Have you ever wondered which funders are the best to work with? It's hard to tell on the funders’ websites. They all have smiling farmers. All the funders say they help entrepreneurs create impact.
Think of it this way. When you look on Yelp or Google Maps you see some restaurants with 4.9 stars that everyone loves. And some have 2.4 stars with reviews like “there were cockroaches in my soup.”
That kind of transparency doesn’t exist for funders in Africa at the moment. Some funders entrepreneurs say things like “[funder] was essential to our growth. We couldn’t have done it without them.”
Wouldn’t you want to have more funders like that?
So far we have over 200 funders reviewed in Africa. Without spoiling the surprise for you too much here are a few of the results.
Low interest can be expensive
Some lenders with concessional low rates are actually very expensive to work with. This is due to delays, processing fees and reporting requirements. The cost of a 3% interest loan can balloon to an effective interest rate of 40% or more. Thus, while commercial bank interest rates of 18% sound high, entrepreneurs might be better off in some cases getting a higher interest rate that has less fees, delays and management costs.
Opportunity cost is the biggest cost
Imagine you have a $1m business that can grow 50% this year with the right financing. If the funder takes 2 years to deploy the capital, this will cost you $1.25m in opportunity costs.
Opportunity cost is an insidious, hidden weight that drags down entrepreneurs.
Entrepreneurs loved their investors
At least many of them.
When we created this database, we assumed entrepreneurs would mostly write nasty reviews. We assumed we’d have to moderate against disgruntled entrepreneurs trashing funders.
To mitigate this, we separated the reviews of entrepreneurs who won funding vs. those who did not win funding.
However, to our delight, trashing funders has not been a problem at all.
Get access to funders and help the community.
Access to the Sunlight Reviews database is free. All you have to do is write an anonymous review. Even funders can access the database by providing information on their fund.
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Sunlight Reviews: Africa's top funders. Ranked by you.
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Today we announce Sunlight.Reviews, Africa’s first and best funder rating database.
Get Access here
Have you ever wondered which funders are the best to work with? It's hard to tell on the funders’ websites. They all have smiling farmers. All the funders say they help entrepreneurs create impact.
Think of it this way. When you look on Yelp or Google Maps you see some restaurants with 4.9 stars that everyone loves. And some have 2.4 stars with reviews like “there were cockroaches in my soup.”
That kind of transparency doesn’t exist for funders in Africa at the moment. Some funders entrepreneurs say things like “[funder] was essential to our growth. We couldn’t have done it without them.”
Wouldn’t you want to have more funders like that?
So far we have over 200 funders reviewed in Africa. Without spoiling the surprise for you too much here are a few of the results.
Low interest can be expensive
Some lenders with concessional low rates are actually very expensive to work with. This is due to delays, processing fees and reporting requirements. The cost of a 3% interest loan can balloon to an effective interest rate of 40% or more. Thus, while commercial bank interest rates of 18% sound high, entrepreneurs might be better off in some cases getting a higher interest rate that has less fees, delays and management costs.
Opportunity cost is the biggest cost
Imagine you have a $1m business that can grow 50% this year with the right financing. If the funder takes 2 years to deploy the capital, this will cost you $1.25m in opportunity costs.
Opportunity cost is an insidious, hidden weight that drags down entrepreneurs.
Entrepreneurs loved their investors
At least many of them.
When we created this database, we assumed entrepreneurs would mostly write nasty reviews. We assumed we’d have to moderate against disgruntled entrepreneurs trashing funders.
To mitigate this, we separated the reviews of entrepreneurs who won funding vs. those who did not win funding.
However, to our delight, trashing funders has not been a problem at all.
Get access to funders and help the community.
Access to the Sunlight Reviews database is free. All you have to do is write an anonymous review. Even funders can access the database by providing information on their fund.
Get Access here