Demo Africa sheds light on investing in startups

29 August 2016

Approaching the right investors and the characteristics of a good or bad
investment were discussed in How to Get Deals Done, one of the knowledge
sessions held on the first day of the Demo Africa 2016 conference in Johannesburg.

At the two-day event, held at the Sandton Convention Centre on 25 and 26
August, entrepreneurs and investors from all over the continent were networking
and sharing insights into the tech industry.

The event was hosted by Lions Africa in collaboration with the City of
Johannesburg, the Department of Science and Technology, Google, Intel and
Microsoft.

Some of the investors said: “The cheapest investment is to just bring cash.
Access to business networks is another way of being part of an investment deal.”

Presentations

The organisers said that this year, 723 tech entrepreneurs from 27 African
countries applied to be part of Demo Africa. Of these, 30 entrepreneurs were
chosen to present their businesses to local and international investors at the
conference.

The entrepreneurs included Rodney Kuhn of Sortd., a Johannesburg company
that designed an app to help businesspeople organise their lives and work through
their emails.

Other start-ups at the conference included Art Nigeria, an online company that
sells the work of Nigerian artists globally. This artwork can be in the form of a mug,
a throw pillow, a duvet or on a frame.

Mum’s Village is an online platform that gives information to pregnant women
in Kenya.

Owners of all the startups were given six minutes to pitch their businesses to
investors and judges on the two days of the conference.

The judges then gave their opinions on the presentation and offered advice.
Through this, the startups stood a chance to get funding for their businesses.

The boot camp

Two days before the conference began, 27 tech entrepreneurs took part in a
boot camp hosted by Demo Africa. During this, they received coaching and
mentoring on how to pitch to investors.

“The Demo Africa boot camp is a continuation of an online mentoring and
coaching process we have in place for the finalists,” said Harry Hare, executive
director of Demo Africa.

The online programme ran for four weeks and was concluded with the boot
camp.

The process of mentoring and coaching was vital for many of these
entrepreneurs, said Hare. “Our experience has shown us that the Demo Africa
finalists are at different development and maturity levels within their businesses.

“A lot of them are also technically minded rather than business-minded, so we
refine them to think more about their business and what they are offering to
investors,” he explained.

Stephen Ozoigba of the African Technology Foundation was one of the mentors
at the boot camp. He said 30% of the startups in the finalists’ group were led by
women.

He encouraged the attendees to support their local startups, especially those
run by women. “It’s important that we empower women.”

demo finalists The 27 Demo Africa 2016 finalists were part of a two-day boot camp with
mentors. (Image: Demo Africa 2016)

Advice on making deals

In the How to Make Deals session, Ozoigba said designation was important
when approaching an investor. “Some cities are more favourable.”

He spoke about issues that could cause an investor to stop funding a business.
One of these was lack of structure, which could lead to your losing a deal with an
investor. “It’s good to learn governance early [about how business works]. Come
into board meetings and learn how things work.

“For example, learn about what voting is in a board meeting.”

Stephen Ozoigba At Demo Africa 2016, Stephen Ozoigba (right) of the African Technology Foundation says everyone should support their local startup. Liew Claasen (left) was also part of the discussion. (Image: Melissa Javan)

It was important that owners of startups understood the legal status of the
entity, said Tomi Davies of the African Business Angels Network. “Before making a
deal with an investor, decide who will get the money that you will make.”

Their process as investors was simple, said Liew Claasen of Newtown Partner.
“You first send out the application to us. We then meet face to face if we think we
want to invest into your business. It helps us to make consistent decisions.”

Mistakes some entrepreneurs made were that they did not communicate much
with the investor after they got the capital, he said. “Post-deal communicate a lot
even if you feel this person is too important and busy.

“A bad investment is when [the startup] doesn’t give updates [to the investor].
We must have a good relationship. Your relationship with your investor will also
send out a message to the next investor about you.”

demo panel A panel at Demo Africa in Johannesburg on 25 and 26 August 2016 on How Deals
Are Done gives advice to entrepreneurs on dealing with investment partners.
(Image: Melissa Javan)

Other knowledge sessions included Venture Growth Strategy.

Insightful event

Entrepreneurs such as Innocentia Msimango said the conference was an eye-
opener for her. She is the owner of a food distribution company called Cyber Mobi
Royal Kitchen. Her staff cooks food for clients, which the company then delivers.

Msimango said she did not have an idea about what investors sought. “This
information gives me hope.

“Not only will I get capital, but heartfelt support of experience. I find it
encouraging that there are people wanting to help us.”

The conference gave quite refreshing insights, said Donovan Nadison of the
Business Place Network. “The information here is about how to deal with and
manage complex small businesses support issues.

“It confirms to me that South Africa is on the right track. We have expertise in
dealing with SMME issues that are complex… Everyone can benefit from the
networking done here.”

There were 500 attendees at the conference. The Global Entrepreneurship
Congress will be held in March 2017 in Johannesburg. One of the objectives of this
conference is to brand the City of Gold, as Joburg is known, and the whole of Africa
as an investment destination.

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