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5 Common Sales-Related Mistakes Startups Make

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5 Common Sales-Related Mistakes Startups Make

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Even though we broke down the sales prockoaxialní kabel hornbach meia com pompom air nike sneakers nfl jersey sales brandon aiyuk jersey detske lyžiarske nohavice 134 140 kilpi predam dänisches bettenlager lounge set miroir terzo callaway reva femme estiti eleganti max mara nike technical cross body bag ciorapi compresivi pana la coapsa játék hajszárító árukeresö balmain carbone fragrantica Purchase college team jerseys at a discounted price and of high quality ss to the three main steps of prospecting, pitching and closing, as a person who has been selling within the African market for 20 years, I wish I can say the practicalities of day-to-day operations were as easy as they sound.

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Because selling is a difficult skill to master, there are a lot of nuances that can trip startups if missed, and in this post, I’ll cover some of the sales-related mistakes being made within the ecosystem.

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  1. There is No Product to Sell

Sometimes what startups try to sell — mainly to investors — is the idea. Instead of taking time to build a prototype or a minimum viable product (MVP) using the resources they have, they jump from one investor meeting to another to sell them the idea.

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They’ll present facts like what the potential size of the market is, and how their research shows the problem they’re trying to solve is a huge one, and how they’re well-placed to build the solution. However, investors would rather see an MVP that has already been tested in the market with relevant preliminary metrics (number of sales made, etc…).

This is not to say that selling an idea to investors with no product doesn’t work at all. We live at a time when it does — sometimes — but it shouldn’t, because it’s really hard to prove product-market fit with no product.

2. There is No Sales Team

It’s strange to walk into the offices of startups and discover there’s a tech team and a product team, but no sales team. If the startup is at its inception and it really, really, really cannot afford a sales team, then the founding team should dedicate a percentage of their time selling.

Unfortunately, co-founders/CEO’s tend to value meeting investors rather than potential clients even though a strong sales record would help present evidence so the company could receive funding.

3. Selling to the non-decision makers

Just because a company is a prospective client doesn’t mean your point of contact within that company is a decision maker. Ideally, as a sales representative, you would want to bring in the decision-maker to the first meeting, and determine if your solution is within their budget. However, that’s not always possible because of hierarchical charts within organizations so you might need to meet and pitch to several other people before you reach the decision-maker.

4. Targeting non-consumers to pay for consumers

This is interesting and while it’s commonly seen within a diverse group of startups, we’ll use Edtech to illustrate. Products are built for potential students, but then instead of investing in a sales team to sell the product to schools and students, the sales team goes to the CSR department of corporates to sponsor hundreds of students at one go.

Similar to the “sell company to investor” path, this is seen as a path of least resistance. However, even if it appears lucrative in the short-term, it’s ineffective in the long-term because it’s not sustainable.

This action may lead to deals being made and cheques being signed, but the startup isn’t capturing the market directly. Instead of selling to the students and relieving their pain, they sell to the CSR department to create more gain for them in terms of a good press release, etc. This leads to a disconnect from the actual market, because you’re selling to someone who doesn’t really need to use your product.

Also, not many corporations have CSR programs to begin with, and just because a company paid for your program once doesn’t mean they’ll pay again. When it comes to CSR projects, companies like to vary them from year to year, or else they become monotonous.

5. Not following up with clients

Startups think the selling process ends with closing. However, following up with clients to understand their satisfaction with your product or service.

Selling to the market directly is hard.

It’s slow and time consuming but it is the best long-term strategy for any startup. It provides useful market research and as a startup you’ll be informed early on if there’s product-market fit for your product.

Co-written with Amina Islam

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Stand Out By Selling Creatively

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Stand Out By Selling Creatively

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Stand Out By Selling Creatively

Creativity is a very important skill to hone during your sales career. Not only will you need to capture the attention of your prospective clients, but also their hearts as that would help them act on your proposal.

Simply said, creative thinking is the ability to think in new and original ways. For prospecting clients, you’ll have to be creative at getting their attention. Due to the hyper-connectivity of our modern life, most people are suffering from information overload. As a salesperson, you need to take this into consideration every time you prepare a sales pitch: attention is a rare commodity so be creative. This could mean applying your creativity in your marketing channels or in the way that you find leads. For example, for the latter, being creative might mean finding a way to bypass the gatekeepers to reach the decision-maker, which could mean researching where they play golf or which social clubs they’re part of and joining those just to get access to them.

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Following that, while presenting your sales pitch, you should aim to connect with them at a visceral level rather than an intellectual one. Filling your presentation with metrics and data may sound compelling, but social science research has shown over and over again that people are not rational beings. Emotions drive a lot of decisions. Neuroscientist Antonio Damasio studied people who had received brain injuries that specifically damaged the part of the brain where emotions are generated and found their decision-making ability was seriously impaired.

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Data Tells, But Stories Sell

Stories work because they’re an effective means of communication that can capture the imagination and be internalized. Most importantly, stories have the power to evoke emotion. So whenever you’re interacting with a potential client, as yourself, “What am I trying to make them feel?”

Definitely, the goal is never, “Repelled by me.”

You want them to connect with you and trust you. You also want them to be engaged and entertained by you so they’ll like you. Persuasion research has shown that people are more likely to say yes to people they like. Nobody likes to get bored, and definitely, not during a process that might end up with them parting with their money.

Storytelling in selling doesn’t mean dabbling in fiction, though. Any stories told need to be true. Otherwise, engage the potential client’s imagination by saying, “Imagine a scenario where you…”

Also, everytime you go through a pitch with a client, pay attention to their reactions, validating the exact parts that work and the ones that don’t.

Storytelling is a skill that heavily relies on creativity as it requires a person to take different perspectives.

So how do you become more creative?

Creativity is a skill that can be developed through practice. It requires lateral thinking, which helps people generate new ideas and solve problems by looking at the world from different perspective.

Just like any skill, creativity can be learned through practice:

– Because creative people are good at noticing things around them, practice your observation skills. For e.g. Everytime you find yourself in a new environment, imagine it’s a setting in a novel and describe what you see. How do the windows look like? What is the kind of floor? What color were the tables? Another thing you can do is find faces in clouds.

– Borrow ideas from different fields. Creative people read across genres as it allows them to implant ideas from one field to another. Think of how James Dyson used cyclone systems to suck up sawdust in sawmills and applied them to the home vacuum.

– Hold regular brainstorming sessions with your colleagues or your potential clients. The main ground rule for brainstorming sessions is to not criticize any idea and to have ideas build on each other.

– Apply the SCAMPER method. SCAMPER is a mnemonic that instigates answers to the following generic questions:

● Substitute: What can you substitute in your solution to make it better?

● Combine: What two elements within your solution can you combine?

● Adapt: How could you readjust your solution so it would serve another purpose? Modify: How could you modify your solution to make it better?

● Put to another use.Who else could use your solution?

● Eliminate.How could you simplify your solution?

● Reverse.What if you try to do the exact opposite of what you’re trying to do now?

  • Hang around children. Creativity is usually associated with play, and hanging around children gives one more opportunities to play and experience the world from a different point of view.

Co-written with Amina Islam

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The Challenges Around Investing in African Startups — a perspective from Tania Ngima

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The Challenges Around Investing in African Startups — a perspective from Tania Ngima

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There is no denying that financial capital is an important element for business growth. Sufficient working capital allows a business to take advantage of new opportunities that come up, invest in new assets, or hire more staff to expand operations. As mentioned in the previous article, it is unfortunate that a lack of sufficient capital has been the nail on the coffins of far-too-many startups, especially in Africa.

We had a conversation with Demo Venture’s CEO, Tania Ngima, who shed light on why it is hard to sell African ideas to investors, especially international investors.

Demo Ventures is the investment arm of Demo Africa, an initiative which runs pitching competitions and serves as a launchpad for innovative African technologies.

There is a market gap that Demo Ventures satisfies. On one hand, investors want to invest in Africa but may lack sufficient knowledge about the market. Also, they might not have the bandwidth to manage multiple investments, preferring instead to makemikrobølgeovn med grill og varmluft comprar fatos de treino adidas baratos astro a50 ps4 and pc mikrobølgeovn med grill og varmluft jayden daniels jersey meia com pompom polaroid κάμερα meia com pompom gepunktete strumpfhose comprar fatos de treino adidas baratos polaroid κάμερα brandon aiyuk jersey youth golf d mallas para hombre nike astro a50 ps4 and pc single large investment — if at all. That is why you will see that an approximate 40 %* of the funding that went into the African startup ecosystem during the first half of 2018, went into two companies only; Cellulant and Branch (Link Here). At the same time, there are many startups that are looking for different sizes of funding. So Demo Ventures was started to bridge that gap. Currently; it is in the process of raising 100 million $ in equity to invest in early-stage tech startups focused on consumer web and mobile, renewable energy, and financial services, among other industries (Link Here).

So why is it hard to sell the African dream to investors?

Infrastructural and political challenges

Conducting business in the African market is not easy, with challenges existing at both the macro-level and micro-level scale.

Macro-level challenges could be infrastructural, like nonexistent roads or minimal access to electricity in rural areas. In some cases, there are restrictive policies and high import tariffs that make it expensive to do business in emerging markets, compare to other more developed markets.

Unstable political climates tend to hinder business growth as well. For example, on the 15 Jan 2019, Zimbabwe’s government shut down the internet after protests turned deadly (Link Here). Imagine the impact of such a shut down on businesses operating within the country.

Headline-grabbing news like these tend to make investors nervous.

Problems with Execution

Micro-level challenges deal with business execution — or the daily operations of running a business. Tania Ngima notes, “The difference in execution is the difference between being able to give your investors a return on investment, or not.”

She mentions that execution problems tend to center around the founding team. Sometimes, they get so passionate and invested in the shape or form of their original idea that they might not be willing to be agile and open to diverse opinions The questions that they need to ask themselves are, “Are we willing to rethink our product if the market is not adopting it as anticipated? Are we willing to rethink our business models to deal with changing legislation ?”

Another challenge with the ecosystem is that local investors are hard to come by. Only recently are angel investors from Africa coming around to invest in startups, as there is the old-school thinking of investments only being poured in real estate or government securities. Because of that, it’s very easy for international investors to raise the question, “If you can’t get your own people to invest in you, then why should we?”

Personal Challenges

Finally, entrepreneurship as a legitimate career path is still not fully understood or accepted culturally. While it is easier for children who grew up within entrepreneurial families to become entrepreneurs, the road for the rest of the population is paved with thorns.

Entrepreneurship is generally viewed as the option until one gets a real job. Also in the case that someone tries to pursue a business venture alongside a real job, the side hustle is not given the energy and focus it requires. That could at times translate into higher failure rates.

Besides the emotional barriers associated with having family members not accept them for following a unconventional path, entrepreneurs usually don’t have the financial bandwidth to fail fast or fail often. While in the US, there’s more liquidity for startup founders to fail a couple of times, it’s more “do-or-die” in this market.

Or to be more literal, “do-or-get-a-real-job”.

Also, ideas from Silicon Valley are being imported into Silicon Savannah without taking care of the fact that the two markets are nothing alike. In Silicon Valley, there’s more experience in angel investing, and proven track records of successful exits. As Tania is quoted saying, “In Africa, it’s virtually impossible for a startup to exit via IPO as our stock exchanges are not that mature yet.”

Instead, exits are usually made by buyouts or acquisitions.

But there is hope.

More international funders are looking here. The most recent Weetracker report, “Decoding Venture Investments in Africa 2018,” highlighted that over 725.6 Million dollars were invested in Africa in 2018. It also underscores that the money went into 458 startups with 80 % of the deals concentrating around South Africa, Nigeria and Kenya.

This newly-spurred interest in the African startup landscape by venture capitalists is a good thing. It shows venture capitalists have enough confidence to expect a return on investment from Africa, rather than signing it off solely as a place to pour charity money into.

  • 67.5 million $ out of the total 168.6 million $

Story co-written with Amina Islam

 

 

 

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Mistakes to Avoid as a Startup While Fundraising

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One of the main growing pains of business is reaching a point where you’re hurtling along so fast that self-funding or bootstrapping is no longer sufficient to keep you going. When you grow at that fast a pace, the wheels may start to come off, which could put your business at risk of failure. This necessitates fundraising as a strategy to keep the lights on and the doors open. In the previous post, we looked at the main challenges African startups face when it comes to raising funds from investors. In this post, we look at different types of funding and the factors that may attract — or repel — investors.

Generally, there are two main categoriesgolf męski zara billige matratzen babyphone mit alexa verbinden dlm382 aiyuk jersey sport jumpsuit nike köröm díszítő szalagok carhartt uk gepunktete strumpfhose vans chima ferguson pro 2 port royale black forty two skateboard shop meilleur lampe uv suport tableta bord nike air max ivo black and white amazon massaggiatore anticellulite amazon nfl jersey sales of funding a startup founder can seek: equity capital or debt capital.

Equity capital is in the form of funds paid into a business by investors in exchange for stock. Such funds come with a risk for the investors, as they will not be repaid in case of corporate liquidation until the settlement of all other creditors[1]. However, investors might be willing to take the risk as the value of their stocks might appreciate over time, allowing them to sell at a profit. Also, owning sufficient number of shares may give them some degree of control over the business.

The alternative is debt capital, which is given to a business with the understanding that it must be paid back at a predetermined date and with an agreement to pay interest in exchange for using the money [2]. Debt capital can be difficult to acquire for startups that are at the beginning of their journey because it would require proven track record of success. However, the upside of getting debt capital rather than equity capital is that it doesn’t force the business to forfeit ownership.

Regardless of what type of funding a startup seeks, as founder, you need to get the fundamentals of your pitch right before attending investor meetings. In conversations with both Tania Ngima — CEO of Demo Ventures — and Jason Musyoka — Angel Investors Manager from Viktoria Ventures, presented below are common mistakes that make investors shudder:

1.Presenting a back-of-a-napkin idea

Ideas drawn at the back of a napkin look cool. But without market implementation, they make better napkins than business pitches. An idea must be validated on the ground before any attempt is made to grab an investor’s attention. While startups don’t need to have broken even yet, they need to show proof-of-concept by being revenue positive and having a base of paying customers. However, if market validation is what you’re looking for, the avenues for these are ‘award-type’ competitions and grant funding. Crowdfunding could also possibly help you to go from idea to product/service validation.

2. Helter-skelter Financial Records

It is common for startup founders to get so caught up in the trenches of their day-to-day operations, that they don’t keep their accounts in order. Showing up for investor meetings without supporting documents such as a business plan and financial records is such a rookie mistake, it makes you look like you were lost and had stumbled into the wrong room.

Investors need to see a clear path on how they’re going to make their money back. A business plan answers questions on how the business is planning to stay on track while scaling while financial records show a summary of the startup’s financial health, covering details on assets, liabilities, cash flow, and more.

Investors also know that, in many cases, projections and business plans are likely to change over time. These documents are useful in gauging your thought process as an entrepreneur (including how you think through assumptions, contingency plans, changes in the external regulatory or market environment) as well as how ambitious you are.

3. Competition? What Competition?

Sadly enough, startup founders are divided into two camps — those who obsess over their competitors that they don’t get much work done, and those who go through life pretending they don’t exist.

While stalker tendencies like putting google alerts on your competitors is not recommended, knowing they exist is important. More important is identifying what your positioning is compared to them, and what makes you unique and sets you apart.

4. Crazy valuation — a unicorn, anyone?

The valuation that you show up with need to be backed up by the numbers in your financial records. Unfortunately, what has become common is for African founders to base their valuation on the target market or the latest valuation of a similar startup they saw on Shark Tank.

Others value their startups by multiplying their annual revenue by numbers that are not very reasonable — like 15x. While valuations based on revenue multiples are more of a subjective science rather than an exact one, factors to be considered are risk, growth and profitability [3,4]. Risk has a negative correlation with revenue multiple whereas growth and profitability have positive correlations. From his experience, Mr. Musyoka puts a 5x revenue multiple as being average in this market.

Co-written with Amina Islam

References:

[1]https://www.accountingtools.com/articles/what-is-equity-capital.html

[2]https://www.thebalance.com/the-three-primary-types-of-financial-capital-357332

[3]https://moronesanalytics.com/develop-your-intuition-about-valuation-multiples/

[4]https://exitadviser.com/business-value.aspx?id=business-valuation-methods

 

 

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Deconstructing the Local Angel Investment Cycle in Kenya (Part 1)

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Deconstructing the Local Angel Investment Cycle in Kenya (Part 1)

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Imagine you’re meeting your relatives for the annual holiday dinner and you notice your nephew is missing. His mother explains that he’s busy building his own startup so he no longer has time for anything.

Not even family dinners.

Noting his apparent tenacity and how he’s trying to do something with his life rather than idle away on the sidewalks complaining about the lack of economic opportunities, you offer to back him up financially if he splits ownership with you.

Six months later, you ask him how business is going, and he tells you he’s nearly nailed his product but he needs more money.

Three months later, you re-inquire about his progress, and he tells you he has perfected his product but client acquisition has been a bit difficult in this market and he needs more money to keep the lights on.

In the next annual family dinner, he plavky chlapec 128nove mikrobølgeovn med grill og varmluft nike wiki dlm382 nike technical cross body bag jayden daniels lsu jersey air nike sneakers meilleur lampe uv mikrobølgeovn med grill og varmluft brandon aiyuk jersey logitech c270 microphone not working köröm díszítő szalagok welche kaffeemaschine für 1 person nike air max aliexpress logitech c270 microphone not working attends.

Only he drives up to the house in a Mercedes Benz.

You wonder how that is possible considering all the money troubles he’s been complaining about.

Unfortunately, that’s how angel investing appears in emerging economies like Kenya.

Informally.

In investment terms, an angel investor is an affluent individual who provides capital for a business startup, usually in exchange for convertible debt or ownership equity. In African markets, arrangements with angel investors tend to exist informally, are usually undocumented, and are catalyzed by pre-existing connections (familial or otherwise).

The only problem is sour outcomes of such investments tend to translate to family feuds and cautionary tales that reinforce the old-school thinking that the only secure investments are those going into real estate or government securities.

That’s why a need exists for institutions like Viktoria Ventures (VV) that formalize angel investing. Viktoria Ventures is a Kenyan company that helps early-stage companies obtain seed funding from local angel investors. It does that by managing a network of local angel investors and guiding them through the investment life cycle so they could screen deals, do due diligence and overall, structure a deal formally where both parties win.

That’s definitely much better than waking up one day to discover that your nephew has been siphoning your hard-earned money to upgrade his car.

Investment Life Cycle

The investment life cycle as explained by Jason Musyoka from Viktoria Ventures are detailed in the following sections.

Screening

The initial stage of the investment life cycle is screening. As an investor, you need to be really picky about the deals you select. As mentioned in the previous post, as an investor you need to see more than a back-of-a-napkin idea. You need the startup to have a validated idea with paying customers. This is not to say that a back-of-a-napkin idea will not work if funded, the realities of the market are such that there are way too many ideas compared to available investment money.

It also means that you’ll need to be more analytical while attending pitches, rather than being blown away by catch phrases such as,

“This will help us make the world a better place!”

“This is absolutely going to 100x very fast and we want you to be part of it!”

“We are the Facebook plus Uber multiplied by Reddit of our industry!”

“We have no competition!”

“We’re closing next week and want you to be part of this revolution!”

As an investor, you have to be equipped with the realistic expectation that the failure rate among the startup ecosystem is very high. While data from the African market is not readily available, the closest one given by a Nigerian bank Stanbic IBTC claimed that over 80 % of Nigerian startups fail within their first five years.

Due Diligence

After filtering out opportunities in multiple stages that look closely at the founding team, business idea, traction, and business model, due diligence needs to be made. Due diligence is an audit made to confirm all facts given by the startup are correct.

The main categories you need to look at as an investor during this stage are:

  • Market diligence, which covers your independent review of the claims that the entrepreneur made regarding the industry they’re operating in. It’s necessary to verify the market size, competitive players in the market, and industry trends.
  • Business diligence, which looks into specific claims that the startup makes about its own operations. These include looking at their books to review revenues and expenses, seeing what their customers think of their product/services, and doing background checks on the founders.
  • Legal diligence, which focuses on the company’s structure, documentation, and history, to ensure everything is as claimed. This involves wading through a humongous pile of paperwork with a fine-toothed comb, including but not limited to, corporate records, employee benefit plans, properties and assets owned, financing documents, etc.

Deal Structuring

Deal structuring necessitates a negotiation process where both parties win and the investment arrangement is formalized. Ultimately, the goal is to be in what is known in game economics as a positive sum game, where both sides gain more by cooperating than by acting on their own.

While the entrepreneur gets an influx of money, as an angel investor you can also bring in a set of much-needed expertise into the startup. You can also make demands for better governance within the organization rather than watch it being run like a kindergarten playground.

Major red flags when it comes to investor-entrepreneur conversations are as follows:

  • Feeling like integrity is lacking and there isn’t 100 % honesty.
  • Receiving push back on the subject of reporting, board meetings, or access to company information.

In the next post, we’ll shed light on post-investment activities such as value addition and exiting.

Last but not least, even if you do every step of the investment life cycle correctly, that does not mean your investment will pan out as it’s important to note that angel investing is still risky business.

Co-written with Amina Islam

 

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What Type of Person Do You Need to Be To Become an Angel Investor?

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What Type of Person Do You Need to Be To Become an Angel Investor?

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In a couple of recent posts (here and here), we deconstructed the local angel investing cycle. One observation that comes up is that despite the existence of African-based investment institutions, a large percentage of money pumped into the continent still comes from international institutions. Why is it that we still haven’t tapped into the big reservoir of African high net-worth individuals (HNWI’s) who can become angel investors but are choosing not to be.

There’s a general idea that man fears that which he does not understand, and given the generational gap that usually exists between HNWI’s and startup founders, it’s easy for the former to dismiss investing in such startups and instead focus on buying properties.

But angel investing can be quite lucrative — as long as you understand it.

It’s a Numbers Game

Googling “average return on angel investing” will most likely return a hit that mentions a 27 % internal rate of return. Quoting this source, “Multiple studies* have shown that over the long run, carefully selected and managed portfolios of personal angel investments produce an average annual return of over 25 percent.”

While this might make your eyes light up with dollar signs, it’s important not to take that number at face value. The key phrases in the previous paragraph are “over the long run” and “carefully selected and managed portfolio.”

Angel investing is risky business. According to Failory.com (the self-proclaimed experts of failure), 90 % of new startups fail. Investors need to go in knowing they’re writing a check they might never see again.

But here’s the thing, when it comes to investing in startups, the Law of Large Numbers applies, where your probability of success is directly proportional to how many times you play. Given the risky nature of the game, this means it’s prudent to limit how much you invest to 10 % of your savings.

Deals don’t get publicity

Another thing to note is that many deals on the continent don’t get announced publicly because people don’t want to put their wealth on display — or in question. This is not surprising in countries where people still associate wealth with corruption or drugs.

Because the startup ecosystem in Africa is still at its infancy and because of this tendency to not publicize deals, the information on this specific market is still incomplete and skewed.

Investing in startups is not for everyone

One more thing that needs to be highlighted is that angel investing is not for everyone. It takes a special type of personality to direct a portion of their investment into something as unpredictable as a startup. Investors need to have a long-term view (measured in years if not decades). Also, they should be financially able to tolerate losses and have a high threshold for risk — and failure.

As quoted here,“So if you are the kind of person who is going to get upset when you lose 100 percent of your $50,000 investment in a promising startup, or can’t deal with the fact that the day after your founder launches a breakthrough product, Google unveils a better, free version that soaks up the entire market, then angel investing is not the business for you to be in…just as you clearly should not be an entrepreneur yourself.”

Steve Jobs once said, “Stay hungry, stay foolish.”

He perfectly encapsulated the sort of personality ideal for an entrepreneur. That phrase would need to be modified for an investor so it reads, “Stay hungry, stay patient.”

Personally, I think every one of us can invest in the people who build our economic ecosystem to some extent. You don’t have to write a 1,000,000 $ check to support budding entrepreneurs. You could invest in them by sharing your expertise and time. Not only that, but I feel if we were to make solid progress as an economy, it is not just something we can do but also something we must do.

In the next post, we explore venture builders and compare them with venture capitalists.

Co-written with Amina Islam

 

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Why Emerging Markets Need More Venture Builders?

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Why Emerging Markets Need More Venture Builders?

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When you listen to entrepreneurs’ stories, many times they’ll say something like, “At the beginning, we didn’t know what we were doing.”

Even Sir Richard Branson’s company Virgin was named to reflect how new at doing business they were when they began.

However, imagine a scenario where every young inexperienced entrepreneur is backed by a veteran who already carries the battle scars of business. Imagine how that would drive faster economic growth catapulting Africa to new heights.

This could be done by multiplying the number of venture builders in the market. Venture Builders are investors who not only write cheques, but also take an active role in building the startups they invest in. In other words, they get their hands dirty, leveraging their knowledge, connections and resources to build their portfolio startups.

One Berlin-based venture builder — Rocket Internet — been on the news this past month as the backer behind the e-commerce behemoth, Jumia, which just got listed on the New York Stock Exchange.

This raises the question, why don’t we have more venture builders on the African continent?

Who are Venture Builders?

Venture builders are also called startup factories. They efficiently churn out startups to the market by executing several of the startup’s functions such as:

  • Market research and idea conception
  • Building high-performance teams
  • Deploying shared resources and services such as legal and finance

Taking care of these services gives the entrepreneurs time and space to focus on their areas of competency.

Some venture builders are full-stack, aiding startups in every stage of their life while others have specialized capabilities.

What’s the Difference Between Venture Builders and Accelerators?

While some might confuse venture builders with accelerators, there’s a distinct difference between the two. First of all, venture builders don’t run competitive programs that culminate in Demo Day. They have skin in the game and are there to run operations alongside the entrepreneur.

Another difference is in the time investment made. Accelerators tend to run for 6 to 9 months and then entrepreneurs are sent out to fend for themselves. The problem with this model is they often find themselves asking, “What next?”

Venture builders, on the other hand, are invested — both with their finances and their time.

Which is exactly what our tech startup scene needs.

Emerging markets are volatile and vulnerable. Entrepreneurs need to overcome bureaucracies, as well as economic and infrastructural challenges. There’s also a shortage of skilled labor in the market, especially in STEM fields. That’s why bringing in a builder to share their resources across multiple startups would catalyze the ecosystem.

Also, venture builders are more likely to attract VC capital than individual entrepreneurs. Their established systems for manufacturing products, strategizing marketing and building high-performance teams tend to be more stable, thus lowering the perceived risk for investors.

Having a venture builder around would be too good an idea for every entrepreneur, but what’s in it for them?

More equity, of course. Because of all the value they bring to the table, they tend to take more equity than their counterparts in the venture capital world.

Just like local angel investors formalize investing, startup factories formalize the value added by investors to startups.

I’ll end with this quote from the website of Unicornify, a Venture Builder, “Money is stupid. It doesn’t think. It doesn’t network. It doesn’t solve problems. It doesn’t interface. Yes, it can buy you stuff but how do you know to buy the right stuff. We try to make money smart by attaching network and experience.”

Co-written with Amina Islam

 

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Why You Shouldn’t Fall Off The Bandwagon of Lead Generation

success, strategy, business

Why You Shouldn’t Fall Off The Bandwagon of Lead Generation

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Being at the helm of your own company has many challenges. One of the main ones is balancing client acquisition with work execution. With only twenty four hours available to you every day, it’s always tempting to lean towards the task you find easier or more enjoyable.

For me, that’s usually work execution.

Which means that I struggle when it comes to staying religiously disciplined while generating leads and acquiring new clients.

What usually happens is this: at the beginning of every quarter, I start off with enthusiasm, but then I slow down the process of generating new leads, as I turn my focus towards work execution.

However, this would eventually catch up with me due to the turbulent nature of the market I work in.

What should drive your sales process is actively generating leads rather than relying solely on referrals and upselling to current clients. Also, keep in mind that industry statistics show that 63% of consumers requesting info on your company today will not purchase for at least 3 months, so you need to always stay ahead of the game.

Referrals are usually a good thing as they’re a sign of clients who were satisfied enough to pick up the phone and recommend you to their peers.

But you can’t always count on them.

Also, clients will primarily refer new clients who are at their level of the financial spectrum, which could make you plateau if your aim is to continuously acquire bigger projects.

Focusing on expanding business off of our current client base is another easy thing we tend to do as business owners but it can be very risky.

I learned this lesson the hard way when during the second quarter of 2016, a new marketing director joined one of my top clients. The new head was skilled at pitching for extra budget and within 3 months, the marketing activities we were executing lead to a spike of 40 % in revenues.

However, during the first quarter of 2017, a new regional management team took over, drastically cut the budget, sending our revenues into a nosedive. This sent us scampering and suddenly, we had to ramp up our lead generation machine.

It did not have to happen that way.

The mistake we made there was relying on that account to generate revenues when we could have diversified by acquiring more clients.

Define Lead Generation Goals Rather Than Revenue Related Goals

It is common for salespeople to define revenue-related goals. So when you close enough deals to hit that revenue (even if it’s just from a single client), lead generation takes a backseat.

However, what you need to do is set goals related to lead generation activities:

  • Number of leads reached out to (on Linkedin, through cold calling or referrals)
  • Number of referrals followed up on
  • Lead conversion

How I learnt to set those goals is to use my own team’s historical data to determine the number of leads we need to periodically generate to guarantee growth. For example, in one of our most productive quarters to date, we had 21 leads, followed up on 16 of them, and converting 25 % to business that lead to our surpassing our revenue targets by 49%.

Armed with this information, generating 20 leads every quarter has now been set as a goal so we can plan ahead.

What if you don’t have capacity?

Maybe you shy away from generating leads because you’re worried about converting so many of them into clients that you find it difficult to deliver due to stretched resources. The truth is, you don’t really know your capacity for execution until you’re operating at your limits. One of the quotes by Grant Cardone, the author of 10x rule, “Never lower your target; increase your actions.”

Unless you’re working on a reimbursement system, where you have to put your own resources to run projects before you get paid, new clients can also help you expand your capacity as they come equipped with resources that could help you free up some of your time — e.g. training a new sales team. You’ll never know until you have those conversations with your leads.

Overall, remember that if you’re focusing on growth, you’ll always need to keep your lead generation running in the background

 

 

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Are You A Visionary Sales Leader

board, chalk, business

Are You A Visionary Sales Leader

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In a world where the majority of people have become salespeople, it takes more than a title to be a sales leader, especially a visionary one.

And no, multiple years of experience selling does not cut it. Neither does marshalling the operations of a sales team.

Visionary sales leaders stand out, not only by what they do but also how they do it and why. Visionary leadership combines the two skills of seeing the potential for change with the ability to lead others to cause that change. Visionary leaders share the following traits:

They operate on a pull strategy rather than a push one. For instance, rather than push their product down their potential client’s throat, they pull them to buy it by inspiring a vision of how it could improve their life.

They also pull the best out of their team members by communicating the why of what they’re selling rather than its what only. For example, a visionary leader would explain to their team why they should be hitting their sales targets, and would also ensure that outcomes are tied to intrinsic motivation. By contrast, a typical sales manager would most likely use extrinsic methods of motivation, enforcing and reinforcing the carrot-and-stick approach.

They neither bark down commands nor micromanage. Instead, they know how to properly delegate. As a leader, your job is to set expectations and empower your team with the skills and knowledge they need to do their job well. Then you must give them autonomy and get out of their way. More importantly, every employee needs to feel like they’re part of the bigger vision, regardless of their position.

The best way I’ve witnessed that was in a company that made its sales target visible at the front office, and even the receptionist could explain to a visitor what that target’s achievement meant to the company. This made sure that everyone understood the value the company provided, and could potentially go out, and bring in more clients.

They know that selling is about building valuable, meaningful and trusted long-term relationships rather than short-term transactional ones. Imagine coming to the realization that you don’t have the capacity to deliver to a client according to their specifications, and referring them to a competitor with the capacity. The client would appreciate that you made a decision that was good for them even if it jeopardizes your position in the short-term.

Building relationships with their sales team is also important, as they nurture the relationship over a long period of time through continuous training and mentoring, leading to team chemistry and loyalty. This is in contrast with continuously recruiting market champions who come with great experience and contacts, but ask for a very high salary scale and are in many cases, less loyal.

Their mantra is ‘Value, value, value.’ They build sales strategies based on the exchange of value with clients. They also live coherently with personal values such as integrity and honesty.

They listen, patiently, to everyone. They listen to their team to understand the challenges they’re facing, and rather than criticize, they opt to give constructive feedback on their work. They also listen to their clients to get feedback on what they’re selling. They listen to the market to see where it’s going and if they need to pivot their product or service, or reframe the message they use to sell it.

They drop their ego, and let others shine. They don’t try to take credit for everyone’s work. They also keep track of their team’s progress, and hold them accountable to their goals, by keeping the lines of communication open.

This also means giving their team enough freedom to make mistakes, without fearing repercussions. This is done by building a culture where failing forward is allowed, and mistakes are dissected and distilled openly to understand the lessons learnt.

Last but not all, they tolerate risks because visionary leadership is about change…changing lives, changing sales metrics, changing the business, and change is never risk-free.

So how many of your traits describe you?

Leave your comments below.

Co-written with Amina Islam

 

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Always Look On The Bright Side Of Life

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To Keep Makeup Looking Fresh Take A Powder

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Michael Franklin

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