As part of the community engagement component of Phase II of the Negawatt Challenge, the iHub hosted a meetup dubbed “Attract Venture Capitalists to your Startup”
Put together by Njeri of the iHub and moderated by Jacob Chencha, the event featured Aaron Fu of Nest, Lia Mayka and George Omendo from Village Capital and Mbwana Alliy from Savannah Fund and Christole Okeke of Botho Limited.
Participants got a wealth of knowledge. Here are the key takeaways of the night:
IT IS MORE THAN FUNDING
Aaron Fu introduced Nest, a venture capitalist firm and accelerator, saying they will be based here Nairobi for Africa and mentioned nine other markets they are in which include San Francisco, London, Los Angeles, Paris, Manila, and Bangkok.
The Nest believes in a unique model that the best accelerator for a startup is working with a large brand. He gave an example of their work with Nissan in Hong Kong for the Smart Cities Challenge.
In sectors such as energy, working with investors who would help your startup with more than just finance is highly recommended – especially those with expertise and networks that can help in testing of the product.
Mbwana described the funding landscape in Africa adding that Savannah Fund takes 12% equity and gives Startups $30,000 for a valuation of $250,000. He expected that the amounts startups will be asking from investors will rise and one of these days just maybe we would have a rare beast that hits 500 Million in valuation.
He said that the startups that were really doing well now in terms of valuation were in multiple countries in Africa, had strong teams, and had identified strong segments in retail.
Valuations still remain a tough nut to crack in Africa.
Two major highlights:
- Post revenue valuations are much easier
- Revenue is a fantastic source of funding. If a no risk option is 20% what do you expect an investor to lend you?
Some useful quotations from the panel discussion:
“Doing a startup in Africa is like playing a video game in hard mode blindfold”
“What have you been able to do with zero – It shows how much you can do”
“Know how much money you need to do the smallest thing. Don’t take the loan if it is half..Don’t take it because it is not going to help you get what you need”
“Do what you can with less but don’t take less than you need to help you generate revenue”
“Don’t throw out the non-profit or grant options that are there for you. The NGO sector is trying to find how they can tap into this incredible entrepreneurship space especially when you are just testing”
“At Savannah Fund people pitch to us from all over the place, we always look at the burn!”
Mbwana shared with the participants the story of his first “YES”, which came after 100 pitches.
“I knew the pitch backwards, I had pitched in the parking lot, I had pitched everywhere. I didn’t have a deck… I didn’t have a deck… I knew the whole presentation.”
Participants were advised to practice and time themselves.