Have you tried borrowing your father about 200 USD to set up a Play Station in your hood? I know the response you got and it was not very inspiring. In my previous article, I introduced us to different ways of financing a start-up business. I also had a bias towards venture capital and angel investors as compared to bank loans. Venture capitalists and angel investors are ready to place their resources on an idea as long as it is appealing enough. What are you waiting for?
Today I fulfill the promise, how to deal with Venture Capitalists or a more local name, investors. I feel optimistic and as a bonus, I will add names of a few for you to check out and start conversations aimed at funding. You have all it takes; an idea that is put on paper as a business plan with proper financial projections and operations strategy. I am not talking of a sixty-page business plan but a smaller document with facts and figures rather than long-empty stories. You also have done your due diligence and learned the modus operandi of the venture you want. You are ready to meet this angel investors.
Where to Start.
Where do you start? It is as simple as ABCD. You need to speak out your idea and meet potential investors. Look out for networking or entrepreneurship events near you. There are also pitch nights or boot camps organized regularly by clubs and hubs. To improve your public speaking and presentation skills, join clubs like Toastmasters. Before you participate, it is wise to sit in the audience for several sessions to learn the titbits. Apply to participate once you are ready and confident. Most investors have a fund facility and you have to meet them and present your project. Some may not give you the funds but they will do something important, coach and spruce you up for the next one.
In Kenya, there are several hubs and incubation centers that support innovative ideas, sign up as a participant and be active. Investors receive proposals from these centers regularly and they prioritize them because they trust the coaching at the centers. An angel investor is not necessarily a guru in the industry but they have a team that analyzes your idea. Other investors are your relatives and friends. The latter are the best options for many reasons.
After nailing the funding, what next? The first way is to prove to the investor that you are the real catch and that you will earn their money and more importantly, their trust. Stick to the plan, channel funds to the stipulated investments. It is not time to buy that personal MacBook or a car. Ensure you start acting prudently and take early risks. Involve the investor where possible and ride on their social capital and customer base.
Local VCs and Angel Investors
Before you accuse me of being out of touch with the Kenyan reality, let’s narrow down to facts. Sometimes you possess an innovative idea that you feel that an investor will steal it and hang you up to dry. We have the Mpesa narrative that claims that Safaricom swindled the innovator. It is an allegation that I choose not to pursue. When the agreement between you and the investor is made, make sure you understand the ownership details. It is advisable to have a commissioner of oaths prepare this contract and have it signed after reading and understanding all the terms and conditions. The annual turnover is shared according to the ratio of shares. To ensure you grow bigger at the expense of your investor; invest your dividends and profits back into the business. It is also imperative to learn the rules of the game fast and first so that you can also make key decisions concerning the company.
Here is a list of venture capitalists;
- Isaac Waithaka – Goblis Group Foundation
- Harry Hare – DEMO Africa
- Dotun Olowoporoku– Novastar Ventures
- Mbwana Alliy– Savannah Fund
- Pardon Makumbe– CRE Venture Capital
These are clubs and associations that support business incubation and development;
Share experiences of your start-up journey. Your younger brother may want to learn from you but do not know how to approach you!