There are ideas laying dead because their owners have and cannot access the capital to bring them to life. This is especially so in a hard terrain like Africa.
In some cases, it is the bank and other financial institutions who refuse to lend money out. Other times, it is the entrepreneurs fault as s/he is unable to provide answers to questions asked. Sometimes, it is about looking in the right place.
Today, we would share the tale of how 4 entrepreneurs, most of which you know, went about getting the capital they needed to become the big employers of labour they are now.
We hope this aids your entrepreneurial journey.
Lorna Rutto (Kenya)
In 2010, she quit her bank job to start a waste recycling business.
Her company, EcoPost, collects and recycles waste plastic into aesthetic, durable and environmentally-friendly fencing posts that serve as an alternative material to timber.
But her business would have remained a dream without the financial support of international and local investors and NGOs.
Every year, hundreds of international and local organisations support businesses that tackle issues such as environmental pollution, illiteracy, disease and other social problems. They usually provide grants, donations, loans, equity or even training and advice.
So in 2010, Lorna applied for and won a $6,000 SEED Award which served as start-up capital for her business. In the same year, she won a grant award of $12,700 from the Enablis Energy Globe-Safaricom Foundation.
She also won a business plan competition organized by the Cartier Women’s Initiative, and received a prize award of nearly $12,000.
Recently, her business attracted an equity investment from the Blue Haven Initiative and the Opus Foundation amounting to $495,000. This was used to expand the business and purchase advanced recycling equipment.
Jason Njoku (Nigeria)
Jason is the co-founder of IrokoTV, a mobile entertainment and internet TV platform that’s particularly popular for its impressive catalogue of Nollywood movies.
But the struggle in the early days of this business was not as glamourous.
After failed attempts at previous businesses in the UK, Jason returned to Nigeria in 2010 to build relationships with local movie producers and purchase content rights for his new startup, IrokoTV.
Cash was tight, and starting this business would have been impossible without the £90,000 contribution of Jason’s friend and business partner, Sebastian.
Since then, the growth of IrokoTV has been remarkable. To date, the business has attracted up to $40 million in investment funding from foreign investors, mostly venture capital investors.
Its investors include Tiger Global, a New York-based private equity firm, and Investment AB Kinnevik, a Swedish venture capital investor.
In January 2016, IrokoTV raised $19 million in additional funding to expand its business into Francophone countries in Africa.
By using a combination of business partnerships and venture capital, Jason has been able to successfully raise significant amounts of capital to grow a company that was described by Forbes Magazine as “the Netflix of Africa.”
Anna Phosa (South Africa)
Anna Phosa is one of Africa’s most successful pig farmers. She’s often referred to as a ‘celebrity pig farmer.’
But her business journey wasn’t rosy, and she struggled to raise capital to start and grow the business.
In 2004, Anna started her first pig farm in Soweto with $100 contributed from her personal savings. She started with only 4 small pigs.
After four years — in 2008 — she was contracted by Pick ‘n Pay, the South African supermarket chain, to supply its stores with 10 pigs per week. This was a first breakthrough and the request grew quickly to 20 pigs per week.
By 2010, she had signed a major contract with Pick ‘n Pay to supply 100 pigs (per week) over the next five years under a R25 million deal – that’s nearly $1.9 million (in Aug 2017 terms).
With a contract in hand, Anna was able to raise capital from ABSA Bank and USAID to buy a 350-hectare farm property. Today, her farm houses 4,000 pigs at a time and employs about 20 staff.
Most entrepreneurs who want to start a business often turn to banks and end up disappointed. And that’s because banks tend to focus on growth and mature businesses that have healthy cashflows and collateral that can be used to secure the loan. If don’t have any of these, you could be wasting your time chasing a bank loan.
Many entrepreneurs don’t know this but banks are just one out of many options for raising capital. The problem is, too many unqualified businesses approach the banks for loans.
Aliko Dangote (Nigeria)
Africa’s richest man, Aliko Dangote, is a role model to entrepreneurs on the continent.
While his business interests currently spread across Africa, Dangote’s impressive fortune was built from very humble beginnings.
He started his business in 1978 with 500,000 Naira borrowed from his grandfather. That’s about $1,400 in today’s terms.
In the search for capital, do not leave any stone unturned. Do not overlook or take for granted sources of capital that are within reach. Many a successful business was started using finds raised from friends and family.
With hard work, Dangote was able to pay back the loan to his grandfather in about six months.
In the early years, Dangote focused on importing soft commodities, including rice, frozen fish, sugar and baby food into Nigeria. Today, his business interests have expanded into local production of cement, salt, flour and recently, petroleum refining.
These days, the banks, private and institutional investors are keen to invest in Dangote’s businesses because of the track record of success he has achieved over the years. But in the beginning, it would have been tough – if not impossible – for him to raise startup capital from any of these sources.
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