Raise Secures Funding to Build Africa's Carta | 500 Startups

The Expanding Cap Tables of African Startups and the Rise of Raise

As African startups experience rapid growth and attract substantial funding, their cap tables are becoming increasingly complex. A significant portion of this venture capital originates from foreign investors, necessitating incorporation abroad, particularly within the United States.

Challenges with Incorporation and Equity Management

The incorporation process can be intricate, and founders often face risks of errors in their cap table management. Instances have occurred where Nigerian startups initially issued preferred shares in naira before reverting to dollar-denominated SAFEs upon U.S. incorporation.

Raise, a startup aiming to replicate the functionality of Carta for the African market, is addressing these difficulties and has secured investment from 500 Startups to enhance its technology.

From Blockchain to Comprehensive Equity Solutions

Founded in 2019 by Marvin Coleby, Tina Nyamache, and Eugene Mutai, Raise initially explored a blockchain-based solution to facilitate the buying and selling of shares in pre-IPO African companies.

However, they discovered a more pressing need: companies struggled with fundamental concepts of equity and liquidity.

Significant resources were allocated to managing corporate structures in Delaware, Canada, and Europe, while maintaining subsidiaries across Africa that relied on paper-based processes.

The Prevalence of Manual Equity Tracking

According to Coleby, a substantial amount of equity across Africa remains documented and tracked using physical certificates, manual procedures, and fragmented government databases.

This reliance on outdated methods increases transaction costs associated with managing subsidiaries and issuing employee stock options, and also elevates the expenses related to entering and exiting investments in both private and public companies.

Raise: A Platform for Deal Management and Compliance

Consequently, Raise was created to provide startups, investors, employees, and legal firms with a platform to manage deals, cap tables, and ensure corporate compliance.

The platform enables automated due diligence, valuation setting, tracking of employee stock vesting schedules, and the generation of standard documentation for licenses and government filings in Nigeria and Kenya.

Early Traction and Key Partnerships

Launched in private beta in 2019 with backing from Binance Labs, Raise transitioned to a public beta in 2020.

Since then, it has attracted clients including Anjarwalla & Khanna, a leading African law firm; startups such as Bamboo, Workpay, and Mono; and venture capital firms like Microtraction and Chrysalis Capital.

Addressing the Liquidity Gap in African Capital Markets

Coleby emphasizes that the core problem Raise aims to solve is liquidity.

“Our focus is on simplifying the process for founders, customers, employees, and investors to realize returns from their investments in companies,” he explained. “While companies are securing funding and individuals are investing, exits remain infrequent.

We are moving away from the Silicon Valley model of solely focusing on massive growth and eventual large-scale exits. We believe liquidity can be achieved through smaller, incremental opportunities over time.”

Illiquidity and the Need for Streamlined Processes

Africa’s capital markets for both private and public companies are notably illiquid.

Buying or selling equity can take months or even years, and Raise estimates that over $1 trillion of stock in Africa is “illiquid, paper-based, and denominated in currencies subject to inflation.”

Platforms like Chaka, Bamboo, and Trove facilitate liquidity for assets within Nigeria, both domestically and internationally.

However, Raise intends to build the underlying infrastructure to streamline a wider range of asset classes and investment opportunities.

Building Africa’s Cap Table Standard

Raise currently organizes ownership data for African companies, making it readily accessible.

This approach mirrors that of Carta, a $3 billion company providing cap table software for U.S. businesses.

Future Vision: A Digital Asset Platform and Equity Engine

Over time, the accumulation of cap table and equity data will enable Raise to evolve into a blockchain-based digital asset platform.

The long-term goal is to become a Nasdaq-like platform for private African companies, offering indexes, ETFs, futures, and other asset classes.

Coleby envisions Raise as an “equity engine” processing the hundreds of billions of dollars in trade and securities volume within Africa.

Growth and Expansion Plans

The company reports a 60% month-over-month increase in companies going live on the platform, currently managing approximately 200 cap tables with assets exceeding $400 million.

The next phase of growth involves onboarding Series A and growth-stage companies.

Raise is currently operating in Nigeria and Kenya, and a seed funding round is planned to deepen its presence in these markets and explore funding and liquidity solutions across the African VC ecosystem.

Connecting the Ecosystem

Raise is also developing a marketplace to connect and educate investors, employees, and founders, integrating them with legal firms to leverage trusted and verified data for deal execution and employee stock option issuance.