8 Innovative Ways to Fund Your Startup
Dear Motherland Mogul, anyone who said starting a business is fun and easy told a fat lie and worst still, have never started a business. One of the biggest hurdles an entrepreneur in Africa (or anywhere in the world) has to cross is the hurdle of financing their business. It’s the reason why many fabulous and potential million dollar ideas die every day or remain mere ideas. Like it or not, money is everything in an entrepreneurs world. Without it, ideas are buried and passions are watered down while frustrations set in, making even the strongest of personalities call it quits and go back to their corporate jobs. I’ve come up with 8 innovative ideas you can use to fund your startup without necessarily borrowing money. Depending on your situation and kind of business, you’ll find at least one or two you can apply immediately to get your business running. 1. Sell your valuables Yes! You saw that right. If you’ve been struggling with acquiring funds to finance your startup and nothing seem to be working, maybe it’s time then to look inwards. Search your house thoroughly for any valuable item that could fetch you a fortune when you sell…that gold wristwatch, expensive jewelry, MacBook, or iPod, whatever. It’s time to let them go for the bigger stuff. If you aren’t ready to get rid of these precious items to make your ideas work, then it doesn’t matter what you say, you are not ready for business! Or better still, you are not convinced about your ideas. Entrepreneurs are people that can give everything including their lives for something they believe in. That is one skill you need to survive in this overcrowded business space. 2. Dip into your savings This is what your savings are meant for: to invest in opportunities and ideas that can transform your life and change your world. Your savings are not meant for spending, fixing urgent situations or paying debts. You can have separate savings for that but primarily we save to invest. Just in case you don’t have any savings, you might want to take some time making some money at first. So try to get a job where you could work for some time and save before starting your business. 3. Your Rich Friends What big money is to you is nothing to some of your rich friends. You know this is true. Instead of dying in silence and wondering if they will be willing to help you, swallow your ego, take the bold step and pitch your ideas to them. You’ll never know if they’ll support you unless you ask. If one rich friend says no, walk up to another until all of them have said no and at that point, you know something else is wrong. Maybe something that has to do with your approach or the feasibility of your ideas. Your friends should be willing to help you make your dreams come true especially when they can. After all, what are friends for? 4. Crowdfunding from family and close relatives Crowdfunding is a good fundraising alternative for entrepreneurs. It involves raising a small amount of money from a large number of people. Crowdfunding can be done through online platforms. The best people to start fundraising from are your family and relatives. You can start by listing down all those who can potentially fund you and write down how much you think they can conveniently donate. Once you’ve located your potential donors, go reach out to them. Pitch your ideas so that they know what you’re capable of doing. For some other family members, you can ask to instead borrow money and then pay as your business yields profits. 5. Leverage on funding opportunities Governments, NGOs and other private and public bodies are providing support to entrepreneurs all over Africa. Since more people are participating in entrepreneurship, these bodies come up with initiatives and CSR projects to provide financial support to budding entrepreneurs. Be sure to leverage these opportunities when they show up. Other funding opportunities include idea-pitching events. For example, the upcoming SLA Accelerator gives entrepreneurs an opportunity to pitch their ideas. Then the top selected ideas get to win large sums of money, partnerships, and mentorship. Such events provide you an opportunity to not just fund your business when you win, but also learn from your mistakes if you lose. In the end, it’s a win-win situation where you get to build on your ideas either way. 6. Partnerships Regardless of the kind business you run, a partnership is a smart way of funding your startup. Strategic partnerships will not only afford you funds, but also help you leverage the experience, expertise, resources, and network of the other party. Just make sure you go about it the right away and involve a legal personnel in all your dealings and agreements. 7. Microloans and peer-to-peer lending While I always discourage small businesses from starting up with loans, at times, that might appear to be the wisest step to take. Microloans are small business loans offered by microlenders to help small or relatively new businesses finance their business. As a new business, you might not qualify for a bank loan because of the collateral requirements and others. But with microloans, you can get your business started without acquiring too many debts or paying high-interest charges. Similarly, peer-to-peer lending is a new debt financing method that provides a platform where lenders are connected to borrowers. You don’t need a financial institution for a p2p lending. The interest rates are also at an all-time low and less risky and safer than other methods. 8. Angel and seed investors Angel/seed investors are wealthy and affluent individuals who provide a business startup with capital or funds usually for a convertible debt or ownership equity in return. Most small business owners don’t buy into this idea of business funding. This is because it involves sharing their business ownership with another business even if it’s a small percentage. However, you
SLA Accelerator Demo Day
Join us on November 20 in Lagos, Nigeria for the Demo Day of our 2016 SLA Accelerator. Demo Day is a public viewing for investors, corporates senior executives and the press to view our most recent accelerator startups. The SLA Accelerator is a 3-month program designed to identify, support and fund the next generation of Nigeria’s brightest female entrepreneurs. The selected businesses are: Art Splash Studio – A virtual art studio offering a social art experience through our Paint Nite painting classes hosted at different venues in Abuja. BathKandy Co. – Creates sumptuous dessert-inspired beauty treats for women who crave the finer things. Bubble Tii – Bringing the Bubble Tea phenomena to Africa. DeliveryBros – Helps you save time and stress through pickup and drops from the market to your house or office. Fresh Direct Produce and Agro-Allied Services – An eco-friendly social enterprise that produces premium organic produce through hydroponics and community action. Keek’s – Designs tailored weight loss packages for busy women who want a plan that is both effective and simple to implement. Koko’s Kitchen – An indigenous brand of confectionary dry mixes specially tailored to suit the taste buds and pocketbook of the quintessential person on the go. Independent Personal Assistant (iPA) – Provides strategic virtual assistance to high-level executives across Africa. We take care of the mundane while you focus on what matters. Medsaf.com – Solves the medical industry’s procurement problem, by providing a technology enabled distribution solution resulting in transparency and simplicity. Shuttlers – Enables professionals to access comfortable and efficient transportation to and from work using seat matching technology. SLA Accelerator is in partnership with the Work in Progress! Alliance and Guaranty Trust Bank The Work in Progress! Alliance is focused on unlocking the economic potential of young women and men in Egypt, Nigeria and Somalia. The project aims to enable them to generate sustainable and living incomes – by finding regular employment or starting enterprises. Alliance partners include Oxfam, VC4Africa and Butterfly Works Guaranty Trust Bank is recognized as one of the most profitable and well managed financial institutions in Africa for providing quality service, ethics, professionalism, integrity, innovation and internationally accepted corporate governance standards. SLA Accelerator is also one of 16 global incubators and accelerators selected as a Village Capital Community VilCap Communities enables anyone, anywhere to use peer-selected investment to support entrepreneurs within their communities. In 2016, each VilCap Community will be running its own entrepreneur training program and investing in two ventures using Village Capital’s peer selection methodology.
Advice from the Accelerator Moguls: Tailoring a foreign concept for Africa
Ever had been inspired by a brilliant idea, then immediately dismissed it as impossible for the Nigerian market? We’re talking about those ideas that people deem “too foreign” for Nigerians to patronise or appreciate. These foreign concepts may actually end up being your ticket to being a Motherland Mogul. Two women who have pushed through in their attempts to introduce concepts and made profit doing so are Tokunbo Sotinwa of Bubble Tii and Crystal Ikanih of Art Splash Studio. Tokunbo and Crystal show us that it is possible to replicate something from the US and Taiwan in Nigeria. They are also both currently participating in SLA’s Accelerator program. If you’ve never heard of bubble tea before, it is flavoured tea with tapioca pearls. The idea for bubble tea was born in Taiwan and subsequently the trend spread to other Asian countries before gaining popularity across the world. Tokunbo is credited with bringing the bubble tea phenomenon to Nigeria to surprisingly good results —Bubble Tii has managed to expand locations to a second store within 12 months of launching the first. Art Splash Studio organises painting classes for grown-ups in Abuja. The idea came from when its founder Crystal Ikanih was visiting friends in the US. So what do both women say about tailoring a “foreign concept” to the Nigerian market? Creating a demand where there was none previously You can expect that this will be very challenging. For Tokunbo, people did not know anything about bubble tea in Nigeria. She overcame this challenge by first starting off by appearing at outdoor events. This helped introduce her product to her targeted demographics. Bubble Tii also appeared at pop-up events where people were offered to taste different flavoured bubble teas. While there was no specific demand for painting classes in Abuja, Crystal saw an opportunity in the demand for alternative entertainment. You’ve surely heard people complain about how Abuja can be boring. Crystal is tapping into this market with Art Splash Studio and her Paint Nite, where people paint while drinking wine. Another important way to create demand is through social media. Social media is a very effective tool to create buzz. Sharpening your marketing tools Already knowing that introducing the concept of a paint class wouldn’t be easy for the Abuja crowd, Crystal took the time to draw up a marketing plan. Be like Crystal and find ways to develop a very informative marketing plan to actually ensure that people are willing to invest their money in your idea. You may start by introducing the concept to your networks and gauging how people respond to it. Sometimes it doesn’t really matter if people don’t understand your idea, if it’s a good one, you can trust that once you launch, it’ll take a life of it’s own. Getting people on board with your idea Now people have heard about your foreign concept and are interested, what other ways can you get them on board with your idea? The most simple way to do this is through word of mouth. It’s worked wondered for both Bubble Tii and Art Splash Studio. For Tokunbo, once one person had the bubble tea experience, they were happy to tell other people. Word of mouth has also helped Crystal grow her business. She’s reached a point where now when she’s telling someone about Paint Nite, they’ve already heard about it. Imagine if your customers are so pleased with your product, they spread the word. So you want to start a café that only sells tea. Someone may caution that Nigerians don’t really do tea, who wants to drink tea when the weather is hot etc. But if you set up that café and wow your customers with different flavoured ice teas and tea-themed cakes, they’ll definitely come back and bring their friends too.
Advice from the Accelerator Moguls: Keeping your business afloat
Keeping your new business afloat is not easy. The first year after you launch your business can also be referred to as the battlefield. This battlefield claims the lives of many young businesses. For some it’s the first few months, for others it’s a year and yet for others it’s five years before the light at the end of the “break even” tunnel emerges. Keeping your business afloat can be tasking, you’ll mostly definitely lose some money and maybe some friends too but the idea is that after all the stress and drama, you’ll be rewarded for your effort. So how exactly can you keep on top of things and make sure that your business emerges from the battlefield unscathed? We thought the best way to find out more on this topic would be to speak with other young business owners in our networks. After all, it’s better to hear it from other people in the same boat. BathKandy, Medsaf and Koko’s Kitchen are among the companies chosen for SLA’s Accelerator program, here they share advice on how they manage stay afloat. 1. The importance of re-invention For Blondie Okpuzor, founder of BathKandy, the best way to keep your business afloat is to keep re-inventing. This will give customers something to look forward to. “Customers love to get value for their money and if they feel they are getting that with you, they will keep coming back. The only thing that should be consistent in a business is excellent customer service!” Blondie says. Re-inventing here doesn’t mean a complete overhaul while your business is till taking baby steps. Once you get the excellent customer service thing down pat, focus on little ways you can define your brand. If you’ve noticed something isn’t working, go back to the table and look at your strategy. What can you do to improve things? Don’t be afraid to make changes early on in the game. 2. Have a flexible plan Motherland Moguls know that when starting a business, you need a plan on how you are going to reach your targets and achieve your mission. Vivian Nwakah of Medsaf, let us know that a flexible plan is key to staying afloat in the first year of business. “A good amount of research and planning should have been done to lay the groundwork for the business.” Vivian says. Consider where you want your business to be in a year, three years and ten years. Think strategically about your business aspirations and write down how you plan to get there. You could spice things up by writing a letter from the future you to the you of today informing you of how she overcame challenges to become a bombass mogul. Once you’ve drawn you plan, you know the next thing is to gather a team that will make sure you achieve your goals. 3. Invest, invest, invest The importance of investment cannot be overstated. We’re not just talking about money here but also resources and time. Vivian also advises that, “Founders should invest an equal amount of money to get the business going to prove their financial dedication to the success of the business. The founders should also throw as much of their resources and time to dedicate to business strategy, and execution. They have to believe wholeheartedly in the mission and value of the company.” After you’ve poured your heart, soul and money into your business, the next step is to be positive. If you’re starting already expecting that your business will not succeed because of all the horror stories you’ve heard, you won’t get very far. There will be many roadblocks and challenges but if you’ve invested in your dream and are dedicated, the chances of overcoming them and keeping your business afloat increases. 4. Everyone will hate your product You’re gisting with your friend and you have a brilliant idea that you’re both 100% sure it’ll be viable and that everybody will love it. According to Sifa Asani Gowon, co-founder of Koko’s Kitchen, this isn’t the best way to start out. “Make sure you have feedback from strangers and people who aren’t afraid to tell you the truth. Your business will be all the better for it.” Don’t rely on what your friends or family say about your business. They may think you have the greatest idea on earth but on the flip side they may also think your idea is useless and will fail. Overcome this by getting opinions from people who don’t know you but know enough about the market you want to break into. The information you gleam from this could just be your armour during that trying year. 5. Master your market One of the many reasons businesses don’t make it past the initial stage aka the battlefield is that they find it difficult to draw in customers. “You may have a wonderful product…but no marketing structure to get it into the hands of customers. Creating a proper and reliable marketing and distribution network is absolutely crucial.” Sifa says. Building on this network will ensure you have what you need to draw customers in and bring in the money you need to break even. Do you have a plan for how you’re going to market your products? Are you connected with the people who will move your goods/services from producers to consumers? If you’re still clueless about your market even after you’ve started officially launched your business, then you have a code red situation.
Meet our Accelerator Moguls: Shuttlers
As you know the first ever She Leads Africa Accelerator Program is currently ongoing. Out of the 120 startups from across Nigeria who applied for the program, we identified 10 as the next generation of Nigeria’s brightest female entrepreneurs. These 10 selected businesses are now benefitting from our intense accelerator training. One of them is Shuttlers, a company that enables professionals access comfortable and efficient transportation to and from work using seat matching technology. Meet the three women behind Shuttlers —Damilola Olokesusi, Busola Majekodunmi, and Damilola Quadry. Frustrated by the stress commuting in Lagos as professionals, the three women decided to do something about it. What idea lead to the creation of Shuttlers? After a long week of stress commuting to and from work, Busola and I shared our commuting experience over a phone call and decided to solve the problem instead of complaining. Not too long after, Damilola Quadry moved back to Nigeria and shared the same commuting challenges. She joined the team to make commuting to and from work less stressful for professionals who share this same plight daily. We shared a common passion, drive, determination and combination of different skills from Engineering, Economics, Management & IT. Also we had been exposed to efficient transport system from Dubai, London and USA. Adding in personal experiences with commuting in Lagos, we developed a business model to solve this problem in the most efficient and cost effective manner. After several months of research, we partnered with a leasing company and had our first pilot in November 2015. – Damilola Olokesusi How has the service Shuttlers provides been received in Nigeria? Shuttlers makes use of a different model from what many are used to, the service idea has been welcomed by many individuals and companies. Due to the structure of our business model and current low capacity we are unable to cater to all the daily demands. Currently, we are working to increase capacity by partnering with more bus leasing companies/ fleet management companies to enable us penetrate areas that are pain points in the city and to meet the demand for the service. – Busola Majekodunmi What do you need to take Shuttlers to the next level? How do you plan to get there? We need financial resources in form of investment, Human Resources and commercial partnerships such as bus leasing companies, fleet management companies, bus owners and companies with staff buses and access to companies to reach professionals who need our service. We plan to perfect our product/market fit and strategically position our product/service to attract these resources. I believe we are currently on that path. – Busola Majekodunmi