Inside an Addis-Based Firm’s Experimental Approach to Startup Survival in Ethiopia

Across Addis Ababa, dozens of innovation hubs promise to launch the next generation of Ethiopian startups. They train founders, host pitch days, and connect them to competitions. However, for many, the journey ends once the program does. A short while later, their social media pages often go silent, and their websites fade into inactivity.

This high failure rate has become an enduring feature of Ethiopia’s startup scene, one shaped by donor-funded incubators, shallow investment pools, and policies that have struggled to match ambition with execution.

In this uneven landscape, EfuyeGela, a startup aggregator, turnkey solutions provider and game publisher, has been implementing an experimental strategy to lengthen startups' life expectancy for the past few years. Instead of relying on grants or investor rounds, it runs on a self-financing model that channels corporate consulting revenue into supporting startups long after the training stage.

“Most African countries depend on donors to build their startups,” says Dagmawi Bedilu, EfuyeGela’s co-founder and chief strategy officer. “In Ethiopia, since we have a lack of investors, we felt the need to change that. EfuyeGela was created to shift from a donor mindset to a community-building model, where value is exchanged instead of just money.”

Despite incubators being built to help startups succeed, their track record in Ethiopia tells an underwhelming story. A 2023 research found more than 100 centers across the country but noted poor follow-up, weak investor ties, and little post-graduation continuity. Many operate on donor budgets with limited market links, leaving startups unprepared once the structured programs end.

Access to finance also remains seriously limited. Despite a recently ratified Startup Act and plans for a two-billion-birr Startup Fund, most entrepreneurs still bootstrap their ventures or rely on small grants and competitions. 

EfuyeGela emerged hoping to address some of these shortcomings. Rather than enrolling startups in short training cycles, it embeds them in a shared portfolio that provides ongoing operational support, client introductions, and access to paying work.

An aggregator typically collects products or services from different providers under one umbrella. EfuyeGela applies that structure to startups: its corporate consulting arm secures contracts, then channels assignments to ventures within its portfolio. 

“We realized startups were not dying because of a lack of creativity,” Dagmawi told Shega. “They were dying because they didn’t have paying clients.”

The company operates through two connected units. EfuyeGela Consultants, its corporate arm, offers management and design services through what it calls a “3P” framework People, Process, Product. This generates a steady income that funds the second unit, EfuyeGela Ventures, which supports startups through shared services, training, and business development.

The model is meant to reduce dependence on donors, but it also limits how fast EfuyeGela can expand. Without outside investment, growth depends on maintaining a consistent flow of consulting work.

Over the past five years, EfuyeGela states it has managed to increase its revenue from 30,000 Birr per year to nearly 12 million in the last fiscal year while staff number has ballooned from 5 to 22. It reports supporting 17 ventures in sectors such as education, health, agriculture, and gaming, alongside a network of over 60 partners. The figures suggest a stability unusual in Ethiopia’s early-stage ecosystem.

EfuyeGela’s origins trace back to Chewata Awaqi, a 2018 project that introduced games into public events. What began as a playful experiment evolved into a broader ecosystem-building effort. Its later initiative, the Green Pill Project, trains participants through simulations of startup operations. Many of EfuyeGela’s staff are graduates of that program. 

The company says it has organized 10 hackathons across eight Ethiopian regions, creating what it calls “game zones” that serve as both entertainment spaces and learning platforms. 

EfuyeGela’s model pins startup survival to paying clients, hoping to address the gap between innovation and market demand. Yet the model scalability rests on several factors.

Consulting revenue can sustain a small portfolio, but it likely won’t replace private investment or robust financial infrastructure in the long run. Nor can it address the regulatory uncertainties and currency pressures that weigh on Ethiopian startups.

The Startup Act might help if implemented effectively, providing clear accreditation, procurement incentives, and access to funds. But without strong investor participation and reliable data on what works, a single piece of legislation can only go so far.

EfuyeGela’s approach is a novel workaround, a way to keep startups alive in an ecosystem where capital is scarce and institutional support is inconsistent. Its self-financing structure offers resilience,but scaling it across a fragmented market will likely require broader reforms and private investment.