Financial experts advise SMEs and startups to seek sustainable and flexible financing solutions

Small and medium-sized enterprises and startups, specifically those in the fields of Science, Technology, Innovation, and Research (STIR), have been advised to turn to cheaper and long-term funding opportunities such as venture capital and angel investors to sustain and expand their operations instead of relying on loans from commercial banks.

This was the unanimous call from speakers at a virtual conference aimed at linking innovation startups and researchers to alternative funding sources for their enterprises and research outcomes, organised by Heritors Labs Limited in collaboration with its funding partner, the RISA Fund, The virtual conference, which formed part of the activities of the Women in Innovation and Research Conclave (WIRC), deepened participants' insights and understanding of the workings and funding mechanisms of venture capitalists, angel investors, crowdfunding, and seed funders.

The Chief Executive Officer of Heritors Labs Limited, Derrydean Dadzie, indicated in his brief remarks: "Women innovators and researchers are often disenfranchised from accessing funds for their research and innovations, and in most cases, they do not have the opportunities that are available on the market to enable them to thrive in the ecosystem."

To him, the online webinars would encourage partnerships, collaborations, and investments in commercially viable innovations and research outcomes across the SME and startup ecosystem.

Barbara Aidoo, Programme Lead at Heritors Labs, delivered a compelling message at the Meet the Money Pathway webinar, a core aspect of the Women in Innovation & Research Conclave (WIRC).

She stressed that "Women innovators frequently encounter barriers when it comes to securing funds. Our aim with Meet the Money Pathway is to explore alternative finance models-like crowdfunding, angel investment, and partnerships with institutions like Impact Investing Ghana & Cal Bank Ghana that offer women-led ventures the support they need."

One of the speakers, Daniel Appiah, Head of Commercial Banking for Calbank Ghana, explained that banks prefer to disburse their limited funds to established businesses compared to those in the SME and startup bracket due to identifiable risks in the sector.

"The debt exchange programme has wiped out a substantial portion of banks' capital, and they are now looking at where the little money left could be deployed to get immediate returns to shore up their capital, which is challenging for SMEs and startups," he said.

However, he stressed that most banks have developed solutions that enable them to support budding enterprises right from the start, including the offering of technical support in the form of financial education to groom such businesses to be ready for funding.

"Banks know the exact funding sources for SMEs and startups as well as the peculiar interests of these investors. It's therefore about how we can prepare such businesses to be ready and qualified for these funds, which are largely available, and that's what most banks are doing now. At Calbank, we're providing such assistance through our Calbank SMEs Academy," he explained.

Another speaker, Ms. Justina Mensah, a Programme Officer at Impact Investing Ghana, emphasised the lack of specific funding for researchers in the country at the moment but added that with the right positioning, innovators and researchers could benefit from crowdfunding, angel investors, and other long-term capital for their businesses.

"The reality is that in Ghana at the moment, there is no specific funding vehicle for research, but it's not impossible. Angel investing is one great area that startups can look to; we also have venture capitalists and crowdfunding, which have become options for startups and SMEs, especially those in research and innovation," she noted.

She added, "But the caveat is that the research or innovation must be viable and of value to these investors. This means that researchers and innovation startups have to be well-positioned to secure funding, including examining the funding positions and requirements of these investors."

On her part, Eunice Asantewaa Ankomah, a certified Digital Financial Services Consultant, encouraged participants to leverage digital tools to build business records to attract investment from banks and other potential investors.

"There are several digital technologies that can be used for bookkeeping, which makes it easier for startups and SMEs to present an attractive financial record to entice banks to invest in their business," she advised.

The financial consultant further encouraged innovators, researchers, and tech startups to forge strong partnerships with banks that can track the growth of the business based on their transactions to facilitate securing loans.

MA/AE