InvestmentStartUpsEarly Stage StartUp Financing with Mr.Kenneth Legesi -The 97Fund

adminFebruary 1, 202359126 min

Please tell us about the 97Fund?

The 97Fund is an Open-end Investment Vehicle (HoldCo) that invests in high growth early stage companies making an impact through creating jobs of the future at scale across the following sectors the creative arts, education, health, agriculture, climate/energy, transport & logistics, manufacturing and fintech. The fund is domiciled in Uganda but targets opportunities across Africa. The 97Fund is managed by Ortus Africa Capital.

The 97 Fund takes an active, hands on approach that leverages the entrepreneurial and early stage expertise of its founders and management team. At The 97Fund we help entrepreneurs to increase their chance of success by applying extensive operational knowledge and providing access to networks, capital and funding. We do this by adopting a Venture Builder + Fund model and seek to invests between 20k – 300k USD in blended investment as grants, angel, pre-seed and seed funding with mentorship/technical assistance.

How did it come into existence?

Mr Kenneth Legesi

The 97Fund is an initiative of and was co-founded by Kenneth Legesi (Managing Partner, Ortus Africa Capital) and CK Japheth (Team Lead, The Innovation Village) as a solution to address three key issues:

1) lack of access to early stage patient capital to businesses and entrepreneurs;

2) building the capacity and ability for African startups and entrepreneurs to grow into world class companies through adoption of a venture building approach to share startup formation and building expertise, act as an institutional cofounder with entrepreneurs; and

 3) address the challenges of a lack of local fund/investment manager capacity and to catalyze venture capital as an investment asset class for investors in Uganda/Africa

Who is the key Focus to benefit from this fund?

Currently, for The COVID19 Relief Fund, this has been set up to address the challenges we face today due to COVID19 specifically in Uganda by providing support to companies that can stay alive and offer employment opportunities to youth and women during and after the pandemic with themes around collaborative working, work from home, gig work and digital economy enablers to revive the sectors most hit by COVID19.

How have startups or SMEs benefited from this Fund?

 In line with the problem the fund seeks to solve for the startups and SMEs in Uganda, we have been able to help startups and SMEs benefit in the following way; firstly providing training, mentorship and capacity building to startups and SMEs through webinars, talks and masterclasses in areas like impact of COVID19 and building resilience in this period, venture building masterclasses (ideation, problem- solution, customer discovery, scaling and growth of a business, investment readiness and exits) these resources are available for any startup and SME to tap into; secondly providing much needed patient capital through equity-free grants to businesses we have identified, for these businesses, providing mentorship and technical assistance that is bespoke to their needs as a business; and thirdly matching and providing leads to follow-on capital for startups and SMEs in our network and building up that network of co-investors and investors with The 97Fund so that we increase the chances of finding capital for startups and SMEs.

How many companies have benefited from the fund and which companies to be exact?

To this day the 97Fund we have received applications for funding from over 130 companies from which we have down selected over 25 to present at a demo day (3 demo days so far) where the companies get feedback on their solutions so that they can improve their businesses and also get seen by other coinvestors. Of these, we have so far provided funding to 10 companies at various stages. These are in Agriculture (2); Digital Commerce (2); Healthcare (1); Transport & Logistics (1); Tourism (2); Gig Working (2). Of these, four (4) are co-founded or led by women. We have also linked all 10 companies to potential follow on investors for more early stage capital in the future, even as we ourselves raise more capital into the Fund.

What challenges are hindering the Ugandan startup eco-system from access to funding and how can they be solved?

The Ugandan startup ecosystem is still nascent when compared to some of the other African and global ecosystems. This means there is still a lack of experienced and successful entrepreneurs who have exited businesses and from whom other entrepreneurs can learn about startup and SME forming and how to build and grow a high growth business (assessing the market opportunity, building and reaching product-market fit, how to go to market, building a team and attracting capital to back the business) that attracts funding. In addition, there is still limited knowledge about the various funding options that are suitable for startups and SMEs at the various stages varying from family and friends, grants, angel investors, seed/venture capital, crowd funding among others. The 97Fund is bridging this information and expertise gap. For example, per Digest Africa data, to date the Uganda ecosystem has attracted only $55m in disclosed funding for startups across 190 deals and of this, $40m has been to two companies as debt funding. Furthermore, about 170 of these deals have been as grants to entrepreneurs. There is a need for capital for the next stage of growth or to support businesses that will make that leap and attract capital for the next stage of growth. There are many startups in the eco-system however creating a scalable business model that will attract funding continues to be an on-going challenge startups and SMEs in Uganda are facing

Why has significant funding gone to countries like Kenya, Egypt, Nigeria, South Africa and not Uganda?

Significant funding has been invested in the likes of Kenya, Egypt, Nigeria and South Africa because these are the larger economies of Africa which presents a market opportunity for most investors. In addition, these countries are more developed along the path to startup ecosystem maturity including factors such as human capital, attracting funding and finance, mentors and advisors support, regulatory framework and infrastructure, education and training and culture. While Uganda has a generally welcoming regulatory landscape for investors. For example, investors are able to access foreign currency easily, repatriate profits, and own local companies, Uganda remains one of the more difficult countries to do business in, ranking 150th of 189 countries in the World Bank’s Ease of Doing Business rankings and 5th out of the 11 countries in East Africa this can be attributed to the tax and license applications that are deemed complicated due to inefficient bureaucracies. However, progress is being made on each of the pillars required to build a sustainable entrepreneurial ecosystem for example linking entrepreneurship to education through universities, providing mentors and advisors support working through the network of hubs and incubators in Uganda about 16 of them and linking corporates to entrepreneurship, attracting funding and finance through networks such as Kampala Angel Investor Network and the 97Fund

What do you think has been the impact of COVID19 on startups in Uganda?

The current COVID19 pandemic has caused a slowdown in economic activity as well as a significant rise in the unemployment rate. Over 80% of startups in Uganda have been negatively affected by COVID19 according to the Ortus Africa Capital Business Relief Survey conducted among Micro Small and Medium Enterprises. The impact of COVID19 has led to complete shutdown of businesses in sectors that have been most inflicted including; Media and Creative Arts, Tourism, Hospitality & Leisure, Supply Chain, Transport and Logistics, however COVID19 has provided an opportunity for some startups to evolve in their operations through adopting new ways of working for example within information technology, spending has shifted from new initiatives to efficiency, remote employee productivity, and cost savings. This has created opportunities for some businesses including Agriculture, Education, Energy, Financial Services (including Fintech and Insurtech), Health, Manufacturing & Supply Chain.

What noticeable trends in Ugandan startup ecosystem have you come to realize?

The Ugandan startup ecosystem has since 2016 registered over a 25% growth in innovation hubs i.e incubators, accelerators, co-working spaces and innovative centers, this so far has provided startups with conducive growth environment where their innovations are nurtured and the companies are able to access funding, co-working space and accelerator programs. The top sectors invested in Uganda’s ecosystem include; Financial Services, Energy & Environment and Health & Pharmaceuticals with grant funding as the highest investment type seconded by seed stage capital. Debt financing in Uganda registers the largest investment deals into the ecosystem. However, despite the investments in the startup ecosystem due to the COVID19 pandemic there has been a 96% drop in funding as compared to 2019 which provides an opportunity for a convergence between industry players, officials and multiple local investors to bridge the gap.

Tell us about the 97Fund COVID19 Relief Fund, who stands to benefit from it and how it’s going to impact startups in Uganda.

The 97Fund launched a COVID19 Relief Fund in partnership with The Innovation Village. The Fund invests in solutions targeting and addressing challenges caused by the COVID19 pandemic and solutions that prepare Uganda for a post COVID19 environment. The97 COVID19 Relief Fund is a part of Uganda’s economic response to the COVID19 pandemic that is targeting companies that are responding to the pandemic and also creating jobs in these times. These include areas such as: providing healthcare and PPP; re-imagining business models in the most hit sectors (tourism and services, education); new ways of working (collaborative working, work from home, gig work); supply chains and logistics; digital economy especially market places. The COVID19 Relief Fund offers $2,000 – $10,000 as an equity-free grant, with an opportunity for further funding, as well as access to technical assistance. The impact of the COVID19 Relief Fund on the startups is providing a means of business continuity in this pandemic preparing the startups for lasting growth and sustainability enabling them mitigate future crises.

Tell us about the other types of funding or finance that the 97Fund has to offer to startups in Uganda?

The 97Fund is a blended capital fund which means we offer different types of capital to entrepreneurs either directly or through partnerships and linkages to co-investors. We offer grants (equity-free and may or may not be repayable such as the current COVID19 Relief Fund), straight equity, quasi equity (SAFEs, Convertible debt), straight debt and other structures such as debt with revenue share, revenue-based financing. Our aim is to be flexible and tailor the most appropriate forms of financing to startups and SMEs in Uganda.

What do you think about the future of impact financing or investing in Uganda? or early stage investing or financing in Uganda?

According to the 2020 Startup Ecosystem Report, Kampala is ranked 80th in COVID19 innovation ranking and Uganda ranks 89th globally and 9th in Africa among the most suitable places for startup development, this comes to show that the early stage and startup scene is growing and attracting capital. The Ugandan startups have managed to attract $55 million with a year on year growth from $2.2 million in 2016, $8.6 million in 2017, $9 million in 2018, $32 million in 2019 and $1.3 million in 2020 with highest investments made in three sectors; Financial Services, Energy & Environment and Health & Pharmaceuticals. We should see some startups i.e. 5-10 startups raise angel/seed capital over the next 1 year and bring attention to the Ugandan ecosystem. This should create opportunities for exit via stock exchanges (local, regional, global) but for this to happen it is important for the link between startups, corporates and exchanges and institutional investors to be strengthened. However for this to be successful we need to consider public sector reinforcement in regards to framework and regulations that support startups and SMEs similar to the “Startup Act” in Tunisia and Senegal and proposed in Rwanda; where startups are exempt from taxes for a period of time with a state funded salary for upto three founders per company, these measures all put in place to encourage young innovators with limited financial resources to become entrepreneurs.

Any last remarks to Cue Africa audience?

 There are opportunities for startups and SMEs to receive funding as part of our COVID19 Relief Fund by applying via . In addition, The 97Fund also offers entrepreneurs free resources that will help businesses to become grow and more investable, in addition to links to co-investors in their business. We would also encourage startups and SMEs to attend our demo days which are an opportunity to learn and network with investors. For corporations and investors (retail and institutional) that would like to join us on this journey to find, fund, mentor and grow entrepreneurs and businesses that are solving the biggest challenges in our society, we are open to having a discussion regarding partnerships and how they can invest in or get involved with The 97Fund by reaching out on


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