage deals, cap tables and corporate compliance. The platform allows customers to automate due diligence, track employee stock vesting, set valuations,and make routine documentation for licenses and other government documents in Nigeria and Kenya.

"Everything we do is to find a way to make it easier for founders, customers, employees, investors to get liquidity from investing in companies," Coleby said during an interview with TechCrunch. "Companies are raising money, people are in eating, and employees are getting stock options. However, there are only one or two exits now and then. That's because we build with the Silicon Valley model where we have to grow, scale until we get some big exit. From our perspective, liquidity doesn't have to be that way. It can be small little pieces of liquidity that employees and investors get over time."

He also said that Africa's capital markets for private and public companies are very illiquid and it takes several months or years to buy or sell equity. Raise also said that more than $1 trillion of stock in Africa is "illiquid, paper-based and priced in inflationary currencies."

Nigerian-based stock trading platforms like Chaka, Trove and Bamboo help Nigerians create liquidity for assets both locally and internationally. Raise aims to use its platform to streamline more asset classes and investment opportunities.