- A company in Africa stands a higher chance of securing funding when it has a European or an American leading
- The whole process before an organization gets money from a venture capitalist is normally too complex since it is all westernized
By Mical Imbukwa
Across the globe, and in Africa to be precise, business ideas exist in amidst of the masses. Whether the idea transmutes to business or not, is pegged on desire and funding to a large extend. The idea of venture capital is therefore irresistible to many who have brilliant startups and have a vision of going big. What do you therefore take of a startup declining lucrative venture capital?
Waweru Nderitu is the Founder and CEO of Notify Logistics, a venture in Nairobi that tackles the space need for young entrepreneurs. In an extensive conversation with him, he reveals that he turned down venture capital worth 6 million Kenya shillings ($60,000) and here is his why.
“Notify Logistics is a fairly young company that is in the growth stage. As much as we qualified for the venture capital, we felt that there was need for us to spend a bit of time with the company, grow it and see how far we can push it.” He says
The other reason according to Nderitu was linked to the concept of venture capital. That a venture capitalist must take a stake in the company. For Notify Logistics, Nderitu feels they were required to give too much. This did not board well for the budding company. Even though they declined the venture capital offer, they have not closed doors to it. He notes that they might reconsider in the future.
An existing trend points to several other CEOs and founders in Africa declining venture capital and, according to Nderitu, this could be linked to the desire for maintaining control of the company, and for others it could be because they want to exercise the freedom of implementing the idea, like in the case of Notify Logistics.
Another interesting reality, in line with Venture Capital, is that a company in Africa stands a higher chance of securing funding when it has a European or an American leading. That is why you will find that for great ideas from Africa many of the CEOs are drawn from the west. According to Nderitu, most venture capitalists are foreign and having a foreign CEO makes the relations easier.
“The whole process before an organization gets money from a venture capitalist is normally too complex since it is all westernized. It is tailor-made to suite the western industries and markets and this is the reason why most African companies are left out.” Says Nderitu
Even with the complexities in venture capital, considering the opportunities, it is worth educating young entrepreneurs on the existence and inherent advantages of venture capital. Additionally, the venture capital industry in Kenya is fairly young, and it is of much profit to help entrepreneurs avoid selling themselves short when signing up for this type of capital.
Funding for startups is a big challenge in Africa and even though many of them close down a few years or months after kick off, there is a new crop of startups coming up, under the leadership of Africans and thriving. This, according to Nderitu, is a clear sign that sooner rather than later, Africa will gain a strong business muscle and will no longer be reliant on the west.
