The African investor is still an enigma and there is no silver bullet — Dr Ofrey Ebi, CEO, GeroCare
You can barely separate startups from pitch competitions. Not because startup founders are natural talkers, but the weight they bear is often accompanied by heavy demands that must be met to ensure they stay afloat.
Every pitch competition invariably comes with its own hype and promises, which like a large magnet, attracts eager founders from every nook and crannies of their locales.
Despite that the startup bubble only ignited in Africa a little less than a decade ago, African founders aren’t taking a back seat in seizing every stage to pitch their companies to the top. This attitude has given room for many to shine both on local and foreign platforms.
One of such platforms is the SLUSH Global Impact Acceleration programme (SLUSH GIA), held in Finland. Its 2018 edition had three startups emerge winners from Nigeria.
One of them is GeroCare, a health startup co-founded by Dr Ofrey Ebi in 2017.
Eager to unravel the intricacies surrounding pitch competitions, acceleration programmes, local and foreign investments, founders and investors’ attitude, and the list goes on, smepeaks couldn’t wait to engage Dr Offrey once we learnt he’s touched down in Lagos.
It was a hot Wednesday afternoon in 2018, at a lounge in Ikeja, Lagos. There was Dr Ofrey and here was smepeaks. Then Conversations began flowing, with Ofrey being as open as he could be.
Grace Akinosun of smepeaks (GA): How did you hear about Slush?
Dr Ebi Ofrey of GeroCare (EO): As with many applications we apply to as startups it is very difficult to pinpoint the exact way we hear about these contests or incubations/acceleration programs. All I can say is that smepeaks is one of our key sources of information as regards this but if para venture it was not the source of the information. I really can’t tell how I heard about SLUSH.
GA: What inspired you to apply for Slush, as well as other competitions you’ve been part of before Slush?
EO: As a startup bootstrapping, any avenue to raise funds is highly welcome and is the primary driver for most applications.
However, bearing in mind that in most of these contests there is only one (first place) prize we also try to leverage the publicity the event generates to inform the public about GeroCare and what we do. This goes a long way in ensuring free press which may otherwise have been paid for from the coffers of GeroCare. Additionally, these events usually present an opportunity to network and meet other investors who may write much larger cheques than the prize money from the events.
For instance, in the SLUSH GIA group created for startups from all over Africa that participated in the final event a startup that did not win the contest posted that they were able to raise $ 2.5 million dollars post-event, riding on the credibility the event provided for them back in their home country.
GA: Briefly tell your experience during application for the SLUSH GIA local rounds
EO: The local boot camp was made up of 15 startups from across Nigeria providing products and services ranging from logistics to eye care. These were chosen after a rigorous screening process of over 600 applications.
The local boot camp took place in Heartland Incubation Hub, Oluaka Institute in Owerri, Imo State and lasted for just about one month. During this period we had workshops covering various topics and various canvases e.g. value proposition canvas, business model canvas, pitching canvas etc.
Apparently, this was the first time SLUSH GIA was organising local boot camps as they wanted to have more impact on the startups that applied and not just those that eventually made it to Finland. The event was to culminate in a pitch competition in which the top 3 startups would have the opportunity to go to Finland for the SLUSH GIA bootcamp and pitch contest.
As with many bootcamps I participate in, the information provided was more like a refresher course in things I am well versed in as I have an MBA in addition to my degree in Medicine. Also because I read quite widely. However, it is always a welcome opportunity to hear things from various perspectives from people with different backgrounds and experiences as these colour the information provided from their unique perspective.
As part of the programme, participants were encouraged to share knowledge. Having had the opportunity to teach pitching in Fate Foundation Port Harcourt to various startup founders and the privilege of being a judge in pitch competitions I decided to take advantage of this opportunity to facilitate a session on pitching.
You might say but this is a pitching competition why would you engage in teaching your competitors how to pitch? The fact is, I am a proponent of value begets value. So I was not perturbed at all because I was sure I would be part of the top 3. And so it was.
Fortunately, at the end of the bootcamp, the top three startups that emerged were Arone, GeroCare and Afagreen.
GA: How did you feel about your win in Nigeria?
EO: I was extremely elated about not because I was ever in doubt but because I had come so close so many times before and was glad that this was not one of those almost situations. Especially understanding how subjective judges can be in these competitions where the points they give is affected by their personal feelings about the person pitching no matter how unbias they try to be.
GA: What was the experience mingling with entrepreneurs, investors and key players from other countries like?
EO: The one thing I discovered mingling with entrepreneurs from other countries was that the startup world is exactly the same no matter where you find yourself, especially within Africa. In fact, if you weren’t told that the other startups at SLUSH GIA were from other countries you would have believed we were all from Nigeria, considering their experiences both as a growing business and as regards their interactions with African Investors.
It also provided the opportunity to forge partnerships and discuss ways of leveraging this new network to expand our business outside the shores of Nigeria.
GA: What disparities are there between startups here in Africa and there?
EO: The key disparity between startups here in Africa and those in Finland is access to funding and attitude of investors. It is much easier to be funded as a startup there because of the less stringent investment process and founder-friendly deals.
For instance, investors we met and discussed with, clearly understood that startups should not be valued in the orthodox way of valuing businesses. They usually invest amounts ranging from €100,000 to €500,000 for maximum equity of 15% because they feel strongly that taking more than that is tantamount to shooting themselves in the foot. They fully realise that startups would still raise funds in the future and further dilutions of founders’ shares demotivate them if they eventually do not hold a tangible stake in the business.
So while in Finland we constantly heard of startups raising up to €500,000 as seed funding for 15% stake in their businesses.
GA: What main lessons did you gain throughout the programme?
EO: The main lesson learnt is that it is extremely unlikely for Finnish investors, to invest in Africa. Not because they do not believe in what we are doing but because they only invest in a country within their reach i.e. either Finnish companies or companies in Nearby countries.
Though they have a history of investing in African founders but these founders must be based in Finland. Secondly, I discovered that the mindset of investors in Africa is very different from those in Europe as regards investment amounts and perception of valuation.
GA: Any investment insights you need to share?
EO: I am a proponent of teaching from experience. Since GeroCare has not received significant funding yet, it would be foolhardy for me to think I can proffer insights into how to get investments. All I can say for now is that the African Investor is still an enigma and there is no silver bullet. They should be treated on an individual basis.
GA: Would you say differences exist between African accelerators and those outside Africa?
EO: I may soon begin to sound like a broken record but again I feel the key difference is access to funds. You see, many startups that graduate from these programmes outside Africhaveas access to investors ready and willing to invest and not just have “discussions” with startups.
GA: What sort of tech businesses get the chance to shine in these competitions?
EO: As Slush GIA was focused more on impact investing companies with a strong inclination to solving social problems stand a better chance especially problems entrenched in the SDGS. In this group, they also seem to be a bias toward AgriTech businesses.
GA: How do you feel when you lose a pitch competition?
EO: Initially, I used to be highly disheartened by losing but having judged a few contests myself I now realise that there is a very thin line between the first place and second place. This may just boil down to the personal opinion of the judge. As such, these days I go into competitions with an open mind expecting the best but also preparing for the worst.
However, I try to make the best use of the opportunity, understanding that the greatest benefit may not be the first prize but getting exposure and getting someone in the audience to invest a higher amount in your business.
GA: How would you advise entrepreneurs to respond to pitch competitions or acceleration programmes?
EO: I would advise them to take hold of every opportunity and apply to as many as they can. However, there is a misconception that if you’re seen applying lots of programs or pitch events it means your business is being neglected. This is so wrong. Most times there is more than one co-founder in a startup, meaning there are others working on the business while you as the vision carrier or CEO is championing fundraising.
I once heard this from a mentor who said “a CEO has 3 basic functions: 1. Steer the vision of the company 2. Make sure there is always money available 3. Hire the right people. If he is doing his job right he has people ensuring the business is running while he is doing his part.”
But a word that really irritates me is “PITCHPRENEUR” which is mostly used by people who have never run a business in their lives because If they had, they would have understood that no founder likes to continually pitch. We pitch for a purpose. To raise funds. The moment a founder gets the funds he needs you are likely never to see him pitch again. Here’s an instance. A founder needs $ 300,000. He has won two competitions with a total cash prize of $30,000 and people are asking why he still pitches. “Helloooo!!!” HE NEEDS $300,000 if he gets that amount and is still seen pitching, then you can talk.