Why you should avoid donor funding

If you are building a venture-scale startup, please avoid donor funding.

The purpose of donor funding is to focus on areas the private market is not focusing on. They should give that helping hand to the poor businesswomen living outside the main city and start their home business.

But venture capital is a different way of doing business. It’s about building innovation and distribution and living on the cutting edge of technology. Not dealing with “beneficiaries” and gender equality and allocation to rural cities, etc.

Those are pre-startup concerns. On a national level indeed where you can put that money into education, infrastructure, up-skilling, and digital transformation of government.

I advise everyone to stop taking donor funding for anything related to the venture. World Bank, EBRD, and GIZ, are all great efforts by entities that want to do impact. But that doesn’t bode well with venture that’s all.

And you have so much to deal with as a founder: markets, competitors, team, technology, and sales. Don’t add new concerns that will have zero impact on your business.

Don’t become an item on someone’s impact checklist. It is helping them meet their KPIs of deployment. Become a line item in a great business’s budget!

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