Startup - Afrikan Heroes

Learning From TransferWise, The Most Valued Startup in Europe

June 13, 2019

Barely 8 years since its life began in 2011, TransferWise, the UK-based money transfer startup launched by Kristo Käärmann and Taavet Hinrikus with headquarters in London and offices in a number of cities including Tallinn, New York, and Singapore, recently reached a $3.5bn valuation and made 33 new millionaires of its workers. Here are a few lessons to learn from Europe’s most valuable startup and its recent valuations.

TransferWise Is Partnering With Its Employees To Grow Its Value

Indeed, this is unlike other businesses where employees are expected to show up at workplaces, work, go and get paid. Over 1,600 employees at Transferwise collectively own around 2 million vested options, according to last year’s company filings. The latest valuation means that all these employees are now worth $250,000 per employee on average. Collectively, TransferWise’s employees and its alumni (so-called “Wisers”) are now armed with more than $70m to start up their own ventures. In total, 33 new millionaires from its employees’ figures were made millionaires. This brought the total number of employees or investors with six-figure holdings in the payments company to more than 150.

Now the startup is not insisting that the employees must stay back or reinvest their new wealth in the business. is encouraging those employees to go and start up their own ventures.

TransferWise’s Head of Recruitment, Ben Craig, said the startup actively encourages employees to channel their “entrepreneurial mindset” into other projects, through initiatives like a six-week paid sabbatical after four years with the company, even though this can lead to “Wisers” leaving TransferWise to focus on starting their own businesses.

“Our old employees are totally advocates of our brand and we’re advocates of their companies as well,” he says, referencing formal partnerships between TransferWise and Plum, and another potential partnership with Dataminer.
“They’ve used our offices, we use their offices, we’re all in constant communication,” Craig adds. “We encourage employees who go out and start their own companies to lean on the skills of the two entrepreneurs who founded TransferWise, and to use the expertise of everyone who has worked with us over the last seven years to TransferWise to where it is today.”

The result of this is that the startup has now become the most valuable startup in the whole of Europe with its recent valuation at $3.5bn. Hundreds of its employees and early backers sold shares to new investors and existing stakeholders. Already more than a dozen former TransferWise employees have gone on to start their own businesses including Victor Troukoudes, chief executive of personal savings AI assistant Plum.

The wider diffusion of wealth to employees and investors is set to be a shot in the arm for the wider European ecosystem, as typically money from a successful startup is plowed back into other startups.

TransferWise Is Build On A Model So That It Not Only Allows Its Customers To Transfer Funds But Also To Buy Shares On Stock Exchanges

TransferWise allows its customers to open an online brokerage account and invest their savings in stocks of companies. Opening an online brokerage account is just as quick and easy as opening a digital bank account. The startup also allows its customers to find a cheap and reliable online broker via our broker recommendation tool.

For users of its online transfer services, there are 44 currencies they can use to exchange money between, within the app. They can also top up their Transferwise accounts in 18 currencies. The startup is also available in 144, almost all countries. At Transferwise, you can open an account for free and also maintain your account for free. There is no monthly cost to that.

Once your account has been opened, you can have your Transferwise ATM card delivered to your address for free. Unlike traditional banks, the startup does not charge any cost for the card. In fact, withdrawing money with Tranferwise from any ATM is free up to £200 / month and costs only 2% above this amount.

Also transferring money in the same currency as your Transferwise account has a flat fee. This will vary depending on your currency. The international transfer fee is €0.5–2.

Its only shortcomings are that it offers no interest on your savings; you cannot set up direct debits; overdrafts are not possible; joint accounts are also not available.

In short, TransferWise charges less than 1% on many currency transfers, compared to what the World Bank estimates is an industry average of more than 7%, thereby undercutting the fees charged by the big banks.

All these make TransferWise an uncommon success. Unlike many of its fintech peers, it has registered two straight years of profits, posting £6.2m in post-tax profits for its fiscal 2018 on £117m in revenue.

TransferWise Has Successfully Shown A New Way Startups Can Succeed Without The ‘Distraction’ of IPO

The founders of Transferwise, Taavet Hinrikus, and Kristo Kaarmann, said this week that they sold “much less than 20%” their own holdings, which are worth $1.3bn at the new valuation. Other big shareholders include Andreessen Horowitz with $65m worth and IA Ventures with $267m worth.
Hinrikus said the $292m sale would allow some of the company’s earliest backers to realize the substantial gains on their investments, without forcing it through the “distraction” of an initial public offering.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Messy Stores Kill Bricks And Mortar Businesses More, Not E-commerce

June 11, 2019

Even though e-commerce is seriously gnawing at physical shops. Physical shops with a messy environment would most definitely get a little crumb of what is left. Of the 70% of consumers surveyed in a study commissioned by ServiceChannel, a facilities management platform, and who said they had once experienced messy stores, over two-thirds have walked out of stores because of the way they looked.

The study suggests that struggling retailers who neglect stores to cut costs hasten their demise by turning off shoppers. The survey was carried out on 1,521 consumers and 70% of them said they recently have had a negative experience with a messy store.

Over two-thirds admitted they have walked out of stores because they were messy or disorganized.

Four out of five shoppers said they would rather have a clean store than ones with the newest tech, and two-thirds said retailers are forgetting the basics—like clean floors and well-stocked shelves—in the rush to add tech.

“The vast majority of purchases are still being done by people walking into a location. And their experience of that location has never been more important,” Buiocchi, the CEO ServiceChannel said in an interview.

“If you look at folks like Allbirds or Warby Parker, Bonobos or Soul Cycle or Shake Shack, their locations are so comfortable and well laid out and so well maintained. You would never walk into a Warby Parker or a Shake Shack and say ‘Man this place is messy.’ Or the lights are dim or it’s too cold in here. They just don’t let that happen.’’

ServiceChannel is in the business of selling software and services that allow retailers to manage store maintenance, connect with and pay contractors, and track invoices, so it is no surprise that it is touting a survey that concludes store cleanliness is crucial. But he has a point that is often overlooked by retailers.

With ServiceChannel, retailers can book contractors and manage maintenance jobs on mobile phones.

“Much like when you get an Uber or Lyft ride and the entire ride is digitally recorded, the transaction is digitally recorded so someone 3,000 miles away can go fix a toilet for you at a Banana Republic and you will know based on the GPS coordinates when that person got there, how long they stayed, whether they showed up on time, and they can send you a picture,” Buiocchi said.

ServiceChannel is seeing that many of the new online brands that are opening stores are quick to recognize the value of rigorous maintenance and are signing up as customers.

“There are the people that get it, and there are the people that don’t get it,” Buiocchi said. “Five years from now what are the chances that the people who don’t get it are going to be in business?”

Buiocchi says reports of a retail death end are overrated. As stores close, new retail disruptors are opening locations and expanding.

“Good progressive retail is investing in their brick-and-mortar experiences and enjoying the benefits of that,” he said. “Bad retail is not and they’re unfortunately being penalized for that.”

In all, messy stores can be a deal breaker, more so today than ever before.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Swvl ’s Next Bus Stop Is Lagos Nigeria And It Is Next Month

Lagos residents will now have one more online ride-sharing option to choose from by July this year. Egypt’s ride-sharing startup SWVL has announced plans to launch in Lagos, Nigeria in July. 5O buses would be on the road from the date of the launch, according to Swvl’s Country General Manager in Nigeria. This is expected to be a huge challenge to existing ride-sharing options, such as Uber, Bolt, and ride-hailing motor-bike alternatives.

SWVL expects the surging population of Nigeria’s most populous city to be on its side. The startup is already in Kenya and Egypt and has plans to expand to Uganda soon. Other target countries include Thailand and Vietnam, and possibly operations in seven world mega-cities by the end of this year.

Barely 2 years in existence, it is the most funded startup in Egypt.

Swvl’s Business Model

SWVL’s goal is to make it easier for Egypt’s residents to book bus rides at a fixed rate on existing routes.
Users schedule trips, pay online or in cash and are given virtual boarding passes.
Even with fierce competition from the likes of Buseet and Uber vying into premium public transport service, SWVL’s application has been downloaded for well over 360,000 times on Google play store and Apple iStore.
The platform completes 100,000 rides monthly.
It was the first company to introduce the service in Egypt in 2017 before Careem and Uber joined the sector late last year.
Swvl is however different from its competitors because of its series of partnership deals. The startup’s credit facility agreements with Nasser Social Bank and EFG Hermes Bank, and after-sales support and maintenance services with Ford-trained technicians are some of these moves.
What Egyptian SWVL users think about the startup is its priority on affordability, comfort, and safety.

Not Afraid Of Competition

Although Swvl is the first riding app to offer bus services in Egypt, giant transportation startups Careem and Uber have recently offered their own bus services.

Mostafa Kandil, Egyptian CEO and founder of Swvl, has however noted that the joining of Uber and Careem to the industry has not influenced Swvl’s growth asserting that they have witnessed remarkable development since the two competitive players have launched.
In 2018, the startup was valued at nearly US$100 million, becoming the second Egyptian company after Fawry to reach these figures.

The startup has recently signed an agreement with Ford motor company to deploy more cars on the road. Ford Transit, which the startup intends to use is already the third best selling van of all times. SWVL is already in possession of about 100 Ford Transits. Hazem Taher, SWVL’s Head Marketing Manager, said the vans were ready to go and they’re excited to push them on SWVL’s route.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

South Africa: e-health Startup SmartBlade Raises $635k

June 10, 2019

E-health startup, SmartBlade has raised a ZAR9.5 million (US$635,000) funding round from the Savant Venture Fund to take its solution to market.

What SmartBlade is All About

SmartBlade is a video laryngoscope that uses a smartphone as a camera and communications device.

Once SmartBlade app is loaded onto the smartphone, it will allow the user to access the camera in the laryngoscope, which in turn allows for video viewing, storage, and transmission. In other words, the app will help users to see videos of their larynxes.

A laryngoscope is an instrument for examining the larynx, or for inserting a tube through it.

The company has been incubated at the Cape Town-based hardware incubator Savant over the past few years and has now become the first recipient of investment from the Savant Venture Fund, launched after the incubator itself raised funds, from the South African SME Fund.

SmartBlade will use the investment, which comes in the form of a convertible note, to take its innovation to market and deliver on the global interest and demand it says it has seen for the device.

“Following the successful launch of the video laryngoscope, the company will look to utilise its smartphone endoscopy expertise to bring associated medical devices to market,” Savant venture fund manager Nick Allen said.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

How South Africa’s Intergreatme Raised Over $2 Million Through Equity Crowdfunding

Looking to raise capital for your startup through equity crowdfunding? No loans? Just some hard currency from some money messiahs? That is what South African businesses are turning to now. Intergreatme has recently succeeded in raising over R32.7 million ($2.2 million) by simply putting up an online request for equity funding on Uprise.Africa and getting overwhelmed by public contributions. This was a big moment for the startup looking to help ordinary people get rid of the daily pain associated with submitting forms and documents through an innovative technology platform.

The startup was founded by a team of young South Africans three years ago and is now valued at about R120m. The team envisions a world where personal data can easily and securely be shared among a host of applications. As long as an activity requires a person’s information, Intergreatme sees a market.

How The Startup Scaled The Hurdles and Raised The Funds

Narrating how the startup raised the funds through equity crowdfunding, Intertreatme CEO said in a recent interview:

We had no idea how successful it was going to be. We thought it was going to be like a 60 day campaign of climbing Mount Kilimanjaro. We needed to get 250,000 that day and we hoped to just do some cold calls. I printed out my full contact list on my phone and my whatsapp list, my email list, and we thought it’s going to be a campaign. But we had no idea that the demand was more than that. We thought that we could raise the 24 million and we thought that we were going to procure a common amount ever.

For startups looking to use crowdfunding to raise capital, he says they are not just going to put a pretty video online and hope people come and invest. They need to do the hard job behind the scenes.

‘‘There are billions and trillions of dollars of money waiting to be deployed,’’ he says. ‘‘People get paid money to invest money. But your business fundamentally needs to be right. Your team needs to be right. What you plan to do needs to be right. So do those things right. And then you can just sample your user base. Just run a poll on Facebook or Instagram or Twitter, just saying, ‘‘Hey, if we rank car, would you invest? And if so, how much will you? You’ll get, you will get an answer. I don’t think you need to do a lot of work to get those answers.

On the pattern of investing, he said about 402 people turned up and contributed to the startup through equity crowdfunding.

We had minimum commitment of 1000 rand and a maximum commitment of 5 million. We had about five, five millions. Wow. We had a couple of millions. It was so cool. We didn’t expect it. And it was just people. We started by saying, if you’ve used our technology before and you sure that you had the wow moment, would you like to invest in this? Tick this box, if you want. But ultimately they, they invested in us as people.

Before that, we had a very successful launch party, which I think was key to the fundraising, where we had a private donation from our whatsapp list. This was two weeks before that. And we’ve got about 120 investors there. And then we had about 250 people at our launch party when the startup was first started. We used that time not to sell the technicalities of the business, but to sell out emotional stories as founders to show that it’s normal for us to overcome unrealistic odds.

He said the crowd bought into the human stories and not the technicalities.

‘‘We said it’s normal for us to overcome adversity and challenges, that it doesn’t matter what comes our way. It’s normal for us. We will find a way to succeed. And so people bought into the emotional story. They always say, you shouldn’t invest in a business. You should invest in people. And yeah, basically people bought the founder’s shares, in the founder’s energy, in the founder’s vision. And so literally everyone in that room at the launch party made us the first 27 million. And so we sold apps 27 millions in the first 72 hours and there were just a frenzy of people trying to jump on and grab the last time.

I think if you look inside now, it is 32 million, 409,000 rands. So they’ll have to be some refunds for some people who just came in and about a hundred people came in on the last day, like before three o’clock.

On Why They Choose Uprise.Africa to Raise The Funds

He says Uprise.Africa has direct exposure to all the upsides and downsides of the business

‘‘I didn’t know who they were,’’ he says. ‘‘We made it a conference. I related with its CEO as a founder. She said cool. They have a framework and are licensed to do it. So effectively it’s as good as a payment gateway. So if you’re running an ecommerce business and pay fast or need paypal or visa, mastercard go to them for a widget. They can accept payments, but they’re relying on how good your business is .

One of my favorite little proverbs is if a bird is sitting on a tree on the branch, it’s not worried about the branch snapping. It has faith and confidence is in its wings. Crowd funding is an easy way to take money from the crowd, but there’s a context to it. If we show the analytics of the money we raised, everyone is within one or two steps of our network. And so accountability is really your socially accountable tool to your community and your network. If they believe in you, you’re not going to have a much bigger responsibility to them.’’

He says Uprise.Africa will own a 25% stake in the startup.

‘‘They will also have an independent board member. Uprise.Africa will be representing the crowd and yeah, fix me. But there are voting rights and things. So Uprise.Africa has the stake on behalf of the people who invested in the initiative. I think they manage it for about 12 months or so and then they give it to us. They have also put automated technology in place for the share registers and the certificates and the reporting.’’

On Why More Black Women Invested In The Startup Through The Crowdfunding

‘‘I think maybe it’s because we spent a lot of time with Uber drivers and optimistic ladies and all security guards and receptionists. They used our technology and they’re like, sweet, I can get my license renewed. Daily visits to the management system are amazing. So it is just crazy for us because we actually thought that we were so proud that we managed to get 30% black female ownership. They were like, this company’s plan is going to dilute that potentially down to 22%. We had signed agreements to become level two. And so it was a concern. It was just, again, a miracle from the universe that it actually ended up swinging way better than we could give. I’ve imagined it. So I think that’s the beauty of opening it up to the crowd. If you’re focusing on one or two high net worth individuals, you’re kind of going for a specific target.’’

Other Startups In South Africa Are Also Resorting To Crowdfunding

Crowdfunding is having a moment in SA. BackaBuddy, the funding project used to raise money for service station attendant Nkosikho Mbele, for example, has so far generated over R107 million for various causes.

Uprise.Africa CEO and co-founder Tabassum Qadir say the company is in negotiations with one of the new share trading exchanges to have equity crowdfunding investors trade their holdings on its platform.

‘‘Although crowdfunding has long been used to support start-up ventures, equity crowdfunding is different as it enables people to become direct shareholders in a venture, ’’ Qadir says,

This is in contrast to traditional crowdfunding services that generally only allow contributors to get new products from the ventures they support for free.

To ensure that the interests of investors are protected, Qadir says prospective companies need to be vetted by its investment committee. Once approved by this committee, a designated Uprise.Africa board member will act as an overseer of investors’ interests in the company.

In exchange for about R24 000, Uprise.Africa will conduct due diligence and organize a 90-day ‘campaign’ to build interest in the company.

Qadir says using crowdsourcing to support start-up businesses is widely seen as a way to drive economic development. The World Bank, for instance, estimates that the global equity crowdfunding sector will be worth more than $93 billion by 2020.

Without crowdfunding, prospective investors either have to wait for a company to be listed on the JSE or invest at least R100 000 into a venture equity firm’s portfolio to get a stake in emerging businesses. With equity crowdfunding, however, for as little as R1 000, they could get a stake in a company as it is about to enter a fast-growing stage.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

A Guide On Pitching Startup Deck To Secure Venture Capital

June 9, 2019

Even for strong startups, fundraising is a marathon that requires near constant attention for 8–12 weeks. The process is punishing, and riskier than you might imagine. You need to prepare for it as seriously as you would for a race.

Prepare for rejection. A lot of it. A promising startup will get 17 or 18 “no’s” for every “yes.” These brush-offs often have less to do with the startup in question than idiosyncratic context or concerns for each VC. Still, it stings. Don’t get demoralized.

To make matters worse, the stress level will ratchet up every week as inevitable “passes” pile up. Many deals are closed sub-optimally simply because the founder is ground down by the process, slightly panicked, and wants to be done with it. You can avoid this fate!

There’s been a lot written about how to prepare a deck, less about the mechanics of running the process. Here are a few thoughts, with a special focus on how to use your current investors for leverage during this taxing time:

???? Build a list

Create a Google Sheet/Airtable. Populate it w/ all the firms you want to pitch. Then step back and ask *why* you’re pitching these firms? Do they do deals at your stage? In your space? Any portfolio conflicts? Figure out which partner would be the best fit.

✂️ Curate the list with your VCs

Founders often want to meet with celebrity VCs. An angel might push for a few friend’s funds that aren’t a logical fit. Cut these out of the list. Meetings with “bad fits” will create more work and lead to extra stress + more rejection.

???? Fixate on leads

This is very important: Don’t set up meetings with firms that don’t lead rounds. If you find a lead, you’ll have no trouble filling out a round. Conversely, a lot of lukewarm interest and no lead makes a deal seem weak and process seem endless.

???? Focus on this round — Only this round

You may feel pressure or have intros to meet with growth firms who are more likely a fit for future rounds. Accept the intro, but only with the understanding that you’ll schedule these meeting *after* you close this round.

???? Make one more cut

“It’s just one more meeting…” you’ll say about each less likely intro. Multiply that times ten and you’ll waste serious time and invite more demoralizing rejection. Important not to get distracted or create needless noise.

???? Prep an intro package

Write a “forwardable” email that includes:

A 1–2 paragraph teaser about your startup
5–10 bullet points about your company: traction numbers, press clips, notable milestones
A deck/Docsend link

????️ Choose the best intros

Choosing who will make the intro is important. You need to balance closeness to the target with cachet. E.g. An intro from a successful entrepreneur is better than one from your VC. But your current VC is a better intro than a service provider.

Image result for startup pitch deck — successful startup pitch decks

????️ Schedule ~10 Meetings

Send invites out in batches by order of preference & try to fill 10 slots as a first wave. Send out further tranches as you get “no’s” from potential investors. More isn’t necessarily better — it’s often worse and it can make a focused process hard.

???? Pad the schedule

You don’t want to cut a productive meeting short because you’ve got to rush out to your next appointment. Likewise, don’t create a bad first impression by being late to a meeting because of a traffic jam or your previous meeting running over.

⚾️ Practice your pitch

A middle-school production of Mary Poppins will rehearse for weeks to impress a group of parents. You won’t impress the best VCs in the world with an unpracticed pitch. Set up 2–3 dress rehearsals of your pitch with friendly investors and advisors.

???? Dress Rehearse

Treat these practice sessions seriously. Avoid “yadda-yaddaing” as you walk through the deck. Ask your VCs to bring some fresh ears to the pitch. Even practice things like talking while getting your computer connected and, of course, handling objections.

???? Sequence investors

Pick a few of your lowest ranked investors and make those your first meetings. Your first pitch shouldn’t be to your dream investor. Even with plenty of practice, nothing beats live feedback. You’ll likely need to burn a few meetings to get in sync.

???? Employ the buddy system

Impressions are subjective, so it’s helpful to have at least two co-founders at the pitch to discuss the feedback from the meeting. Make sure both of you contribute to the pitch and the vibe between you reflects the positive energy at the company.

???? Embrace “Objection Response”

Be methodical about addressing critiques of the deck. Incorporate pushback into your deck. If a point won’t fit in the main flow, build an appendix slide. Every objection should provide data that gets you closer to a “yes.”

???? Report objectively

After you’ve done a few pitches, reconvene with your current VCs. Use this opportunity to rejigger your deck/reconsider your narrative. Remember, try to provide as objective a report as possible — your VCs’ advice will only be as good as your account.

????️ Shield your team (and VCs)

Inevitable rejections will alter the way the startup is perceived by employees and investors (and even yourself). Be honest, but spare your team the ups, downs, and gory details. Stay positive. Even the best companies face tons of rejection!

????️‍♂️ Use backchannels

Ask your VCs to check-in with the investors you pitch. You’ll rarely get straight feedback, but there will typically be some actionable insight that the VC wouldn’t share directly with an entrepreneur.

???? Nurture all interest

Make every potential investor feel like a VIP, even those lowest on your list. It’s often surprising who ultimately does the deal. Nothing is worse than ghosting a VC and coming back when no one else shows interest.

????️ Race to a term sheet

This is the least helpful advice, but the most important. Once you have one term sheet, everyone is on the clock and has to make a decision. If you sense someone is close, figure out what you need to do to close the deal. However…

???? Never ever mislead …

If you tell a VC you have a term sheet or a verbal commitment, and you don’t, you can destroy credibility and the possibility of a deal — also, your broader reputation will take a major hit.

There are a million nuances and edge cases, and no tweetstorm can come close to preparing you for the exhaustion of fundraising. That’s why it’s important to have aligned VCs and to prepare as you would for any other endurance event.

The above opinion is the thought of the Managing Partner at Founder Collective, Entrepreneur and Investor Eric Paley who recently shared this in a tweetstorm. This is a dimension to all the best opinions out there on how to secure a VC for your startup. We thought this must be helpful to you. You may share with any startup you know preparing for a pitch event.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Taking Your Startup To A Foreign Country: What You Need To Know

June 8, 2019

The first few years of your startup are very crucial to its survival. After this stage, an ambitious startup may consider launching operations in a foreign land. Usually, you may have one reason for doing so: you want the business to grow and attract more investments. It is always a case of the bigger the merrier. Expanding to a foreign territory would also present your startup with a big chance to sell your business to a foreign investor, or launch a franchise deal. But the crucial question is usually: when is the right time to set up a foreign office for your startup? We would consider these points in bits, from time to time, about what strategies, when and how to carry on your startup business to oversea countries.

Why Do You Really Need To Move Your Startup To A Foreign Land?

This is a crucial question every startup owner must ask himself/herself. A key reason is usually diversification. In fact, the world is becoming more accessible than ever before. At a click of a button, you would know how the business environments of most countries are. With diversification, you most probably can’t put your eggs in one basket. With a more open world, why would one choose to invest everything they have in one country? Diversification is so important that you should look for investment opportunities beyond your own geographical borders. Take, for instance, doing business in one country with high volatility may affect the value of your stocks in that country. At the same time, some other countries may have a lower rate of volatility. Most investment professionals agree that, even though diversification does not guarantee against loss, it is the most important component of reaching long-range financial goals while reducing risk.

Again, take it or leave it, your location would affect whether your startup would be bought by an investor or not. The picture below shows that some countries get billions of more funding than others. This shows that investors are preferring some countries and even continents over others. Again, investment in emerging market countries carries with it certain “emerging market risks” such as currency fluctuations, expropriation scaremongers, social unrest, crime, among others. Click here to get a view about which countries pay the least corporate tax in the world.

Take a look again at this chart below.

More businesses in South Africa, from the chart above, are expanding to other offshore countries. In fact, a survey released by the Franchise Association of South Africa in 2018 shows that with most independent businesses having a 90% failure rate in the first two years of being in business, the average number of years franchisees are in business has remained consistent at 10 years — with 36% in business for more than 10 years and 67% for more than 5 years.
From the above, it has become obvious about how a future Mark Zuckerberg will suddenly put an end to his coding when he thinks about building the next Facebook in Nigeria or Sudan. However, one thing which makes most businesses successful is that most of the times, they are more willing to take the risk even in an adverse environment, such as in these countries mentioned above. But the risk also has to be a wise and calculated one.

See Post: Foreign Investors Dump More Nigerians

Why Move Out?

Here are a few occasions on which it is extremely important to move out of your current location.

Your Market is Offshore

Most African countries require you to bring back all foreign currency earned from offshore clients within the limit of a particular period. In South Africa, the limit is for 30 days. Nigeria has a liberal “free entry, free exit” approach to the movement of foreign investment funds into and out of its economy, although there are a few hitches here and there. However, if your revenue comes from offshore, do you really need to allow it to get caught in your country’s exchange control web, especially where the exchange controls are highly unpredictable? The best wisdom may be to bill and receive income in your offshore business account, which is more often than not influenced by the exchange control structure in place.

The Startup European Partnership, an open innovation platform organized by the Mind the Bridge Foundation, found that 1 in 7 of all European startups valued at more than $1 million moves their headquarters internationally (with the vast majority of those heading to the United States).

Your Investor Wants You To Move Off-shore:

In this case, your investor may have funds and the experience, connections, and mentorship, but they may desire that you move offshore before they can invest in your startup. Where such is the case, make sure that you do some studies about how much it costs to restructure your business offshore.

You Are Positioning Your Startup for Future Buyers

Most of the time, your startup’s future buyer may just want your startup to be based offshore. Sometimes, the value of your startup may just be the software IP developed by your startup and potential buyers may not want the IP to be based in your home country. Hence, the need to move to offshore locations.

Personal Reasons

You may have started a startup in your home country but you or any member of your family desires to relocate to another country. This may be a chance to extend your startup’s reach to other countries. Where such is the case, having a foreign business in the place in those offshore countries for you or any of your family members may earn you hard currency.
According to a report by the National Venture Capital Association, 1/3 of all venture-backed publicly traded companies between 2006 and 2012 had at least one foreign-born entrepreneur. An immigrant or child of an immigrant has founded more than 40% of the Fortune 500 companies. These are often 100% U.S.-based at inception, but they are more likely both to open an office abroad and to sell abroad than a company without an immigrant founder.

Image result for How startups moved offshore chart — Israel has proved that any country that is serious about its startup ecosystem wins

How Some Startups Handled The Issue of Moving To A Foreign Land

WooCommerce and Getsmarter (which sold to WordPress for something over $30-million and to 2U for well over $100-million respectively) are a perfect example (as a result of that sale to WordPress, WooCommerce today powers over 30% of all online stores with over 1M+ downloads.)

One interesting fact about these two startups before their acquisitions is that never had any plan to expand offshore, yet much of their revenue came from offshore customers. In fact, their offshore customers were the reason why both startups remained in business. Hence, the most important question every startup owner has to ask themselves is how big is your market, and are you well positioned to tap into it?

Even without planning to expand, these two startups succeeded because they focused on developing and selling their product, rather than on an intricate international group structure.

According to Dommisse Attorneys law firm which oversaw the two startups during their early lives:

They knew that at their early stages, they had many demands on limited growth capital. And more importantly, they chose to focus their time and mental energy on value creation. If they had spent either their cash or their time on international structuring, there would have been an inevitable opportunity-cost in terms of slower value creation. Even worse, the opportunity cost could have been terminal to their businesses if they used up capital that could not be replenished, leaving them empty handed when it came to investing in product development.

Bottom Line

Moving your startups to offshore jurisdictions depends on your immediate need for growth. If your immediate need for growth is absolutely pressing and you have the capital, why don’t you go for it? After all, the more markets you go into, the better the chances of exposing your business to more potential consumers. In the next series, we would be looking at the cost of setting up an offshore company across Africa and beyond and key issues of using the right tax strategies to boost your offshore business as well as issues surrounding procuring one trademark for your startup which you can use in almost over 20 countries across Africa.

In all these, you may wish to access more legal other advisory services before proceeding with expanding your business.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

How Ride-Sharing Startup SWVL Plans To Take Over Ride-Sharing In Egypt

Just founded about 2 years ago, Egypt’s ride-sharing startup SWVL is on its way to displacing market shares for other Egypt’s ride-sharing startups. The startup recently signed an agreement with Ford motor company, to deploy more cars on the road.

How The Terms of This Agreement Would Be A Game Changer for SWVL

The agreement will combine the brilliance of the Ford Motor Transit, world’s best-selling van brand, with an app-based mass transit system that enables commuters in Egypt’s major cities to enjoy an affordable, convenient, safe and reliable alternative to existing transportation services.

Ford Transit, which the startup intends to use is already the third best selling van of all times. SWVL is already in possession of about 100 Ford Transits. Hazem Taher, SWVL’s Head Marketing Manager, said the vans were ready to go and they’re excited to push them on SWVL’s routes.

This agreement not only gives SWVL an advantage within the Egyptian private transport market. It also, by some distance, allows it to broaden its reach in the MENA (the Middle East and North Africa) market.

The timing is more than excellent for SWVL. Egypt hosts this year’s TOTAL African cup of Nations (AFCON), with commuters expected to quadruple in major Egyptian cities where matches will be played.

From Alexandria to Cairo, to any place in Egypt, SWVL provides commuters in Egypt’s major cities with cheaper alternatives to existing transportation services.

SWVL’s goal is to make it easier for Egypt’s residents to book bus rides at a fixed rate on existing routes. Users schedule trips, pay online or in cash and are given virtual boarding passes.

Even with fierce competition from the likes of Buseet and Uber vying into premium public transport service, SWVL’s application has been downloaded for well over 360,000 times on Google play store and Apple iStore.

See Post: Zimbabwean Startup Law Basket hopes to change Legal Service Businesses in Zimbabwe and Africa

The platform completes 100,000 rides monthly.

It was the first company to introduce the service in Egypt in 2017 before Careem and Uber joined the sector late last year.

What SWVL Is Doing Differently

SWVL is different from its competitors because of its series of partnership deals, including the current one. The startup’s credit facility agreements with Nasser Social Bank and EFG Hermes Bank, and after-sales support and maintenance services with Ford-trained technicians are some of these moves. What SWVL users think about the startup is its priority on affordability, comfort, and safety.

How This Partnership Will Help SWVL

SWVL founders are convinced this partnership will help it take the next big step forward.

“SWVL was created to help improve people’s lives by revolutionizing the transport scene in Egypt with a smart solution that helps ease the commute. We’re proud of the results we’ve achieved in such a short period of time, and the work that Ford has put in to help elevate the levels of service we offer our customers,” CEO, Moustafa Kandil said.

I think we are in uncharted territory when it comes to expansion when it comes to growth for an Egyptian startup. We feel that this is our responsibility, and we are committed to bringing what we have done in Egypt, scaling it even further and bringing it to the rest of the emerging markets.

Speaking at the announcement in Cairo, Ford North Africa MD Achraf El-Boustani said,

“We are thrilled to bring Ford Transit to Egypt, debuting in such a prominent and important role through this partnership with SWVL. The key to Ford Transit’s success as a mobility platform is its reputation for dependability, versatility and capability, and we’re confident that Swvl operators here will soon learn just why thousands of people around the world rely on the Ford Transit to get the job done.”

SWVL’s domestic competition includes Uber and Careem, who are sometimes the same company. But SWVL has the momentum right now, raising all the funds, signing all the partnerships, expanding into major African cities, many of which are clogged by chugs of traffic and would represent ready markets for SWVL’s deft ride-sharing system.

SWVL was founded in 2017 by three young Egyptian entrepreneurs — Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh. As noted on its website, the company is “a revolutionary idea born from passion, loyalty, and persistence to face all challenges on the table …not just a means to facilitate commuting, but a hunger to strive for solutions, encourage the contribution of youth in innovation and inspire change.” So far, they appear to be doing just that.

Of the total amount of about $686.4 million raised by African tech startups last year, Egypt got a share of $68 million. SWVL got about $38 million out of Egypt’s share, making the startup the most-funded Egyptian startup. The startup has expanded to Nairobi, Kenya, with plans for Manila, Jakarta, and Dakar.

In February this year, SWVL entered the Ugandan market, registering a presence in Kampala.

Charles Rapulu Udoh

Charles Rapulu Udoh, 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.

Facebook: https://web.facebook.com/Afrikanheroes/

Zimbabwean Startup LawBasket Intends To Transform Legal Service Businesses In Zimbabwe and Africa With Its New Launch

LawBasket is, well, bringing law to the basket of what can be purchased online in Zimbabwe and across Africa. The startup was just founded in December of 2018 by a team of entrepreneurs that includes two lawyers. In what was supposed to be a huge thrill for the startup, it secured signups from legal professionals from more than 25 African countries on this launch.

The Law Startup Business Model Is Simple

The startup believes you can shop all legal services online the way you shop for clothing and other wares. The startup calls itself an online legal services marketplace for small businesses and startups, which bring together hundreds of lawyers in over 200 practice areas to deliver quality and affordable legal services online. The startup also offers client relationship management technology and payment processing services for lawyers.

The startup exists for both lawyers and clients.

The client can get to hire lawyers for their job from a wide range of lawyers on the platform, with expertise in various areas. They can either post a job and let lawyers bid based on expertise and client’s budget, or they can simply search for services, find lawyers and invite them to do their cases.

The startup is also giving legal clients the power to manage jobs from anywhere in the world, using their dashboard. With an integrated mailbox on the dashboard, the client can send emails to their lawyers quickly and follow up on their cases. They can also monitor proposal for posted jobs or manage their payments to lawyers for work done. Lawyers are only paid when the job is done. Through LawBasket Payments, the startup also simplifies the process of creating and managing bills for lawyers and provides a simple portal to process multi-jurisdictional payments for legal services.

See Post: Fintech Startup Pyitup Raises $13 million in New Funding, Zimbabwe

For lawyers, they can search for cases that tickle their fancy, and send proposals to clients based on their expertise that suits the case, and at the same time search jobs at any time.

The startup is also giving lawyers a dashboard and a mailbox to manage their work from anywhere in the world.

According to the startup’s co-founder and head of marketing Nyasha Makamba in a recent interview, the platform presented a credible alternative to traditional law firms, providing a cost-certain solution to getting legal help for small businesses across Africa.

“In terms of the competition, and although the company is not a law firm, the firm broadly competes with traditional law firms, as well as other consultancy companies that provide technology-driven legal solutions. LawBasket is different from traditional law firms both in size and reach, as well as its approach to pricing legal services,” said Makamba.

How Law Basket Expects To Make Its Profit

Although LawBasket has been funded by its founders, Makamba said it had a “clear path to revenue generation and profitability in 12 months”, with revenue expected from commissions on LawBasket jobs, premium membership, and payment processing fees through LawBasket Payments.

Already, the startup has gained traction with over 153 lawyers from more than 25 African countries registering on its platform.

“It is almost 10 times bigger than the largest law firm in Zimbabwe, and is less than 40 lawyers away from surpassing the largest law firm by lawyer number in South Africa and Nigeria,” Makamba said.

Law Basket is also getting a hit from potential clients from more than 15 countries. Its client base is already over 106, ranging from small businesses and startups.

“With these demographics, this means that the legal services payment processing aspect of the business is operative in 25 countries in Africa, including South Africa, Nigeria, Zimbabwe, Kenya, Zambia, Botswana, Senegal amongst other countries,” Makamba said.

“We plan to increase user numbers both on the client side and the lawyer side in the current markets, with plans to introduce more lawyers from the Francophone and Lusophone markets within 12 months.”

Globally, the legal technology industry is still growing, but the industry has quietly built up a number of emerging categories over the last few years. As of 2017, legal tech companies raised just $739M in aggregate funding since 2011. However, there is still a lot of opportunities to improve processes within the legal industry still attached to manual and paper-based processes.

The least popular areas in legal tech in 2018 are e-Billing and intellectual property, where machine learning is widely used. These areas are represented by three companies on each side. In 2018, only one of them has raised investments, a company which is developing an IP-solution.

On the other hand, e-Discovery is one of the most popular destinations in the whole legal tech industry. e-Discovery, mostly used in common law countries is an electronic service for finding relevant information about lawsuits and investigations. In common law countries, e-Discovery does provide great help to lawyers, saving them time and improving the accuracy of finding suitable court cases.

In 2016, $224 million was invested in the industry; in 2017, $233 million was invested. Investors were eyeing a fairly young business area and refrained from large transactions.

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.

Facebook: https://web.facebook.com/Afrikanheroes/

Nigerian Ride-Hailing Motorbike Startup Gokada Raises $5.3m In New Funding

May 25, 2019

Who says giving Nigerian notorious okada riding business model a new repackaged outlook cannot be a viable business model?

Nigerian Lagos-based on-demand motorcycle taxi app Gokada has proven to be up to the game. The startup has just raised US$5.3 million in Series A funding with a plan to expand the number of its motorbikes and available drivers, increase its daily ride numbers as well as grow its team.

Gokada Is Just A Year And Three Months Old

Although Nigerian commercial city, Lagos, has banned motorcycles from plying its major highways, Gokada, defied this rule and formed itself into a more refined business model in February 2018, with a neat, safety-driven business model and more trained drivers.

Customers who need rides in the heavily congested commercial city and the smallest Nigerian state in terms of land mass with a population of 17 million people, can just download Gokada app on their smartphones, or visit Gokada’s website and input their locations and destinations and they would be matched with an available Gokada motorbike. The startup did all that magic in just a year and three months. It secured close to 1,000 bikes and completed around 5,000 rides across Lagos’ Mainland each day, with rides approaching one million in total.

The latest funding is part of the startup’s plan of expanding. Gokada is trying to play a safe game with its highly dangerous business model that demands well-trained drivers.

Related: Egypt: Food-tech Startup Yumamia Raises $1.5M For Expansion To Saudi

Govenment’s rule against the use of motorbikes on the highways of Nigeria’s most populous city is so tight. Recently, the Lagos State Task Force on Environmental Sanitation and Special Offences impounded 115 motorcycles, including 22 branded commercial motorcycles, including ‘Gokada’ and its competitor ‘Maxokada’, for violating the state road traffic laws.

The Task Force stated that the motorcyclists were operating on restricted routes and driving against traffic. The startup has launched a driver training school to train its drivers, and prevent what may be the biggest most possible threat to its business.

Gokada: Who Invested?

The new funding was mostly led by Rise Capital with Adventure Capital, First MidWest Group, IC Global Partners and other several local investors joining. The impact of this round of investment is expected to be felt in the areas of its fleet of drivers, who are sometimes thousands of kilometers away from the location of the hailers.

The startup would also target an increase in the number of its daily rides. At least a 10% increase won’t be bad. In the long run, it is also looking at acquiring more local tech talent who would have to do some jobs about the highly faulty application upon which the startup runs its business. It also intends to explore new verticals for business growth, and provide more value added services to drivers.

Gokada’s biggest competitor is Maxokada which is a bit older, having been founded in 2015, although its initial focus was on-demand delivery where order or packages are delivered in no more than 3 hours. Maxokada may have to fight to retain its market share with its higher pricing model compared to Gokada which is relatively cheaper, although it has better app functionality, and has nearer drivers.

“Our green Gokada motorcycles have become a regular feature of Lagos’ roads in the 14 months since our official launch. Gokada was built with the intention of becoming the future of two-wheel transport in West Africa, and we are fast becoming the go-to platform to hail a motorcycle ride in Lagos. Today’s announcement allows us to accelerate our growth projections significantly, as we continue to grow our market share and look to introduce more product features and services,” said Fahim Saleh, co-founder and co-CEO of Gokada.

Image result for bike hailing startups in Nigeria graph

The Startup Did Not Take The New Funding For Free Though

With the largest investment from Rise Capital, Mr Ayodeji Adewunmi, director at Rise Capital and the co-founder and former CEO of Jobberman, would be displacing former CEO Deji Oduntan. Adewunmi would be taking over as Gokada’s Co-CEO, a role previously performed by Deji Oduntan.

“It is an incredible time to be joining Gokada on this journey to transform transportation in Nigeria and the rest of Africa. I am truly excited about the promise of Gokada becoming the operating system of how cities function optimally and efficiently across Africa. There is no doubt in my mind that this will become one of the most important companies in Africa,” Adewumni said.

Nazar Yasin, founder and managing partner at Rise Capital, said Gokada’s rapid entry into Lagos’ transport market had been transformative.

“We have noticed that some markets like Nigeria and Indonesia, which both have large populations and inadequate road infrastructure, are more likely to be dominated by motorcycle-hailing companies rather than traditional car-hailing players, and Gokada’s relentless focus on product, customer service, and safety has enabled them to take advantage of this dynamic and produce some truly impressive growth metrics. They are reshaping the tech-enabled transport market in Lagos, and we are excited to be partnering with them as they scale,” he said.

In the meantime, this is a big win for the young Nigerian startup. However, there is still so much work to be done to convince the government that it is worthy to be spared from the long-standing ban against local motorbikes on Lagos’ major roads. This would be a highly defining moment in its next ten years’ future as it looks to build a sustainable business. With high emphasis on safety of both its users and other road users and its appreciably cheap fares, the startup would hope to convince Lagos residents that it is a good alternative to the reforming Lagos transport system and the burning agony of spending several hours on Lagos traffic, in a city that is the smallest in Nigeria and that actually would take about three hours to go round in a mini van with an average speed limit.

Image result for Road Transport stats in Lagos — According to Nigeria Watch Database, Traffic accidents account for the most fatalities in Nigeria.
In 2015, FRSC stated that 5440 people died as a result of car crashes.

Charles Rapulu Udoh

Charles Rapulu Udoh, 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 organisations 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.