Idea Financing
The Development Bank of Ethiopia (DBE) has recognized the need to address the financing challenges faced by innovative start-ups and is taking a proactive step to introduce “Innovative Start-up Financing” products. This initiative aims to bridge the financing gap faced by innovative start-ups and create an environment conducive to innovation, entrepreneurship, and sustainable growth. These start-ups, despite having ground breaking ideas and high growth potential, may struggle to secure traditional financing from banks and financial institutions due to the perceived risks associated with their innovative nature and unproven business models. The DBE’s initiative aims to address this gap by providing tailored financing solutions specifically designed for innovative start-ups.
Eligibility Criteria
- Intellectual Property Rights (IP): The DBE prioritizes start-ups with Intellectual Property Rights (IP) certificates for quasi-equity financing. However, for early-stage start-ups without IP certificates, DBE could finance them on condition that Ministry of Labor and Skill (MoLS) supports them through training and capacity building programs, including pitching. These programs include various forms of assistance such as refining business models, developing pitching skills, and other relevant entrepreneurial training. The support from MoLS enhances the viability and potential of these start-ups, increasing their eligibility for financing.
- Citizenship Requirements: The innovator or the major shareholder of the start-up must be an Ethiopian citizen. Additionally, foreign nationals of Ethiopian origin or foreign nationals residing in Ethiopia may be eligible for financing based on relevant government policies. Innovation Requirement: The business idea proposed by the start-up must be innovative. It should demonstrate a unique approach, product, service, or technology that distinguishes it from existing offerings in the market.
- Implementation in Ethiopia: The innovative start-up business must be implemented in Ethiopia, contributing to the growth and development of the Ethiopian economy. Age of the Start-up: The innovative start-up business should not be more than five years old since obtaining a business or trade license. This requirement ensures that the financing targets early-stage businesses with high growth potential.
- Sharing of Business Ownership: The innovator must be willing to share their business ownership with the DBE through the Innovative Start-up Financing program. This arrangement aligns the interests of the innovators and the bank, fostering a collaborative approach to business development.
- Start-up Label Certificate: The applicant must submit a business start-up label certificate from the relevant authority. This certificate verifies the legitimacy and registration status of the start-up.
- Working Space and Infrastructure: The innovator or innovative start-up must have adequate working space with access to necessary infrastructure. This requirement ensures that the start-up has suitable facilities to support its operations and growth.
- Business Plan and Required Documents: The applicant must submit a comprehensive business plan and other relevant documents. These documents provide detailed information on the start-up’s operations, financial projections, market analysis, and other aspects necessary for evaluation.