Startup Advisory - Afrikan Heroes

Egypt’s E-learning Startup Al Mentor Raises $4.5M in Series A funding

October 7, 2019

Sawari Ventures, Egypt’s leading venture capital firm today announced that it has led a $4.5 million Series A investment round for e-learning platform, almentor.net with participation from Egypt Ventures, Endure Capital and angel investor Mohamed El Amin.

Here Is The Deal

This funding brings the total funding raised by the company to USD $8 million to date.
almentor.net plans to use the funding to accelerate course development and expand the roster of mentors who are recruited through a vigorous selection criterion, with a 10% acceptance rate in order to maintain the highest quality offered in the market.

Why The Investors Invested

According to Wael Amin, Partner at Sawari Ventures, investment into AI Mentor came because the startup was filling a crucial market gap.

“We are very pleased to have led this latest round,’’ said Wael Amin. ‘‘From the beginning, we have supported Almentor’s mission to expand the personal development options available to young Arabic-speaking professionals in the MENA region. Filling this gap in the area of knowledge development and laying the foundation for a rich online learning ecosystem is crucial to the development of the next generation of empowered leaders. We are impressed with what the team has achieved in the last two years and are excited to be part of its future journey.’’

Read also: Egypt Is Finalising A Draft Law That Will Impose Tax On Social Media Ads

A Look At AI Mentor

almentor.net was launched in 2016 with a mission to address the lack of online personal development content for Arabic-speakers. The platform offers a catalogue of exclusive training videos and expert talks, introducing unique knowledge development solutions for the region in areas including health, technology, humanities, entrepreneurship and business management.

“Already we have more than 10,000 videos online and we hope to use this investment to further avail our audience to even more enriching learning experiences, in the process helping young people enhance their personal development and confidence, while increasing their knowledge base,” said Ihab Fikry almentor.net CEO and co-founder.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

How Startups In Nigeria Can Benefit From Pioneer Status Tax (Free Tax) Incentive

October 6, 2019

In Nigeria, government has over the years, put in place numerous tax incentives, one of which is the incentive of Pioneer Status to help businesses and startups reduce the burden of the first few years of being in business. The incentive of Pioneer Status is a tax strategy used by government across the world to encourage investments in industries that were either non-existent at all, or the country did not have sufficient presence for its economic development.

The Nigerian federal government has over the years expanded the range of industries that would benefit from the Pioneer Status tax incentive under the Nigerian Industrial Revolution Plan, NIRP, and the Economic Recovery and Growth Plan, ERGP, by promoting the 27 industries and products in the approved status document.

Here Is All You Need To Know

The pioneer status applies to companies or startups in their first year of business or operations in Nigeria. Consequently, companies or businesses older than a year would not benefit from the pioneer status incentive. Again, businesses that have existed for several years in a particular sector may not enjoy the pioneer status, except such companies or startups branch into a new line of business covered under the list of 27 or more new industries and products.

Clearly, established companies such as Payporte, Konga or Jumia who are already leaders in the e-commerce business sector as well as those in the music industry would not enjoy tax exemption by the government under the new regime.

Image result for Tax stats Nigeria — Nigeria’s GDP By Sector contribution -Source: NBS

Industries Covered By The Regime Include:

Agriculture:

Startups or new businesses under Nigeria ‘s agricultural sector, who are within the first one year of their business can get tax break for a period of three years or more (under the pioneer status). The areas covered under the agricultural sector include:

Processing and preservation of meat and poultry
Production of meat/poultry products
Processing of cocoa
Marine and Freshwater fishing and aquaculture.
Growing of all crops.

Manufacturing:

This is where Nigeria hopes to diversify its oil-dependent economy to. Areas covered under the manufacturing sector include:

Manufacture of starches and starch products
Manufacture of animal feeds
Tanning and dressing of leather
Manufacture of leather footwear, luggage and handbags
Manufacture of household and personal hygiene paper products, like tissue papers etc.
Manufacture of paints, vanishes and printing ink.
Manufacture of plastic products (builders’ plastic ware) and moulds
Manufacture of batteries and accumulators
Manufacture of steam generators
Manufacture of railway locomotives, wagons and rolling stock
Manufacture of metal-forming machinery and machine tools
Manufacture of machinery for metallurgy
Manufacture of machinery for food and beverage processing
Manufacture of machinery for textile, apparel and leather production;
Manufacture of machinery for paper paperboard production.
Manufacture of plastics and rubber machinery

Information Technology And Communication:

E-commerce services
Software development and publishing
Publishing of Books.
Telecommunication apart from GSM telecommunication

Entertainment:

Motion picture, video and television programme production, distribution, exhibition and photography;
Music production, publishing and distribution, such as Record Labels etc.

Environment:

Waste treatment, disposal and material recovery, such as recycling.

Also check: Practical Guides On How You Can Register A Business Name In Nigeria Yourself

Real Estate:

Real estate investment vehicles under the Investments and Securities Act, such as Real Estate Investment Trusts,REICs etc.
Construction and operation of non-residential buildings (Shopping malls, hotels;Office buildings; building for industrial production;warehouses; low and middle-income housing estates of single and multi-family buildings,etc)

Business :

Business Process Outsourcing

Securities:

Mortgage backed securities under the Investments and Securities Act

Mining:

Mining and processing of coal

Construction:

Construction and operation of water projects
Construction and operation of roads, railways and airports
Electric power generation,transmission and distribution, among other.
Construction of utilities generally.

Steps To Take To Obtain Pioneer Status Certification:

Make sure you apply within the first one year of doing business and that you fall within the categories described above.
Get your documents ready. Documents in this case include financial statements, certificate of incorporation and other incorporation forms, project documents such as Land Documents, Building drawings, Construction agreements, trademark certificate, title documents and invoices of assets of the company, Tax Identification Number, Tax Clearance Certificate, Bill of quantities and any other document pertaining to your projects.
Choose a date to make presentation to the Nigerian Investment Promotion Commission about your project. Furnish the Commission about your company as well as your financial statements.
Once presentation of your project has been made to the Commission, and NIPC is satisfied, you would then be requested to make payment of the application and due diligence fees. Make payment to the Commission.
At this stage, you would now make application to the Commission, attaching both the soft and hard copies of the relevant supporting documents. NIPC will review your application and conduct intense legal and compliance checks on your project, after which it fixes a date for a verification visit to your facility.
At this stage, once the NIPC declares your application successful, you will then be requested to make payment of the service charge. NIPC, thereafter, issues you with an Approval In Principle (AIP) once payment has been made, which you may collect in person, or have sent to you by courier. A copy of the AIP is forwarded by the Commission to the tax office and the Industrial Inspectorate Division.
The next stage is to complete an application form for Production Day Certificate (PDC) and submit same to the Industrial Inspectorate Division (IID) under the Federal Ministry of Trade and Investment alongside the soft and the hard copies of the necessary documents. IID will review the application and schedule an inspection visit to the site of the project for the purpose of determining the production day of the project.
Satisfied, the IID will send you a mail to that effect,as well as a copy of the Production Day Certificate, at the same time notifying the NIPC.
Once notified, the NIPC will issue you a Pioneer Status Incentive Certificate and send copies of the PSI Certificate to both the tax office (FIRS) and the IID
The whole process takes a minimum period of 25 weeks (approximately 6 months) to be completed.
You may however get yourself a tax consultant or a lawyer who does the work for you while you run your business.

Bottom Line:

Applying for tax exemption in Nigeria under the Pioneer Status tax incentive is one of the strategies organised businesses and startups should consider in their earliest years. This is because no matter how you how see it, your business must one day account for its tax returns; for instance when it is going on IPO, or about to be acquired by external investors who would prefer a more detailed documentation on the legal status of the business.

On the other hand, you can only imagine the heavy job of having to fulfil numerous tax and levy obligations within the first year of being in business, at the same time struggling to raise more capital or manage the fast depleting funds within your disposal.

So exploring the alternative of pioneer status tax incentive in your startup’s earliest years may be one of the ways to legally run away from taxation in Nigeria. This will allow you to worry only about the growth of your business.

Advice:

Find your startup a good tax attorney or expert in your startup’s earliest years so that the mistakes or lack of compliance with regulations and local laws in the past do not come back to haunt your startup in the future when your startup is ready for the next leap.

Charles Rapulu Udoh

Why Startups Fail to Generate Revenue Quickly — And What to Do Instead

October 3, 2019

The more revenue you have coming in, the better the chances you can raise (and not waste) investor funds. At startups, the difference between survival and running out of runway always comes down to taking our eyes off revenue.

We don’t want to do this, and we certainly don’t do it on purpose. But when we’re in the middle of the startup run, it’s pretty easy to fall into a trap of wasting time on feel-good tasks that feel like progress but don’t bring in any money.

No entrepreneur is immune to this trap, myself included. It’s part of the drive that makes the successful entrepreneurs successful.

I’ve founded, worked at, and advised a ton of startups, and each one tends to make the same mistakes where revenue is concerned. Whether a founder is launching their first company or their fifth, there’s one universal fact they can’t ignore: The path to success starts with survival.

The odds of survival depend on how fast you can generate revenue. The key to getting to revenue fast is to do nothing else but seek it out. Here are the easiest traps to fall into and how to sidestep them.

“Remember: Raising money is not the same as generating revenue.”

Mistake #1: Raising money before you’re ready

No one joins a startup to do something ordinary. But if you want to do something extraordinary, you’ll need a shitload of money to get it all done.

That doesn’t happen overnight. It happens in stages — sometimes long, mostly boring, often very scary stages. The problem is that we usually see, hear, and read about startups as overnight successes: Some kid genius has a great idea, drops out of college, works on it for a couple months, and then raises a few million dollars at a $1 billion valuation.

This is the trap: Like the lure of the lottery but with pitch decks and spreadsheets instead of Powerball tickets.

Before you try to raise money, you need to establish that what you want to build will generate revenue. And remember: Raising money is not the same as generating revenue.

Here’s what I usually advise to avoid this trap: You might estimate that you need a few million dollars to take a serious run at your dream company. Break that number into small pieces, and raise just enough to get to that first revenue-generating piece. As a guide, think about how much of your own funds you can scrape together to put into your company. Multiply that by 10 and go raise that.

But even before that, figure out how you’ll get to your first dollar of revenue, and then build your deck, financial model, and pitch on repeating that process over and over. Because this is what almost all successful entrepreneurs do anyway — they just take bigger strides. It’s also the reason investors love repeat entrepreneurs, because those entrepreneurs can say, “Remember that time I made all that money? I’m going to do it again but a little different.”

Unless you have already built a track record, you can’t say that to investors — and believe me, it’s not that simple even when you do have a couple exits under your belt. The more definitive your proof that revenue will be coming in, the better the chances you can raise (and not waste) investor funds.

Mistake #2: Building out the company before the product

From business plans to business cards, founders can spend a lot of time dreaming and building their company before the first dollar is made. Here are some of the things startups don’t need before going after revenue:

A website or social media presence.
A mission statement, brand statement, or logo.
A board of directors, advisory board, or management team.
A financial plan or P&L statement.
Office space, T-shirts, or stickers.

It’s not that a startup shouldn’t have these things. But how the initial revenue comes in will drastically alter not only whether those things are needed, but also what their true purpose is. A common example of this trap is building out an amazing web app and then realizing all the things paying customers actually need are three or four clicks deep.

I get that company and brand building are intended to establish legitimacy. The advice I usually give to avoid this trap goes like this: “You want to be an entrepreneur? Boom. You’re an entrepreneur. But no matter how cool your brand is or what your mission is or how far out your financial plan goes, you’re not really an entrepreneur until someone pays you money for something you’ve made.”

Everything will change when that happens, so make it happen early.

Mistake #3: Hiring or teaming up before the idea is fully formed

I can’t exaggerate the number of times a startup co-founder has come to me with the lack-of-revenue issue and it turns out there are a dozen people fighting over the strategy of a company that doesn’t have a single paying customer yet.

Look, running a startup can be hard to do alone. But for your own sanity, as well as for the integrity of your vision, it makes sense to get as far as you can down the revenue road on your own. You may not be a coder, but there are a number of SaaS tools that can get you to MVP. You may not be a financial expert, but most of us can wrangle a spreadsheet in the early days. You may not have sales magic, but if your idea is good enough, you’re probably the right person to get it into the hands of those first paying customers.

Yeah, it’s always easier building something with other people, except when it isn’t. There are priorities to juggle, schedules to wrangle, agreements to hammer out, decisions to get consensus on. Believe me, especially in the early days, it can be much less of a headache to go it alone.

Mistake #4: Mapping out the full infrastructure of the product before the first release

If we’re building a rocket, we first need to build something that manages to take off and land without exploding. How far it flies, its reusability, and what color it is don’t matter yet.

This is a trap that most repeat entrepreneurs get caught in, and I still fall for it. I know the true vision I want to build is not version one, but version five of my product, and the trap I fall into is trying to build all five versions at once. In other words, before I launch, I plan for every use case in every scenario with multiple features across multiple customer segments.

My advice to avoid this trap is something I still tell myself on a weekly basis: Narrow it down and get to a small feature set for a small segment with manual steps. Then collect money, figure out the priorities based on where the money comes from and what breaks, and move on to building the next feature.

Mistake #5: Focusing on innovation before execution

A startup without innovation is a small business. But innovation without execution is just a great way to earn a doctorate degree.

Obviously, the trap is worrying about innovation before building the product. Again, I raise my hand as having been guilty of this many times over, just not anymore. My advice is something I started doing about halfway through my career: If you want to innovate on a product, first you need to sell the product. If you have a new way to mow lawns, start by selling regular lawnmowers. If you can’t sell a lawnmower, you can’t sell the lawnmower of the future.

Mistake #6: Chasing a large number of customers before landing one

Almost everyone makes this mistake, especially during the early stages of their startup. The trap is trying to sell your minimum viable product to hundreds or thousands or even millions of customers at once, tailoring the marketing, the pitch, and the price to a target we think might be somewhere in the middle of the curve.

This seems like a good way to generate revenue quickly, but it’s really just a flawed way to try to generate a lot of revenue. It’s also crazy expensive. My advice is to start with one customer and sell the heck out of them. How that first customer gets sold, how they get onboarded, how they adopt the product, and when they stop using it will all be lessons to learn.

Learn from customer number one, then go to 10 customers. Learn from them, then do 20, and so on until you have definitive, repeatable, scalable revenue streams. Then go innovate, launch new versions, hire the team, build the company, and — if you’re still interested in growing — raise the money.

Joe Procopio is a a multi-exit, multi-failure entrepreneur. Building Spiffy, sold Automated Insights, sold ExitEvent, built Intrepid Media. M

Charles Rapulu Udoh

Before Letting People Mount Board Positions In Your Startup, Here Are A Few Things You Must Know

September 29, 2019

When you set up your startup company, be ready to allow more people onto it in the future. Indeed, once a startup resumes business and goes all out to look for investors, there is a high possibility that the ownership structure and stakes in the business might change. You may give up 30% of your ownership stakes in the venture to these investors. You may even be replaced as the CEO of the company or as a director on the board. How you allow these events to play out would not only determine the life span of your business but how fast the business accomplishes its goals.

Recall that Diamond Bank in Nigeria was recently acquired by Access Bank –much of the reasons for this is that Diamond Bank was not run properly, in accordance with the appropriate governance rules. So, running your startups would require that you put in place some strict measures of checks and balances among its management and on the affairs of the company to ensure that it does not die before it is due.

In Nigeria, the Code of Corporate Governance (recently updated to 2018) sets a guide on how you can effectively run your startup to ensure that it lasts for a reasonably longer time.

The essence of the Code of Corporate Governance is to ensure corporate accountability and business prosperity.

These rules do not have boundaries as they represent the best practices around the world.

Below Are A Few Points To Note About The Nigerian Code of Corporate Governance As It May Affect Your Startup

1. Your Startup Can Appoint Any Number of Persons To Be On Its Board

What this means is that you can appoint two or one hundred persons to sit on the Board of your company. The Board of Directors of company help in the management and running of the affairs of the company. In selecting Board Members for your startup company, you have to ensure that there is:

(a) Appropriate mix of knowledge, skills and experience, including the business, commercial and industry experience needed to govern the Company; (b) Appropriate mix of Executive, Non-Executive and Independent Non-Executive members such that majority of the Board are Non-Executive Directors. It is desirable that most of the Non-executive Directors are independent; c) need for a sufficient number of members that qualify to serve on the committees of the Board; (d) need to secure quorum at meetings; and (e) diversity targets relating to the composition of the Board.

2. No Member of The Board Has The Right To Dominate The Board’s Decision Making

To this effect, the positions of the Chairman of the Board and the Managing Director/Chief Executive Officer (MD/CEO) of the Company should be separate such that no person can combine the two positions

Again, the Chairman of the Board should not serve as chairman or member of any Board committee of your committees. The MD/CEO or an Executive Director should not serve as chairman of any Board committee. A person (or group of persons) who is not a serving Director of the Company should not exercise any influence or dominance over the Board and/or Management. Such a person or group of persons would be deemed a shadow director as defined by extant laws

3. You Can’t Be A Director In Another Company Without Disclosing it in The Present Board.

The Code states therefore that Prospective Directors should disclose memberships on other Boards, and current Directors should notify the Board of prospective appointments on other Boards. This information should be kept current by serving Board members.

The Board should also consider the disclosed directorships, taking into account the number of other directorships and the responsibilities held, and determine whether the individual can discharge his responsibilities and contribute effectively to the performance of the Board before recommending such a person for appointment or continued service

Consequently, Directors should not be members of Boards of competing companies to avoid conflict of interest, breach of confidentiality, diversion of corporate opportunity and divulgence of corporate information.

4. Directors Cannot be Appointed Without Informing the Shareholders

To this effect, Shareholders should be provided with biographical information of proposed Directors to guide their decision. Such information should include: a) name, age, qualifications, country of primary residence and the ownership interest represented, if any (b) whether the appointment is for ED, NED or INED, and any proposed specific area of responsibility or Board committee roles if any; © work experience and occupation; (d) current directorships and appointments; (e) direct and/or indirect shareholding in the Company and/or its subsidiaries; and(f) any other relevant information. Consequently, the Code requires the Company to state the processes used in relation to all Board appointments in its annual report.

5. The MD/CEO Or An Executive Director (ED) Should Not Go On To Be The Chairman Of The Same Company

If in very exceptional circumstances the Board decides that a former MD/CEO or an ED should become Chairman, a cool-off period of three years should be adopted. In any case, the Chairman of the Board should be a Non-Executive Director and not be involved in the day-to-day operations of the Company, which should be the primary responsibility of the MD/CEO and the management team.

6. The MD/CEO Should Not Be A Member Of The Committees Responsible For Remuneration, Audit, Or Nomination And Governance.

The Code also states that MD/CEO should declare any conflict of interest on appointment and annually thereafter. In the event that he becomes aware of any potential conflict of interest at any other point, he should disclose this to the Board at the first possible opportunity. Actions following disclosure should be subject to the Company’s Conflict of Interest Policy.

7. The Presence of An Independent Non-Executive Director In Your Startup Is To Bring Objectivity In The Running of The Affairs of The Company.

To this effect, An Independent Executive Director is a Non-Executive Director who does not possess a shareholding in the Company the value of which is material to the holder such as will impair his independence or in excess of 0.01% of the paid up capital of the Company. Again, the Independent Executive Director is not, or has not been an employee of the Company or group within the last five years;

He/she is not a close family member of any of the Company’s advisers, Directors, senior employees, consultants, auditors, creditors, suppliers, customers or substantial shareholders; He/she does not have, and has not had within the last five years, a material business relationship with the Company either directly, or as a partner, shareholder, Director or senior employee of a body that has, or has had, such a relationship with the Company; He/she has not served at directorate level or above at the Company’s regulator within the last three years.

8. Where The Startup Secretary Is An Employee Of The Company, He/She Should Be A Member Of Senior Management

Where such is the case, the secretary should be appointed through a rigorous selection process similar to that of new Directors.

9. The Board of Your Startup Shall Hold Its Meeting At Least Once Every Three Months in a Year.

The consequence of this is that the attendance record of Directors should be among the criteria for the reelection of a Director.

10. Only Directors may be Members of Board committees of the Board of Your Company

However, members of senior management may be required to attend committee meetings. Committees your company may have include:a) Committee responsible for Nomination and Governance b) Committee responsible for Remuneration c) Committee responsible for Audit, Committee responsible for Risk Management

Each of these committees should be composed of at least three members

11. The Board of Your Company Should Be Evaluated At Least Once In Three Years.

This process is called Board Evaluation.

It is for the Board to establish a system to undertake a formal and rigorous annual evaluation of its own performance, that of its committees, the Chairman and individual Directors. This process should be externally facilitated by an independent external consultant .

Bottom Line

These codes may be applied once your startup takes up fully and begins to accept equity investments from the general public, or once it begins making some substantial profit and growth. These rules do not have boundaries as they represent the best practices around the world. For the fuller rules click here.

Charles Rapulu Udoh

How Giraffe Played The VC Game (And Won Funding)

September 26, 2019

Local start-up Giraffe has accomplished what many entrepreneurs would consider impossible: Not only did it win the Seedstars World’s Best Global Startup Award, it has also secured funding from Silicon Valley VC firm Omidyar Network. Here’s how the founders have managed it.

Vital Stats

Players: Anish Shivdasani and Shafin Anwarsha
Company: Giraffe
Established: 2015
Background: Giraffe is a fully-automated mobile recruitment agency service that enables businesses to recruit medium-skilled workers quickly and affordably.
Visit: giraffe.co.za

Most start-ups would kill for the sort of trajectory Giraffe has enjoyed over the last 18 months. Since launching early in 2015, the company has enjoyed solid growth and traction, received some great PR, walked away with an international award and managed to secure funding from a Silicon Valley VC firm.

This is all incredibly impressive, and there’s no doubt that most start-ups would love to emulate Giraffe’s success. So how have company founders Anish Shivdasani and Shafin Anwarsha managed to get the whole world talking about Giraffe? Here’s their advice on attracting VCs to your start-up.

Solve a real problem

“We looked at the South African landscape and identified unemployment as a real problem. Then we asked ourselves how we could use technology to address and remedy the problem in the short term, if not solve it,” says Anish Shivdasani.

“We did this for two reasons: Firstly, we felt that there was a certain obligation to try and solve a real problem that the country was dealing with. Secondly, we realised that by looking at an emerging-market problem, it was not something that Silicon Valley start-ups would be looking at. We wouldn’t be competing with large and well-funded companies.”

So what does Giraffe do? Essentially, it allows jobseekers to upload a CV to the company’s mobi site for free. When employers need to hire, they simply submit a staff request at www.giraffe.co.za and algorithms sort through the thousands of CVs in the database and automatically identify, contact and schedule interviews with relevant candidates.

“We wanted to make the hiring process as easy and hassle-free as possible, both for employers and jobseekers. This meant coming up with an innovative solution. We created a system that allowed a CV to be completed quickly, but that didn’t require a lot of text. The system navigates a jobseeker through various options, ascertaining his or her skills and experience. So you don’t need to deal with hard-to-understand text,” says Shivdasani.

Lesson: Come up with a truly innovative product or service, and you’ll find that funding isn’t nearly as hard to come by as people often say. Build a solid company that addresses a real problem, and funding will find its way to you.

Bootstrap as much as possible

Unless you’re a hot Silicon Valley start-up with unicorn potential, you’re unlikely to attract funding until you’ve shown some traction.

Shivdasani and Anwarsha didn’t even think about funding during the early days of Giraffe. “We were focused on getting the platform and the business going,” says Shivdasani. “We had put our own money into the business and managed to give ourselves 12 months of runway. For that period, we didn’t give any thought to VCs and funding.”

“We also found that VCs will usually be reluctant to invest if you haven’t bootstrapped for a while,” adds Anwarsha. “They want to see that your company has some traction, and they want to see that you’re invested — that you’ve put your own money into the business and that you are committed to making it work.”

Lesson: Bootstrapping your business is a good idea. The best way to build a sustainable company is to spend as little money as possible up-front and get cashflow-positive as quickly as possible. Depending on funding for survival is risky. What if the money falls through? Create a business that can sustain itself. Rely on funding only for scaling.

Let the money come to you

“While we bootstrapped early on, we also met with investors. These were mostly people we had been put in contact with via our own personal networks,” says Shivdasani. “Importantly, we never asked for money. In fact, to this day, we haven’t asked for money. We simply introduced ourselves to investors and placed Giraffe on their radar.”

By introducing potential funders to the company, but not asking for money, the founders of Giraffe let the company’s performance speak for itself.

“We simply stated our intentions when we met with investors. When we saw them again six or twelve months later, we could tell them that we had followed through on our plans. We had attained some real traction, which made us worth investing in,” says Anwarsha.

Lesson: It is a stark reality of the start-up scene that the companies without much of a need for funding are usually the companies that attract it. This is hardly surprising. Investors want to fund companies with growth potential, not start-ups struggling for survival. So, focusing too much on attracting investment can be counter-productive. Instead, get the fundamentals right. Build a sustainable business. If you do that, the money will eventually come to you.

Don’t underestimate the value of PR

“While working together in the boardroom, I received an email from SeedStars to take part in the South African leg of its global start-up competition,” recalls Anwarsha.

“Anish told me to forget about the mail and get back to work. We were very careful not to be distracted from our primary goal of building the company, but I was keen to give it a try. Anish said it was okay, but there was one condition: Make sure you win.” Anwarsha did win, and it had a profound and immediate impact on the company.

“Until that moment, we had underestimated the impact that good PR could have,” says Shivdasani. “I was interviewed by John Robbie on 702 for a few minutes. Suddenly our servers were being overrun with new jobseekers and employers. It made us realise that entering things like start-up competitions is a good idea because of the PR it can generate.”

Lesson: Marketing can be useful, but nothing compares to great PR when trying to introduce your start-up to the world. Winning a start-up competition — of which there are no shortage these days — is a good way to do it. Another is to contact media houses and pitch your story. It’s important, though, to focus on the problem you are solving. Journalists are particularly interested in companies that are either innovative, or working at solving social issues.

Don’t just take the money

It’s very hard to say no to VC money, but before you grab anyone’s cash, it’s worth taking a moment to consider the long-term implications.

“It’s important to get on with the people who will be investing in your company. You need to be able to work with them. We were approached by another investor as well, but we ended up going with Omidyar Network — who had approached us after we won the local SeedStars event — because the firm was asking the right questions. They grilled us hard, but we realised that as an impact investor, they could bring value to the business,” says Anwarsha.

Giraffe has also been careful in how much investment it has actually accepted.

“After winning the local SeedStars competition, I travelled to Switzerland to represent Giraffe in the global event,” says Anwarsha. “To my complete surprise, I won. It was a surreal experience.”

The prize came with a maximum investment from SeedStars of $500 000, but Giraffe was reluctant to take it.“We had already closed a round of funding and had enough runway for at least 18 months,” says Shivdasani.

Lesson: Equity in a start-up can be cheap, and many founders have kicked themselves for giving away too much too soon. That’s why it’s important to keep operating with that bootstrapping mentality, even if you’ve received some investment. You want money to last as long as possible. The less money you need, after all, the less of your company you need to give away.

Take note

If no one is willing to invest in your idea, you should take another careful look at it. Focus on solving a real problem and the money will usually follow.

GG van Rooyen is a Senior Copywriter at PageFreezer Software, Inc.