A 10 point checklist for Startups in Africa Fundraising

1. INVESTOR READINESS: Africa Startups
SEPTEMBER 2015
@mbwana @savannahfund

2. ▪ 2012 The Savannah Fund was established as a seed capital fund
focused on early stage technology startups in Sub-Saharan Africa
▪ 2012-2015: 21 investments across 6 countries. Combined
investments including partners = $13.5M as of August 2015.
◦ (14)Accelerator bridges network and experience gap for
Entrepreneurs
◦ (7) Seed Syndicates/Series A rounds range between $300k-4.3M
◦ 2014: FIND- MAKE - GROW- REALISE - VC COURSE with Knife
Capital- Led to the Spark VC fund (Safaricom).
◦ 2015: 500Startups Inside Silicon Valley Course and Upcoming VC
training
Progression in Funding Startups
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3. 21 Investments in 6 countries

4. Portfolio Allocation
6%
31%
13%13%
13%
6%
13%
6% Agriculture
Ecommerce
Education
Entertainment
Financial
Logistics
Social
Cloud Hosting
Allocation by
Industry
Allocation by Funding
Round Stage
45%
36%
18%
Accelerator
Seed
Series A

5. A checklist of 10 steps to Investor Readiness
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1. Product-Market / Traction
2. Team commitment
3. Investor Validation / Syndicate Size
4. Legal Jurisdiction vs Investor Origin
5. Social Enterprise vs High Growth (VC)
6. Balance of Terms (Price and Control)
7. Compelling Story / Narrative
8. “Go-To-Investor” / Fundraising Strategy
9. Know Your Investor (KYI) Diligence
10.Momentum & Close

6. ▪ You must get early product usage or transaction behaviour
▪ A clear understanding of the unit economics
▪ Made early mistakes
▪ Convinced yourself through trial and error
1. Product-Market / Traction
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7. ▪ Startups heading for fail due to team issues
a. Technical (drop in CTOs)
b. COO and CFO
c. Sales / Biz Development
▪ Team has not worked with each other long enough or “isolated”
▪ Not enough incentive for teams members to stick around- including
salaries
▪ Full time or side Gig?
▪ Design HR System / Vesting Schedules / Option Pool
2. Team Commitment
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8. ▪ Known name investors with a track record can help
▪ Accelerator can be important for exposure to investors, partners
▪ Investor Updates
▪ Online Platforms: Angel List.
▪ Bigger the syndicate, the longer the deal takes (6+ months)
3. Investor Validation / Syndicate Size
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9. ▪ Understand whether your local jurisdiction and investor network is
mature enough to fund and help your startup with the RIGHT terms.
▪ Understand the pros and cons and complications of having foreign
investors
▪ Examples: Mauritius, Singapore, US Delaware, South Africa, Nigeria
Zimbabwe, Zambia?
▪ Decisions will greatly impact how quickly round forms as well as the
ease to get follow on funding.
▪ Get good trustworthy lawyers.
4. Legal Jurisdiction vs Investor Origin
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10. ▪ Understand the differences between Impact Investors (Returns First vs Impact First)
▪ Consistency with team/traction//valuation story
▪ Growth and Market Size requirements for a VC investor (hint: don’t think or act
small)- Go Big or Go Home.
▪ What does “patient” investor really mean?
▪ How is your startup positioned? Sectors to Watch
a. Bottom of the Pyramid
b. Focus on the unbanked
c. Education and Job Creation
d. Focus on Farmers
e. Energy Access
5. Social Enterprise vs PE/VC - High Growth
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11. ▪ Understand which terms are important
▪ Price /Valuation:
a. Know your industry and comparables
b. Africa discount (or premium?)
c. Allow early investor to make a return
▪ Control
a. Board Seats
b. Change of Control
c. Strategic Direction alignment
d. Corporate VC
6. Balance of Terms: Price vs Control
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12. ▪ Investors (and stakeholders) like a good story don’t overfocus on the
mechanics
▪ What does the press say about you (PR)?
▪ How do investor fit into your story?
7. Compelling Story Narrative
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13. ▪ Are you able to travel and afford the costs of fundraising overseas?
▪ Diligence Readiness
▪ Can you use investment advisors (Open Capital Advisors/ iDev)
▪ Timeframe and progress difficultly
▪ Use Online Platforms
8. Go to Investor Strategy
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https://angel.co/savannah-fund

14. ▪ How experienced of an investor are they>?
▪ What size deals do they do? What Sectors?
▪ Do they know/understand Africa or your country?
▪ How have they impacted their portfolio startups?
▪ Who is the point person on the deal (board) vs diligence, sign off
authority?
▪ Have you established a clear timeline of closing and investment?
▪ If a syndicate, how well do all the investors get along with each
other? What other networks can they bring to the table?
9. Know your Investor (KYI) Diligence
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15. ▪ Understand the drivers that get investors excited. Build Momentum
with progress and news.
▪ Uplift Africa positive news, downplay negative news.
▪ E.g. Obama Visits Kenya, Rocket Internet enters Africa etc… Ebola
impact on Ecommerce
▪ Closing does take some time, but if too long investors might drop
out and follow another opportunity
10. Momentum & Close
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16. What about the Business Plan????
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17. THANK YOU.
@mbwana @savannahfund