African start-ups are the least funded in the world; 80% of funding goes to Kenya, Nigeria and South Africa with most directed to FinTech (financial technology) start-ups. Ensibuuko, a Ugandan company providing mobile finance services, received financial and incubation support as winner of CTA’s AgriHack programme in 2013. We are now involved in CTA’s Market-led User-owned ICT4AG-enabled Information Service project. Along the way to becoming Uganda’s most funded start-up, we have learnt some key lessons in applying for finance and looking for investment.
Firstly, time and effort are key. We have attended so many events, workshops and even a couple of accelerator programmes. You have to look hard to find and attract investors and we did our best to always shine as well as we could. Over these last few years, we have talked to so many people at so many events for so many potential investments.
People invest in people
Building relationships is also crucial. You have to invest time in keeping in touch. Encounters with investors at events may be a one off, but you have to invest in following up. And many start-ups fail to do this. Investors take interest in people they like. So if you invest in relationships, you start as friends, they want to learn about your business and then they might recommend you to other people who are willing to invest.
You will fail many times before you win.
However, don’t let failure hold you back. It takes time to put business plans together for investors and you are lucky if you get a response at all. It can get really frustrating being repeatedly turned down, but if you let it hold you back, you will fail. It is important that when you don’t succeed, you learn, and you ask for feedback on ways to improve. One key thing is to always ask people for advice and they can say, “Sure, let’s have a call, let’s talk,” and then they get to understand your business better.
Too often start-ups get defensive, they want to justify the challenges they face and to prove themselves as a business. But it is important to accept these people are the experts and their advice can help you improve. So follow up is essential, get to know the investors, ask them if you are dealing with a challenge whether there is someone on their team that can advise you. And sometimes, they will come back to you and ask “Did my advice work? Any other help I can give?”
Ask for funding and you may only get advice
Many times when we approach people for funding, we have only received advice in return, but this always helps us to improve and to seek the next opportunity. And then sometimes, when we ask for advice, we get funding.
We have had one particular experience with a current investor who we first met in 2014, he was one of our mentors and he was often travelling to Uganda. So he would make time to visit us and we would sit together to really work out the issues. He became really involved in the business, investing emotionally as he got to know us better. Then when we came to him and said we had worked on achieving a good business model but we needed finance, money to progress, he said, ok – I will speak to investors in Canada. But, in the meantime, he told us that he could see we needed cash so he gave us an advance to help us become investor ready. After all this time, post-investment, he is still emotionally interested and we are constantly in touch, keeping him up-to-date. And we know that at any time, we can go to him for advice and to even get further help with funding.