JINO INSIGHTS

If you are seeking for a small business funding to start your own business, or expand an already existing one, you might consider venture capital besides other sources like grants, as one of the ways to access capital for launching your ideas.

Accessing capital is well known to be one of the most critical factors constraining business startups in Africa.

However, to be considered by venture capitalists and stand a chance to attract funding,  you need to position yourself to be worthy of their investment. How? Let’s find out!

Here are some of the key factors VCs look for, gathered from major firms in the industry across Africa.

The founders. Venture Capital firms like Founders Factory are seeking to understand how deeply ‘connected the founders are to the problem they are solving, and whether this connection is in such a way that it provides insights that helps build a solution that can be differentiated in the market place’.

So, when starting a business, or seeking funding always try to address your connection to the problem. How passionate are you about the idea? Does it give you a reason to wake up every morning? How well do you understand the problem and what skills set do you have or are you building to solve the problem? Answering such questions will help you develop a connection with the problem.

Acquirable assets on a pathway towards commercial scale in a growing market.

Before these firms commit their funds into your business, they want to be sure there are assets that can be acquired. You may  ask, why do they need these assets before investing?

Well, acquirable assets help them assess your potential for growth, scalability, and to identify whether there will be clear exit strategies?

Therefore, VCs seek to make informed investment decisions through understanding the acquirable assets available to you or the business such as intellectual property (Patents, Trademarks, Trade secrets, Copyrights), Technology and software, Talent and team, Brand and marketing, to mention a few.

Although not all firms put consideration into acquirable assets, most will require them.

Are you coachable? Venture Capitalists are careful to invest in “entrepreneurs who are willing to receive feedback from investors, customers, and other stakeholders”.

Being Coachable means that you have no problem with receiving feedback whether positive or negative from those connected to the business.

Most firms have teams developed to offer mentorship programs and guidance to entrepreneurs for example on how to access new markets, recruit top talent, and build the business to a greater level.

They want to build the entrepreneurs’ capacity so that their investments are safely managed and multiplied.

Therefore when seeking for funding, always demonstrate the ability that you can be coached and is willing to learn new knowledge and skills.

Returns. Venture Capitalists are also in their own business.

This means, as they fund your ideas and business, they expect to profit  from it.

It’s not just about profiting, but how attractive are the returns, and what will be the returns package in 5 to 10 years.

To win their funds, then you will have to pitch an idea that guarantees attractive numbers concerning their returns on investment.

Communication Skills. This is another critical area to hone when seeking funding according to Uwem Uwemakpan, Head of Investments at Launch Africa.

In his own words, “it’s one thing to know how to build a great product, and another thing to communicate your value or unique selling point”.

Whether you are communicating with investors, customers, partners, employees or any other stakeholder, the ability to communicate you ideas clearly is of great value.

Therefore, you need to develop and demonstrate good communication skills to your potential investors who want to release their money to the right businesses and hands.