During the much anticipated Episode 1 of the Ye! Enterprising Youth Connect Series: Linking Youth Ventures with African Investors, the featured experts were: Anne Njuki, Investment Manager, DOB Equity; Roeland Donckers, Co-founder, iungo Capital; and Laila Macharia, Serial Entrepreneur, Angel Investor and Executive Chair, Africa Digital Media Group. Each investor shared their insights and expertise relating to some burning questions among young entrepreneurs. Questions included what are investors looking for in East Africa in the context of COVID and beyond? How can entrepreneurs appeal to investors? What are the tips and suggestions to cut expenses and run the business as lean as possible during the crisis? If you missed out, here is a quick recap of the highlights and key takeaways.
1. Good news! Most investors are still investing, but within their existing portfolio of companies.
Despite the negative impact caused by the pandemic and the reduced mobility to meet in person, the money is still flowing. Most investors continue to invest within their region, but are focusing in to provide additional support to their existing portfolio.
Nonetheless, as a result the many uncertainties brought on by this crisis, investors are being more rigid in conducting due diligence to check on the conditions and the potential of the company through conditional investments. On the other hand, some investors continue to uphold their capital deployment commitments for the moment. Many are indeed, taking this time to look for ways to better support the companies and the ecosystem in the future.
So in short, keep maintaining a relationship with your potential investors, and regularly provide updates and progress from your side, would definitely help!
2. Tips for becoming a more resilient company in crisis
For youth entrepreneurs, it is important to remember not be too tough on yourselves, as no one could have predicted the pandemic or the impact it would have. For certain sectors that were hit particularly hard such as , tourism and hospitality, this was to some extent just bad luck and this should not define your capability as an entrepreneur.
Focus on revenue. Cash is king, but revenue will ultimately determine the winners! The investors throughout the session stressed they are looking at two key aspects during this time: capability to continue generating revenue during this time and the strategy for managing expenses. With the current restricted business context, entrepreneurs should think about focusing on the fundamentals, and cut any unnecessary expenses to run as lean as possible.
Some entrepreneurs raised questions about the differences and relationship between pivoting and resilience in crisis. As explained by the experts, in the current context, the entrepreneurs should consider short-term pivoting and long term resilience as well. Pivoting to business models that are conducive to short-term survival, can potentially help your business maintain competitive in the market and achieve long -term growth.
3. Tips for approaching an investor
Building a track record is key! It is true that everyone loves a good story, and the investors are no exception. Although packaging your narrative and impact are useful to attract investors, youth-led businesses need to demonstrate their capacity to successfully manage their business, meet customers’ needs and build a stable revenue base. This is the track record that investors want to see.
Anne Njuki shared a great analogy in fact. She shared that “A good narrative is like the body work of a car, nice and shiny on the outside, but it is the engine- or the fundamental work and disciplined mindset that moves the car forward.”
So what can entrepreneurs do to build a strong track record in practice? Entrepreneurs should set up targets for the next 6-months to 1 year, and assess their progress towards these targets.
Every investor is different in what they ask and offer, so do your homework before approaching an investor. There is no one way to appeal to to an investor. It is imperative to do your research as an entrepreneur to make sure you are approaching investors who provide the type of investment your are looking for. In other words, to find the right fiance for you, i.e. equity, debt, grants, etc., shop around!
Once again, don’t forget that revenue is always the cheapest form of capital, so continue to focus on generating revenue and building your track record! Money is not free, as pointed out by the investors; even a great investment requires a great investment of time and effort from the entrepreneur.
4. The takeaway: Two final pieces of advice to entrepreneurs facing business challenges during the crisis:
Be kind to yourself and to others. You are an asset, and the current pandemic is a good time to invest in yourself, while continuing to adapt and innovate. Stay optimistic and realistic, distinct yourself from your business as well.
Be compassionate when making tough decisions. Going lean isn’t always easy as it can mean letting go of friends and long-time colleagues. During this time, be compassionate to others in your team, even those you may choose to let go of; we are all going through this pandemic together.
Watch the full recording of the webinar below:
Stay tuned for more upcoming webinars on the following topics:
- Trade in the region and global market
- Legal regulations in trade and beyond
- Branding and pitching
- Market Analysis