Lessons from the Savannah Fund Accelerator – Perspectives from Djuaji Research
When my co-founder Hungai?first told me about his idea for Djuaji, I was blown away. It seemed like it could answer a lot of questions and solve a lot of information problems for the average SME owner in Sub-Saharan Africa. Pairing mobile money with smartphone technology, and the right team to build it, he envisioned he could develop incredible survey and product trial applications to help change the way market research and testing is done in Sub-Saharan Africa.
We knew that we had the expertise, willpower and experience to develop such a complex product, but we had knowledge gaps in as far as creating a sustainable business was concerned. Building a startup can be incredibly difficult, and we knew that building this type of business successfully would need input from people who had a lot more knowledge and experience than us, to save us from making mistakes that could ruin our vision.
We needed help, and we decided to get it as early as possible to save us time and effort. Both Hungai and I had done startups before, and we both had varying levels of success and failures.
One of the hardest lessons to learn as a young technology entrepreneur is that things never, ever go exactly according to plan. One of the key factors that underscore the success of a tech startup, especially in Africa, is adaptability. Being able to react quickly and effectively to a multitude of changing variables in your environment can make all the difference in your business.
Having the right knowledge is critical to building capacity to adapt to the rapidly changing environment that is a startup company. This was our primary motivation for seeking external support and based on recommendations, we thought Savannah Fund’s Accelerator would be a great fit.
We were right.
Getting into the Savannah Fund Accelerator would provided us with the knowledge, connections and resources needed to make a lot of headway with our product. Further yet, it provided us with much needed capital to handle operating expenses for the first few months. It was an intensive learning experience that was as challenging as it was rewarding.
Lesson 1: Investor Relations & The Investment Process
Our first few sessions in the accelerator program were meetings with different investors, typically over breakfast or lunch. Coming out of a world where all of our expectations about investment and venture capital were influenced by TV shows like Shark Tank and Dragon’s Den, we expected the investment process to be relatively simple and straightforward (hint: it’s not). It’s fairly simple in principle: Party A has a business or an idea but no capital, party B has money. Party B gives Party A their own money in exchange for part ownership of Party A’s business.
However, there is a lot more to it than that, the investment process is particularly involving, with even small rounds taking between 2 – 6 months to close. Finding the right investor is pretty much like finding the right marriage partner, it shouldn’t be rushed. We learned how to engage with investors, present our pitches, demo our product and start the conversations for fruitful relationships well in advance. Getting VC funding in Africa is particularly difficult, and investors need to have a lot of confidence in you, your product and your team before they put pen to paper. Investors often need a long history of progress updates, well organised and managed records and evidence that everything is in order well before any money is released. We’ve already started talking to investors now for rounds we haven’t planned for, that’s how important this is. We will soon be setting up a dedicated investor relations portal, in addition to our monthly updates just to optimize the process for the future.
We also learned about the very lengthy legal processes involved in closing an investment deal. We spent a lot of time looking over term sheets, share subscription documents, cap tables, vesting schedules and founders agreements and having them thoroughly checked by our lawyer and counter checked by Savannah Fund’s lawyer to make sure everyone was all on the same page for the investment. It was extremely beneficial for us to have a dedicated lawyer working on these for us throughout the process and greatly reduced the time needed to close the round. I’d strongly advise any early stage startup looking for VC funding to have identified and agreed terms with a lawyer even before looking for funds.
Lastly, we also learned the importance of having a good pitch. You never know when you’ll find yourself in a room with a big investor and you only have one chance to pitch your business. First impressions are crucial and can make all the difference in whether or not a conversation with an investor will even continue. Almost every session in the Accelerator began with all of us pitching our businesses to a variety of audiences and this got us a ton of much needed practice.
Lesson 2: Valuation for the African Startup
One of the key sessions from the Accelerator class was with Mbwana Alliy on Valuation for the African Tech Startup. We learned about the key factors that would help drive valuations for our business to enable us to raise the funds we would need to grow. We also learned about mastering the tricky balance between creation of wealth and loss of control in a VC-funded company. This session gave us a strong foundation for kick starting money conversations with investors and we strongly recommend it for any early stage startup in Africa looking for VC funding.
Lesson 3: User Experience (UX) Lab
Part of the Accelerator class included a two-week training session with one of the foremost local experts in the UX industry, Samantha Merritt.?She leads the iHub UX Lab and together with her team, trained us on the principles of UX research, design and implementation. This was important for us because we made a lot of assumptions about how small businesses would typically carry out market research. We also made assumptions about what the biggest customer pain points were, and all of this was disproved with a bit of UX research.
The UX Lab allowed us to learn how to systematically and continuously draw from the experiences of our potential customers to design and deploy improved product iterations. Even though UX is typically overlooked in most early stage ventures, I think a lot more startups would benefit from learning how to do it properly. This saved us a ton of time and money.
Lesson 4: Pitching Your Story
One of the most interesting sessions was with Nisha Ligon of Ubongu Kids. As an expert on storytelling, she showed us how to turn plain and bland pitch decks into vivid stories to captivate audiences and communicate messages more clearly and effectively. This session allowed us to redesign our pitch decks to be more story-oriented, which was important for arousing the interest of both investors and potential customers. Lessons from this session allowed us to reach the finals of the Pivot East 2015 pitching competition, where we pitched to an audience of a 100+ investors, industry leaders and startup supporters in Nairobi. The resulting networking session got us talking to some of our first potential customers, and got us the?meeting we needed with a payment provider to complete our MVP.
Lesson 5: Marketing & Growth Hacks
One of the last important meetings was with Christina Lin of Google Kenya, she spoke extensively about digital marketing and growth hacking strategies that we could use in our business to drive substantial growth. Drawing from her experiences at Airtel International and?L’Oréal, she had some key insights into how best to select digital marketing options and how to leverage affiliate marketing and developing a brand persona. Her inputs helped us design an on-boarding strategy for Djuaji respondents that has been quite successful, and very cost effective.
Lesson 6: Demo Day
All of the training and practice sessions were very beneficial, but were almost always in a ‘safe’, controlled environment where everyone was aware that we were early stage startup founders with relatively little experience. Nothing can substitute being put on the spot to pitch to a group of investors and business owners who don’t know who you are or care how you feel. This was definitely the case with the Savannah Fund Demo Day where all the startups in the class had an opportunity to pitch to some of the biggest players in the industry. Taking advantage of the Global Entrepreneurship Summit week, Savannah Fund invited investors and staff from funds and companies all across the globe to come and listen to our pitches at an exclusive cocktail.
It was intense to say the least, as we had to answer some tough questions from both investors and potential customers, with no second chances. Fortunately, we were adequately prepared and managed to exchange contacts with several dozen high profile individuals, including the country head of a multi-billion dollar company?interested in using our product extensively.
It would be impossible to summarize all of the lessons we learned from the 4 months we were in the Accelerator (I actually filled up an entire A4 size college notebook with notes from various sessions), but both Hungai and I feel that it was one of the best decisions we made, especially at the pre-revenue stage.
Armed with this knowledge and more, we’re working very hard?to build the product and take on the market and we feel exceptionally confident now that we’ve ironed out some of the knowledge gaps that could have been our Achilles’ heel. The Savannah Fund Accelerator provides a great introduction to the VC and startup ecosystem and suffice to say, the investment money was probably the least valuable thing we got out of it.
About Djuaji Research
Djuaji Research Limited provides?a platform that allows businesses to create and deploy digital surveys or product trials and send them to smartphone users who share the same characteristics as their ideal customers. In return, these users are rewarded with mobile money. Djuaji has?a growing database of respondent candidates and collects a lot of information about them in order to better match them to product trials and surveys, which enables more reliable data from even a small sample size.