The Silicon Valley bug was bound to hit Zimbabwe sooner than later. It is very good because it means that Zimbabweans are finally realizing that startups are the future. As Zimbabwe, I have noticed that we seem to be incorrectly borrowing the Silicon Valley startup funding model. I know Zimbabweans love doing things their own way but this is too much.
As an entrepreneur, having your business and growing it, scaling upwards can do so much for your economy. Fewer people will be worried about employment and young people can finally create jobs. On the farther end of the spectrum, multinational organizations can be born from this. I was watching Simba Savannah, the Zimbabwean spin on Dragon’s Den and Shark Tank and I was deeply saddened. So in this article, I will look at what I found missing from the startups with regards to funding in general and also with regards to Simba Savannah. In summary, it was like watching Ximex mall dealers on tv.
Of course, there are areas of the show itself that can constitute a blog post on their own. In fact, they will but this is about my observation when it came to the actual startups. The whole system is flawed and further corrupted by the apparent mentality that our entrepreneurs have. Most startups need funding, that is a given and it is good that the Simba Savannas show gave a platform to be seen as well as an opportunity to get funded.
What We Have Been Getting Wrong
1. The Simbas are Capitalist Business people
The Simbas are the Venture Capitalists (VCs), equivalents of the Dragons or the Sharks on Dragon’s Den and Shark Tank respectively. No one is just going to give funding for nothing. That is a given with shows like Simba Savannah. What the entrepreneurs then forget is that in business everyone is trying to get the most out of any situation. Many went in with a naive mindset assuming that the Simbas would play fair. Being a VC, one is trying to get more for less; you want to give me 20% I will definitely try for 30%. Why is this important? The more confident and sure of your product you are the less you can be manipulated. Giving away a stake in your business for the promise of mentoring and networking connections. That doesn’t make sense for one big reason. If a VC is only bringing ‘mentoring’ and not financial assistance it means they don’t believe in your product enough to actually put their money there. I would understand if they offered less than you asked for and offered mentoring or their network. How much effort will a person put in a product the didn’t really invest in but own a percentage in? Next thing you will work hard because the product is your life and the benefit as well. For nothing really.
2. We’re trying to get Paid For Ideas
Most of the entrepreneurs who went to Simba Savannah seem to want to be paid for ideas. What’s worse is that these are not market proven ideas. Granted, they have very good ideas in most cases but no one pays for an idea unless it is absolutely unique and maybe patent-able.
3. No MVP
The MVP is the Minimum Viable Product. Its like a starting point for you when you are developing a new product. The MVP is what you use to see how the product is accepted in the market, where you need to change, and generally to continuously improve the product before full-on launch. So if a startup has no MVP but they are asking for funding how do they know it will work? You haven’t put your product out there and do not even know how it will be received yet you want someone to invest their money.
4. Simbas Are In A Hurry to Get Return
This is where my earlier comment on Ximex dealers come in. For those not from Harare, Ximex Mall was a tiny one-story mini-mall in the center of Harare that was known for shady deals that were irreversible. Ximex Mall has since been taken down but the dealers have never left.
The Simbas mostly gave me that vibe. Maybe it was the pitches from the startups but I want you to count the number of times they offered mentorship for shares versus the number of times they offered money. I ain’t saying they’re broke or anything.
5. Entrepreneurs are in a Hurry
The way most startup pitches on Simba Savannah went made it look like most startups are in a hurry to ‘succeed’ and lacking determination. A good number hadn’t bothered to monitor the metrics that are important to a person who you would like to give you money. My view is that Zimbabwean startups feel like we should be babied, get funded and walk off with 80% of the company when it eventually works out because they thought of it. Our startups want funding now and want to grow into a highly valued organisation but from financed money instead of it’s own income. That’s not how it works. Proof of concept goes a long way. Two examples of such were Washen and. Point number 5 becomes very important. I mean if you really look at large organizations, the invest and know that the business will only break even after a while…years.
a. Washen – Washen, the on-demand laundry service from Bulawayo. An ingenious idea that is a genuine need. Washen asked for $15000 saying they wanted to get 4 scooters (for $2000 a piece) which would be $8000 and said the money would also be for expansion to other universities. While what he is requesting makes sense, I felt he needed to ask for less, maybe enough for two scooters and marketing to grow in Bulawayo. Paul had mentioned having 25 customers in the first three weeks. That wasn’t enough to warrant a growth strategy. Maybe they were looking at the bigger picture before looking at the immediate view. Important metrics like from their 25 how many were return customers? How long on average do they take before coming back for their next order? Paul said they expected them to return after two weeks but that was an expectation not based on current operations. All this was information they couldn’t have know with 3 weeks worth of statistics. If he had his statistics on point, he would charmed the Simbas because the Washen idea is great!
b. NedTec – These guys pitched automated chicken feeding machinery that they were making. The system itself would be solar powered, making it perfect for sustainability and reducing the costs that come with having the actual machine. Another great idea with no MVP. They were looking for $40,000 to fund their product that again wasn’t market tested at the time of pitching. From the focus of the camera throughout their pitch it was clear what the talking point was going to be. The ‘prototype’ they carried to show the principle was horrible to look at and totally destroyed their pitch. Their standard unit costs $96 dollars to make and NedTec wants to retail it at $250. Given that information I’m sure we can all agree that a $100 investment would not be too much for a first unit that can obviously finance the making of two more. NedTec’s chicken feed could grow generically if they made that first $100 investment. unfortunately because they sought funding before making an MVP they screwed themselves over and botched their pitch. Of course there are questions as to whether the the $96 cost was a mass production cost or if that’s the cost when it is still just one unique manufacturer. Again, information that they chose not to have off hand that could have helped
6. Thinking funding is once off Event
Most of the startups that pitched at Simba Savannah pitched like it was the only time they would pitch for funding. I can almost understand the fear. Unfortunately those guys were out there trying to raise money for the next ten years’ growth. I think that makes it difficult to plan the future because it splits the focus. You stop focusing on actually building yourself for success and start thinking about growing into international markets before dealing with your first customers. Looking at organisations Like Snap Inc (creators of Snapchat) that have and continue to have immense growth and yet they still continue to have funding rounds. So maybe if as Zimbabwean entrepreneurs we took deep breaths and took our time to grow in stages we’d make better decisions.
In a recent WordPress feature that shows post editing history, I realized I started this article on the 15th of February 2017. I hope it was worth the year-long wait.
Business Blunders & Brilliance 