Mara Foundation hosted three venture capital providers on Friday 30th March 2012 at the Mara Launchpad, to answer questions to 50 assembled entrepreneurs about what venture capital is, how it works, and whether all those rumours we’ve heard are true… Solomon King, founder of Node6 tweeted at the end of the event, “Great advice and insight into the mindset of Venture Capitalists,” so it seems it did the job. Here you can read the profiles of the speakers and some of the live tweets that were made throughout the event (have your dictionary of financial jargon at the ready). First up though, is a bit about Mara Foundation’s own Venture Capital fund being launched soon.
This blog entry has been compiled by Nigel Ball and Gilbert Beyamba of Mara Foundation, with contributions from Solomon King of Node6 and Billy Branks of Crystal Interactive Systems who live tweeted throughout the event (with thanks).
Mara Launch Uganda Fund, a venture capital firm for entrepreneurs
As a young entrepreneur, raising funds for your idea or business can be challenging and it’s no secret that this is becoming harder as borrowing from banks is a nightmare for small entrepreneurs. One gets turned down for bank loans for a variety of reasons, including lack of assets, collateral and business experience. Don’t despair. It is because of these frustrations and discouragements like the amount of time it takes to secure capital, the rejections endured, and the lack of linearity and progress checkpoints over the course of the fundraising process, that entrepreneurs need to be creative in their search for alternative sources of financing.
Mara Launch Uganda Fund as an alternative source of financing is a Venture Capital firm designed to support entrepreneurs build high growth companies. With an emphasis on backing Ugandan youth with a talent for business, it provides risk capital in the form of debt but later converted into equity.
Although bank loans or debt financing seem to be the only source of financing on the Ugandan market, entrepreneurs need to know that there are several alternative sources of capital outside of the traditional debt financing, like venture capital. Venture capital is an option for enterprises that have a seasoned management team and very aggressive growth plans.
Mara Launch Uganda Fund provide risk capital between 5,000,000 UGX and 10,000,000 UGX to high-growth new and early-stage start-up, small and medium-sized Enterprises in various sectors which show good growth, in return for an equity share in the business. We believe it is the first locally owned venture capital firm in the country.
Speaker profiles from the event
Kim Kamarebe holds a BS Financial Engineering Degree from Princeton University and an MBA from the Harvard Business School. Kim has significant experience in Investment Banking, Business Management and Private Equity in the European and African arenas. Kim is currently in charge of East African Investments for TLG Capital, a leading private equity investor in frontier markets with a focus on Sub‐Saharan Africa. TLG has a number of investments in East Africa, including Quality Chemical Industries Limited, the first WHO‐approved manufacturer of antiretroviral and anti‐malarial medications in Sub‐Saharan Africa. Prior to TLG Capital, Kim worked at HSBC Bank’s Principal Investments Practice focusing on private equity investments in large cap African enterprises. At HSBC, Kim accumulated significant African commodities transactional experience, including but not limited to, the management and sale of a diamond mine in Southern Africa, and the proposed purchase of a chrome and platinum mine in Southern Africa. Kim spent the bulk of her career at Goldman Sachs International in London and New York, primarily covering Real Estate, Leverage Finance and Sub‐Saharan Africa Coverage. At Goldman Sachs, Kim worked on US$bn US and European real estate transactions, €bn European leveraged finance and financial restructuring transactions, in addition to European and African Mergers & Acquisitions advisory. Kim is a frequent speaker on finance and investment and sits on several Boards in the region.
Samuel is a development finance professional who begun his professional career in the microfinance sector working with Centenary Bank Ltd before joining French rating agency, Planet Rating where he focused on reviewing potential investment prospects in tier 2 – 4 MFIs, for various microfinance investment vehicles (MIVs). He joined the social impact investment space in 2009 and currently serves as LGT Venture Philanthropy’s investment manager in charge of the social impact fund’s investment activities across East and Southern Africa. This includes investment appraisal; due diligence; deal-structuring and post-investment portfolio monitoring. Samuel holds a masters degree in International Development Finance from Reading University (UK) and a BSc. Agriculture Economics from Makerere University.
LGT Venture Philanthropy is an impact investor supporting innovations and organizations with outstanding social and / or environmental impact on lesser advantaged communities across the globe.
Ted Pantone is the East Africa Director for The Mango Fund, a non-profit investment fund that comes alongside SME entrepreneurs to help them grow their businesses. Ted holds a Bachelors of Science in Business Administration from The King’s College. After college Ted spent several years managing a division of a manufacturing company in the US. He then transitioned to East Africa where he worked for Innovations for Poverty Action managing operations for a Bill and Malinda Gates Foundation funded project in Western Kenya. Now, with the Mango fund, he hopes to see developing economies grow rapidly through private investment in industries that will create lasting value.
Live Tweets from the event (hashtag #VCUG):
- Kim Kamarebe talking about company valuation methods. Options are EBITDA, asset valuation and multiples of revenue.
- Advice: Get a sense of the multiple of your industry and work that into your revenue.
- Second speaker mentions intuitive valuation. How much a VC “feels” your business is worth.
- More advice. Figure out when you want to approach a VC, source/bootstrap to get started, then approach VC with facts & track record.
- Kim says be realistic. Approach valuation as a negotiation and don’t get too cocky/unrealistic with your valuations.
- Kim on Exit: depends on fund size. $100,000 will not work with IPO exit.
- Exit options are numerous and are pretty much dependent on what the VC’s investment strategy is.
- Ted from Mango Fund says Good Management is often indicated by knowledge of products, industry, and competition.
- Teams at #marafoundation #maralaunchpad discussing the biggest problem of startups venture capital
- Exit strategies are very important
- Kim says Good management is purely objective and can be indicated by dedication, character,and good track record.
- Sammie: Good management includes making decisions on gaps in team expertise and working towards filling those gaps.
- Ted: If you can get audited financials, do so, but they are not mandatory.
- Qn: What if I’m more interested in skills than cash?
- Kim: Get the cash, take it home. Consultancy services (defined by VC skillset) can be valued and that gets converted into equity.
- Sammie: Projections need to have a basis. Can your assumptions be backed up by fact or research?
- Sammie: Understand stages of growth and know when to bring in partners. Manage and understand your growth cycle. Do not be myopic.
- Kim: Treat your equity partner like a partner. Don’t lie or be dishonest about your business history.
- VC Involvement in the business is dependent on the VC’s confidence in the team and also the maturity of the team.
- Kim: Most entreprenuers have an ego issue. The VC may need to fire you to get the business growing better and faster.
- Kim: VC’s that want to be involved in the business are often a good thing. Their goal is to build the business.