A Rwandan start-up, Ampersand, last week announced that it had successfully raised $3.5M in its ‘Series A’ funding from Ecosystem Integrity Fund, an America venture capital fund.

The development excited many as the firm which debuted about two years ago was able to raise funds amid the Covid-19 pandemic when a section of investors are hesitant to disburse capital over uncertainty resulting from the pandemic.

Ampersand is an electric motorbike company that has successfully rolled out electric-powered motorbikes with battery swap stations.

Josh Whale, the Chief Executive of the firm, said that last week’s development was the culmination of a process that commenced towards the end of 2020.

"The process began right after Christmas when the investor heard about us, it moved quite quickly. We had phone calls and later a visit from the investor to understand the market and the business,” he said.

The firm commercially launched in 2019 with seed capital of about $600,000. It also received support and funding from FactorE Ventures in 2018, Rwanda Green Fund, USAID’s Development Innovation Ventures, Shell Foundation, the UK FCDO’s Frontier Technology Livestreaming fund, the New Zealand Government, and a loan from Blue Haven Initiative’s Catalytic Fund

The new funds will go into increasing the fleet size as well as battery swap stations and further development of the technology to make it scalable, according to Whale.

In 2021, the firm is targeting to increase the fleet size to between 250 and 750 motorbikes against a waiting list of 7,200.

The firm currently employs 45 people and has built much of its own proprietary technology, including chips within the battery packs.

Whale noted that they also plan on expanding to an East African country in 2021. He however did not specify which country.

Electric mobility is increasingly popular across the world for its environmental conservation traits as well as cost-effectiveness in the long run. This has seen firms like Tesla the American electric vehicle grow to be termed as the world’s most valuable automobile company.

Whale said the sector’s growing popularity across the world has made it possible for start-ups in the sector to easily raise capital buoyed by developments in the sector.

"This is a new and exciting sector. There is a lot of interest and investment around climate change and a firm belief that electric mobility is going to play a big part in the future and is commercially viable,” he said.

The $3.5M is the start of capital-raising drives to come as the firm seeks to increase fleet size, develop the technology.

In the process, the firm said that they are open to partnerships with players such as through working with gas station operators to set up battery swap stations as well as motorcycle producers.

This would allow the firm to concentrate on being an energy firm.

Going forward, if Rwanda was to have all motorcycles as electric in coming years, Whale says it would require an investment of about $75M with massive returns for investors.

However, as opposed to re-fitting current motorcycles with electric systems, Whale says it’s more commercially viable to maintain the natural cycle and phase out old bikes replacing them with electric ones.

"A typical bike stays on the road for about 4 years depending where it is and the quality. We don’t have to retrofit the existing bikes, it would be expensive and inefficient. Just by keeping up with the natural cycle of new motorcycle purchases in the country, the next 5 years, and all motorbikes could be electric,” he said.

Across the East African region, the endeavour would require capital of about $1.5B.

If maintained, the trend of attracting capital could see Rwanda Start-ups go beyond the estimated $4 million (Rwf3.9 billion) in financing raised in 2020 and $1,150,000 raised in 2019.

A funding report by Disrupt Africa, a tech analysis platform noted that Rwandan firms raised $4 million while African start-ups totaling 397 raised $701,460,565.

Green energy initiatives and investments have in recent years attracted funding with further growth expected. For instance, in 2016, BBOXX an off-grid electricity provider raised $20M in its series C funding.

ARED, a firm that installs and runs solar kiosks in 2019 raised $250,000 in its Series A funding.

Rwanda is looking to attract alternative financing for early-stage ventures with the new law relating to investment promotion and facilitation.

The new law is aimed at bridging the existing gap currently in terms of the right financing options for early-stage firms.

The push to provide incentives to angel investors is based on the fact that conventional sources of financing for startups such as commercial banks are not ideally placed to take risks on start-ups.

Among the incentives include that angel investors investing a maximum of $500,000 in a start-up will be eligible for exemption from capital gains tax upon the sale of shares, provided the shares were initially purchased as a primary equity issuance by the start-up.

Angel investors will also be eligible for exemption from withholding tax applicable to dividends paid for five dividend issuances by the start-up.