Wennochat: Talking to an Investor
Ibadan.
Idris Bello was in town. And yes! It was for an eye-opening Wennochat session at Wennovation Hub on Wednesday, 24th May, 2017.
Idris Bello, an angel investor and advisor to several African startups including Andela, Flutterwave, ScholarX, Printivo and a host of other tech related start ups interacted with young techpreneurs and tech enthusiasts on the topic “How to talk to an investor”. The two hours spent was definitely an investment for the participants, I mean Idris is definitely an investor.
“How many of you own a start-up and how many people have had at least 100,000 naira invested in your business?” He asked participants (**Smiles** But I believe for security reasons, all the attendees chose not to raise their hands in response to the second part of the question).
Idris connected with the audience by expressing what it felt like as he tried to get an investor some eight years ago in Lagos.
“The way to raise money is to build good business.” – Idris Bello
According to him, investors are interested in good businesses not desperate businesses. He shared three things that investors consider in deciding whether or not to invest in a start-up business.
• Formidable team or entrepreneurs
• Size of market
• Traction.
For Idris, it is important you properly understand yourself and know your strong points. If you cannot convince yourself that you have a viable business, how can you convince investors? , he asked. Understanding your domain even without the technology is very germane in convincing yourself.
“The time to raise money is when you can convince your investors.”
Quoting Confucius, he explained that “Real knowledge is to know the extent of your ignorance.” As regards the size of the market, Mr. Bello stressed that value is more important than funds; the team and the future they see is part of what constitutes value.
Basically, the first step to getting an investor is making something that is worth investing in, understanding why it’s worth it and being able to communicate it well to the investors.
In communicating to the investors, you need to show traction – what you have done so far. The afroprenuer explained that traction gives credibility, which in turn gives access to investors, he added that entrepreneurs should stop talking about ideas and products- just prove that you are trying to build a business.
A cross section of the participants @ Wennochat, May 2017
He reiterated the fact that participants need to connect emotionally with the investors on the problem not really the solution. Test your markets before meeting an investor.
“About 80% of your time should be spent in making your start up awesome and about 20% should be spent in getting investors.”
To round off the session, he shared some points to bear in mind while talking to an investor.
• Do not approach investors with an exit plan.
• Integrity is important as the world is connected.
• Listen to your investors. This does not mean you should do what they say.
• Non-disclosure Agreement is not important except it is a cure for cancer or something related to that.
• You have competitors.
• Have a plan to utilize the investment.
• Precise valuation of the business.
• Never hand over the future of your business to the investors. Do not be carried away.
• Never lose focus of the business.
• Learn how to communicate well to investors ( check out : https://cofounderslab.com/ )
Next month (June 30th), WennoChat will discuss: “Tax clearance and VAT Returns; what start-up businesses should know”… it promises to be another exciting time.
