Innovating for local, Low income consumer markets
Aisha Raheem-Bolarinwa. Founder Vision Director, Farmz2U
1. You need a proper understanding of your target market, in order to develop a good solution.
2. Understand the pain points of your users or customers and create solutions they can easily access.
3. Whilst trying to make profit, keep your customers in mind and develop what they can afford.
Nick van der Velde. Project Manager, Bopinc.
1. To attract low-income consumers, your product needs to be understood, desirable, easy, and rewarding.
2. When offering relevant value propositions to your customers, design an integrated behavior change campaign and leverage digital avenues.
3. Make your business rewarding by leveraging partnerships that are very useful in meeting the demands of your consumers.
Debt or Equity Financing?
Lelemba Phiri - Operating Partners, Enygma Ventures
1. Equity can be taken at any stage of your business.
2. Equity shouldn’t be taken to acquire assets( a one-off thing), it is key that equity is taken when you have plans to scale(size) your business.
3. The longer you wait and grow your business without equity, the more your business becomes more valuable. Grow your business before inviting an investor.
4, Before you take equity, you need to consider;
i. The stage of your business
ii. What you’re using it for
iii. How much you need
iv. How long before the investors exit?
5. Sales are the best type of financing for your business.
6. An equity investor will like to see your;
i. Business profitability
ii. Future projections for your business
iii. Market share- how large the market (global )is able to get and how much of it you’re able to access
v. Debt. The amount of debt you have affects your valuation. The more debt, less valuation for your business
vi. Traction - the evidence of having achieved something over a period of time.
Lombe Lumbwe - Investment Manager, AgDevCo
1. When sourcing for debt financing be critical in specifying what the debt is for.
2. Debt shouldn’t be taken if you’re just starting to grow your business, other sources of financing such as crowdfunding from family and friends, grants, or angel investors should be considered.
3. A more mature business will be able to get debt easily than a new business because it has proof of viability.
4. Mitigating risks in agriculture can be difficult.
5. Debt financiers would like to see the following in your business:
i. Reliable access to water and energy
ii. Land access
iii. Good Product
iv. Reliable Team
v. Skillful entrepreneur
6. Management is key - before you present your business, have a business model that works, i
7. You have to be a credible person and a person of outstanding character because debt financiers will do a background check on you before handing out loans,
Advancing Nutrition and Health in Africa
Myriam Sidibe - Founder and Chief Mission Officer, Brands on a Mission.
1. Health and wellbeing are the Foundation of Social Justice.
2. Building business brands is an opportunity to solve the nutritional crisis. To drive a brand, we need to build brands based on what we can grow in Africa. It is important to focus on how to match business, nutrition, and public health in ways that promote positivity and growth of the economy.
3. Since Health trends are becoming more popular, it is vital to be true and authentic in terms of quality.
4. Brands on a mission are brands that not only stand for something but are concerned about who they stand with.
5. Brands on a mission are brands continually thinking about changing the system and keeping the focus on what is attainable.
6. Brands on a mission are brands that measure the impacts of the brand on the consumers.
7. Brands on a mission are concerned about getting quality, hygienic and edible ingredients.
8. Consumers are the best resources.
9. In order for a brand to achieve its mission and goals, an entrepreneur needs to identify a need and think to create a product that will be profitable because there are many investors willing to invest in enterprises with a mission.
10. Globally, people are coming to take away what we take for granted.
11. The best thing we can do is to grow food naturally and back on our plates. We need to value our local foods and look for ways to make them healthier.
Hakeem Jimo - Co-founder and CEO, VeggieVictory.
1. Plant protein is more effective than Animal protein.
2. The modern diet needs to be more quality. Since People are concerned about health in Africa, interests in proteins have been encouraging. That is why new products need to emerge and more brands need to look into capitalizing on what we can grow in our Continent.
3. As entrepreneurs, along with the mission the brand represents, the business needs to be profitable.
4. Pricing plays a vital role in developing a product.
5. Food is a big business.
The continent is doubling in population and we need food.
6. The better the product, the more customers are kept. We need to find out how to develop products that aid quality living and good health and create awareness of the benefits of these products.
Khadija Mohamed Churchill - Founder and CEO, Kwanza Tukule.
1. Transparency and control of the products are vital in gaining the consumer's trust.
2. The use of technology has made it possible to easily meet the demands of the people by having knowledge of available stocks and providing real access to the products in demand.
3. Customer database is very essential as a means of reaching out to customers when new products are available.
Setting Up Your Agribusiness The Right Way
SETTING UP THE PERFECT BUSINESS STRUCTURE
1- When starting a business, you have to set up a solid business structure
2- 4 key elements when setting up your business structure is.
• Start with an idea of the problems and needs of your customers
• Have a detailed business plan and perform market research to spot a Gap and find what makes your business unique. Build credibility for your business by making sure it is "bankable."
• Gain economies of scale by developing a market entry strategy and data analysis. Identify a small market in which you can get a monopoly and scale quickly. Think about market growth and ways your business might evolve. Stay innovative and relevant because customers are always looking out for solutions
• Execution - have plans to sort out customer engagement, supplier management, and machinery procurement. Never underestimate the power of the right relationships with your customers and vendors. Engage real estate agents to help you find a suitable location for your business. Ensure your business complies with the regulators of the law. Also work on your business branding, logo, and website to build credibility.
3- KEY FACTORS TO CONSIDER WHEN TEAM BUILDING
• Direction - Collective vision and success
• Alignment - Be clear about roles and responsibilities
• Commitment - People should express passion and motivation for work
• Retaining key staff - Who will help you get there
• Creating an ecosystem that supports ideas and innovation
• Consistently conduct performance review and accountability
• Get the best out of your employees by rewarding achievements
SORTING THROUGH BUSINESS REGISTRATION AND COMPLIANCE, CONTRACTS, AND BOOKKEEPING
1- Your business registration is about having your business records with the appropriate authorities.
2- No international partner or funder wants to deal with a company without a face / or a company that isn't registered according to the countries' laws.
3-Misconception of SMEs when it comes to business registration are;
• The perception of the communicated process involved
• Ignorance of the benefits involved
• Avoidance of Tax
4- Important regulations for businesses include
• Social security
• Health scheme
• Revenue authority from the state
5- BENEFITS OF REGISTERING YOUR BUSINESS
• The right to operate your business legally
• The opportunity to protect your business name and your trademark from theft and impersonation.
• It protects your intellectual property
• It avoids personal liability but rather any financial debt is going to be acquired from the firm as it is now seen as a separate legal entity
• It gives you credibility when you want to get partnerships and funding support
• It shows accountability of the business
6- REGULATION AND COMPLIANCE
Regulation is the provision of laws that revolve around fiscal and tax issues, employment matters, environment safety, health, and safety, etc. Compliance is how you comply with the provision of laws set out by the regulatory organizations.
• Contracts help to mitigate operational risk management for day-to-day activities. There are various contracts such as employment contracts, and vendor contracts, etc.
• When developing a contract, always consult with a legal entity to avoid unexpected loopholes.
8 - BOOKKEEPING
• There is no growth feasible for a company with no control over its financial data and transactions.
• Every entrepreneur should understand the basics of accounting
• All your transactions must be recorded.
• If you can't take control of your transactions seriously, shy away from cash transactions. It is better to use digital payment methods, such as bank transfers and Pos transactions. Digital payments help you track all your transactions.
• Having financial data limits the overpayment of your taxes
• Take advantage of the various accounting tools and software
FINDING THE RIGHT FINANCE
1- Key Considerations for SME Financing
• Track record - The team, key success milestones and achievement, competitive advantage, market positioning, and future plans.
• Project - What will the funding be used?
-Align the funding requirement with the fundamentals of funding that you wish to source
• Cash Flows - Borrowers need to forensically interrogate their historical business trends and illustrate how factors like seasonality impact the timing of inflows and outflows.
-Remember to consider the working capital investment requirement. It is critical to understand and articulate how cash conversions will release funds to service debts.
-Ultimately, any successful loan application will be based on the ability to generate free cash flows to service loan repayment.
• Security - consider what security is available to the lender to mitigate loan default risk.
2- Funding Options / Pros and Cons
There are three core financing options.
1- Debt ( Loans) includes raising money for working capital or capital expenditure.
-Provides funding at lower rates than equity financing
-Locked into a payment schedule
-Borrower to adhere to covenants
2- Equity (Minority Stake) is the process of raising capital through the sale of shares in an enterprise. It refers to the sale of an ownership interest to raise funds for business purposes.
Minority stake refers to a sale of less than 50% ownership
-Control is maintained
-Value addition in both experience and capital
-It may impact valuation outcome
-Misalignment in business goals and values will be costly
3- Equity (Majority Stake) refers to the sale of an ownership interest to raise funds for business purposes. Majority stake refers to a sale of more than 50% ownership in the business
-Better valuation outcome
-Value addition in both experience and capital
-Misalignment in business goals and values will be costly
TYPICAL INVESTOR GROUP
Strategic investors are international players in the sector who come into a specific market to invest in a particular industry. They stick around for a long time. They want to have a major stake in your business and your board. It is an excellent opportunity for entrepreneurs who want to expand.
Financial investors stay for a short time, about 5 - 7 years. You still have control of your business. Examples are
Private equity funds and bank loans etc.
The issue isn't the funding. The entrepreneurs' lack of preparedness makes funding difficult by not putting in the key considerations required to access funding.
Key points to consider in the funding process to attract the funding your business needs.
- Prepare Adequately - Efficiency depends on clarity and consistency of objectives between your finance, operational teams, and advisers. Have your documents together and ready, to show the investors your commitment
- Develop a compelling equity story - What is that competitive factor that makes you stand out, that will persuade any investor to inject money into your business
- Limit Surprises - By being prepared. Maintain consistency and predictability of financial performance during the funding process
3-KEY FUNDING SOURCES
1-Bootstrapping - personal finances (savings, income from investments and pensions.The ideal starting point for new ventures especially if the market evaluation for your products and services is yet to be done.
-You have complete control.
-You can use this to convince investors to get on board since it demonstrates the business owner's confidence and commitment.
- Always keep a proper record of your savings and investments. Remember to keep your records.
They are willing to invest at start-up or the early growth stage in exchange for equity in the venture.
• African business angels' network
• Global business angels network
• Angel Fair Africa
• Heva Africa
• Ibiza Africa
• Adlevo Investment Network
3 - Private Equity and Venture Capital Firms
These are firms that have done market proof, have initial revenues, and inject substantial capital into a business.
In exchange, they get equity in the company, which means a seat on the board and a say in the SME activities.
The East African Equity and Venture Capital association
The African private equity and venture capital association
- You need to be prepared and know what type of funding you require before searching for the private equity and venture capital associations.
4-CROWDFUNDING is raising capital by getting small contributions from the public, usually online or mobile-based platforms.
Visit Africa crowdfunding association for member directory - www.africancrowd.org.
5- SUPPLY CHAIN FINANCING is not a loan - Supplier finance is an extension of the buyer's account payable and is not considered financial debt. It represents an actual sale of receivables. It is not just for larger companies but also for firms of all sizes and credit ratings, including SMEs.
Source: Inquire directly with banks. Don't focus on getting a loan, try to find out if they offer supply financing,
OTHER FUNDING SOURCES
• Mastercard Foundation Funding
• Africa Guarantee Funds
• Tony Elumelu Foundation
• Seedstars Africa
• Acumen Fund
Digital Marketing and Advertising
Regional and Cross Continental Trade
Founder and CEO of Maneli Pets,
South Africa and Nandi Pets Inc, US:
Managing Director AACE Foods, Nigeria:
Henri E. Stetter,
Senior Private Sector Development Advisor,
USAID/West Africa Trade and Investment Hub:
USAID/West Africa Trade and Investment Hub
Building a Winning Business Pitch
COO, Ecobank Foundation
CEO, Myonga Fresh Greens. Kenya
MODOU N.S. N'JIE
CEO, Farm Fresh Gambia & Money Farm
Deji Adebusoye, Principal Facility Director, Sahel Capital.
Entrepreneurs should have a seat on the table when policies affecting their businesses are formulated.
Some of the major challenges facing Agri-food entrepreneurs in Africa include lack of funding opportunities, infrastructure and limitation of land for farming.
Entrepreneurs, more than ever, need to stay updated with information and trends in the agri-food sector.
More Agri-food entrepreneurs need to work together to make sure they meet this demand placed on their producs.