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Identifying the right venture capitalist for investment: The do’s and dont’s

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Kevin Mutiso (Source: Kevin Mutiso)

I wrote an article recently on the key lessons I have learnt so far in the tech business and some people reached out to me to provide some advice when negotiating with a venture capitalist (VC) or an investor. This is from my own personal experience and observations and thus critical feedback and debate are welcome, particularly from investors themselves.

Sun Tzu, one of the greatest strategists in human history and author of one of my favorite books, The Art of War, has a quote that I live by: “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Before I go into what to look for in a VC, it is good to understand WHO YOU ARE. In the world of ideas, the probability that you have a unique idea is next to zero. In the big scheme of things generally, you as an entrepreneur are nothing but another person roaming this earth just trying to figure out life. This video is a scaled representation of our solar system: https://www.youtube.com/watch?v=Kj4524AAZdE 

When you realize how far the Moon is from Earth, or that it takes 5hrs for the suns rays to reach Pluto, it hits you how small you are in this infinite universe.

Secondly, a conversation with a VC is about an exchange of value. The entrepreneur has a vision and an idea that he believes will have commercial success. A VC has cash and wants to take a risk with this cash and get above-average returns. Usually, in an early stage start-up, the VC is buying into your ability to execute your vision and deliver these above-average returns. So you both have something of value to exchange. You are equals.

With those two points in mind; let go of your ego the moment you meet with an investor and instead start observing and looking for their ability to understand your vision and idea.

What should you be looking for?

1. Does the VC insist that you get your own lawyer – The reality of life is that by the time someone has enough cash to invest in people’s ideas, they have learned that a good lawyer is a must-have. If they downplay the need for you to have a good lawyer, then be wary. This is a clear sign that they want to take advantage of your ignorance. “Lawyers -” as my mentor from CreditInfo once told me -” plan the funeral,” the entrepreneur and the investor usually plan the wedding – they only see the happily ever after. The lawyers usually see what could potentially go wrong in a transaction and thus depending on whom they are being paid by, provide the protections to this party.

Yes, you are a start-up and you may not have money, but by the time you are engaging lawyers you have agreed to begin a relationship with the investor, and they should be willing to add the cost of your lawyers to the investment they are making. If they are not willing to do this, be aware of potential malice.

2. Does the VC understand the risks your business’ faces – An entrepreneur should always know what are the key risks to the success of their business and should strive to de-risk them. The VC too should have an idea of the risks of the business they want to invest in. If they do not, then other than the money they might not be of much use. If you are not aligned on how to de-risk the business then you will have conflicting objectives and this will start affecting the business. A good example of this is usually observable when it comes to allocating resources of the company.

3. Do you want to be in the trenches with this investor – The legendary John Doerr usually asks himself when evaluating entrepreneurs the following question, “If s*** hits the fan, do I want to fight the fight with this person?” I think that question also applies to the entrepreneur. Problems are part of your existence and things will not always be rosy, so when you have a major fraud in your business or the technology crashes, does a blame game start, or is a brainstorm held?

You can see this early on, observe how the investor negotiates their must-haves in a contract or if a junior member of their team accompanies them to meetings. Do they naturally teach or do they instruct them on what to do? Do they apologize if they misunderstood something? These little things give you an indication of the kind of person you are about to spend considerable time with — so can you live with this for the next 5 years?

4. Zero-sum game vs. Positive sum game – The key lesson I learned when I did the master negotiator program at Strathmore Business School (If you can, please do this course – it changed my life) is that negotiation doesn’t have to be a winner and loser experience, it should be a win-win for both parties. If you are raising a sum of money and the VC wants to take anything over 50% of your business, I’d be wary. If an exchange of value is the point of the transaction then a fair price must be met.

Both parties must be striving to solve for each other’s needs when negotiating and the must-haves of both sides must be very clear. If you reach an understanding with the positive-sum game strategy, you have found a partner you can work with through even the most difficult of problems. Mark Zuckerberg is going through one of his most tumultuous times with all the data privacy issues, but when I looked at his board and saw he has the likes Peter Thiel and Reid Hoffman on his board, I was a little envious because the problem-solving abilities he has at his disposal are at genius level.

What I would do to be a fly on the wall during their brainstorming sessions. Both Peter and Reid were early investors in Facebook and have been with Mark from the beginning, and if I was to bet money, I’d bet that they will solve this too, not without some bruising. Entrepreneurship is lonely, and more so during tough times.

Also Read: Meet The Resilient Black Brothers Saving The Planet One Car At A Time

Finally, I’d like to add the final tidbit that another mentor constantly reminds me of. He says, “Good ideas do not chase money, money chases good ideas!”As an entrepreneur, it is always better to give a true and honest picture of your business to your potential investor and demonstrate that you have the ability to execute the idea and vision that will achieve commercial success.

Author: Kevin Mutiso, CEO Alternative Cricle

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Agriculture

Goodwell Investments Backs Chicoa Fish Farm With $1.5 Million Funding To Support Food Security In Africa

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Chicoa Fish Farm Production Breeding Cage, Mozambique (Source: Chicoa Fish Farm)

Series A funding enables Chicoa to contribute to a stable market for affordable protein and improve outcomes for smallholder farmers and food vendors in Southern Africa.

Chicoa Fish Farm, a Mozambican-based company addressing the critical challenge of a lack of affordable protein in Southern Africa, announced today that it closed its Series A equity funding round totalling $1.5 million from Goodwell Investments.  

Building A Sustainable Aquaculture Industry

Chicoa Fish Farm was founded by Gerard McCollum and Damien Legros in 2015 with the vision to provide a blueprint for a sustainable aquaculture industry across Africa. Since its inception, Chicoa has focused on securing its supply chain through primary production of tilapia, establishing a breeding program, and developing sales and distribution channels in Mozambique, Malawi, South Africa, and Zambia.   

The $1.5 million Series A funding boosts the transition to its next stage of growth — the processing and distribution of frozen tilapia products. To facilitate this growth, plans include extending production facilities, the installation of a processing plant and including local small-scale farmers in its model. At scale, Chicoa will produce over 5,000 tons of tilapia per annum, putting more than $10M of direct income into the local economy each year.  

“We are delighted that Goodwell has joined us on this really exciting journey to develop fish farming as an industry in Mozambique,” commented Gerry McCollum, CEO of Chicoa Fish Farm. “Being a first-mover is really challenging, but also hugely impactful. Not only do Goodwell bring a wealth of experience to the table, but their philosophy of supporting for transformative businesses in areas of most need makes them a perfect partner for us.”

Supporting Food Security

Food security is one of the biggest challenges facing Africa and Mozambique is amongst the worst affected, with nearly 80% of the population unable to afford an adequate diet. While the continent has the resources to feed its population, most countries are net exporters of food. Mozambique, for example, imports nearly double the value of fish products it exports. Further, regional aquaculture businesses currently satisfy just 6% of the total demand for fish across the Southern Africa region.

“The opportunity to develop the aquaculture industry to meet the local and regional demand is clear,” notes Dhanyal Davidson, Senior Investment Associate at Goodwell Investments. “The sector can play a key role in the economic development Mozambique by providing affordable, high-quality protein, creating jobs and generating income for local farmers, and promoting broader regional development.”

Affordable, High-Quality Protein

In the face of overfishing and climate change, aquaculture, in particular, provides a means of providing a stable fish supply without increasing the harvesting of wild fisheries beyond the maximum sustainable yields. Chicoa is the largest commercial provider of fish in Mozambique and works to increase yields to provide a sustainable protein source and facilitate import substitution, boosting the sector with an affordable, high-quality fish.   

“Chicoa’s significant traction achieved to date coupled with our visit to the farm in Tete solidified our confidence in the company and its potential. The company is driven by an experienced team with deep roots in aquaculture and Southern Africa, and we look forward to supporting Chicoa to fulfil its potential. Aquaculture is a new area to Goodwell Investments, and we are especially pleased to be joining the table with like-minded investors who bring along a wealth of knowledge in the aquaculture space,” added Davidson.   

Goodwell joins long-term Chicoa Fish Farm investor and leader in sustainable aquaculture investments, Aqua-SparkAmy Novogratz, Founder and Managing Partner at Aqua-Spark commented, “We are excited about Goodwell Investments joining the investor base of Chicoa. Finding a high-quality partner like Goodwell, committed to joining us for the long-term development of regional food security, keeps Chicoa’s vision on track.”  

By developing a vertically-integrated solution to kick-start the freshwater aquaculture industry in Mozambique, Chicoa helps to improve the lives and incomes of local fish farmers and increase the sustainability and stability of food supply across Southern Africa.

Source: Goodwell Investments

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Investment

ARM Holding Company Lists 6 Mutual Funds on Cowrywise

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Today, Mutual Funds from Asset & Resource Management Holding Company (ARM) can now be accessed through Cowrywise. These new mutual funds, managed by ARM Investment Managers, swell the growing list of SEC-registered mutual funds now easily accessible on Cowrywise by retail investors nationwide. Also, this deepens our position as the platform with the highest collection of mutual funds in Nigeria.

Meet ARM: One Of Nigeria’ Top Asset Managers

Established in 1994, as an asset management firm, ARM, is  Nigeria’s largest non-bank financial services firm with the primary objective of providing a platform that meets all the investment needs of individuals. ARM Group’s retail products comprise mutual funds, estate planning services, wills, pension, stockbroking services, and real estate.

Currently, it manages 6 mutual funds and all of them are now available on Cowrywise. Get them here with any comfortable amount. This partnership with ARM dovetails into our commitment to help change the way Nigerians invest.

Speaking on the collaboration, Henrietta Bankole-Olusina; Managing Director, ARM Financial Advisers, stated; “Our goal is to empower more individuals to fulfil their dreams and encourage them to imbibe a healthy investment habit. Our range of mutual funds caters to different needs depending on their investment goal and risk profile.

How Do Nigerians “Invest”?

In 2019, when mutual fund assets hit the ₦1 trillion mark, Nigerians spent ₦730 billion on sports betting. That means, in 2019, 73% of the industry’s total value was equal to what Nigerians spent betting in just one year. Diving deeper into the report, we see that the drivers for this adoption are:

• Affordability

• Ease of access

• Ease of understanding

• The hope of expected returns

Sadly the adoption of betting has done more harm than good in general. Hence, to place people on a sustainable path of wealth there is a gaping need to make investments simple and clear about their rewards.

Starting in 2017, we launched into the market with a digital savings product. The process was (and is still) simple, people save any comfortable amount and we help invest the bulk in treasury bills and bonds to earn returns. Alongside, we curate a robust finance education system that simplifies money for the everyday person.

These efforts positioned us to initiate our core plan of helping everyday people access high-end investments through mutual funds. On May 21, 2019, we started off with four mutual funds. Today, we have nineteen high-profile mutual funds.

The Journey To 10 Million First-time Investors

Partnering with top fund managers across the country, we will bridge the gap of onboarding and educating the average Nigerian. In essence, we are easing up more time for fund managers to grow wealth while we drive up demand. Our commitment is to introduce 10 million first time investors to mutual funds in the next five years.

ARM Mutual Funds: The Details

The ARM suite of mutual funds is a diverse one. Its offerings fit the desires of various types of investors. Below are its current offerings.

ARM Money Market Fund: this is a low-risk fund that invests in instruments like treasury bills. A good fit for short term investors.

ARM Fixed Income Fund: like other fixed-income funds, this is a medium-risk fund. It’s a great option for medium to long term goals, as it can serve as a source of steady income.

• ARM Ethical Fund: helps investors put their money in firms that align with a strict ethical selection.

ARM Discovery Balanced Fund: designed for a balance between equities and fixed income. It’s a medium-risk fund.

ARM Aggressive Fund: got a long-term view? This is your fund. Though high-risk, it helps your investments grow over the long term. 

ARM Eurobond Fund: this fund gives you access to investment instruments denominated in United States’ Dollars. Also, it is excellent for protecting your investments from currency depreciation. 

ARM Funds on Cowrywise

Today, all above-listed funds, and thirteen others, are accessible on Cowrywise with any amount and in few clicks. There’s no better deal than this. We say this as the number one marketplace for mutual funds in Nigeria. 

Currently, we offer the most diverse basket of mutual funds in Nigeria. To top that up, we provide relatable advice at no extra cost and you get to invest with any comfortable amount.

To buttress this, Yarmirama Ashama, Product Manager at Cowrywise, described the recent partnership as an expansion of the opportunities that come with investing with mutual funds. In her words, “We cannot raise a new generation of investors alone. This is why partnerships with fund managers like ARM are important. Having them onboard feeds this vision, and we are excited about the results that will follow.”

Confused about what fund to pick? Check this guide.

How to Invest in ARM Funds

To start investing in a few minutes, follow these steps:

• Signup here

• Tap “Invest in Mutual Funds”

• Start investing

How to List your Fund as a Fund Manager

Over the past year, we have opened up the retail market for top fund managers. With a bespoke retail and onboarding process, we have brought a younger demographic of first-time investors into the mutual funds’ space. 

Currently, our audience age range sits between 21 and 35 years. If you want to improve the visibility of your funds to this demography, you should join us on the journey to 10 million. Please send an email to mutualfunds@cowrywise.com.

Got questions about how mutual funds work? Start with this guide

Issued by Cowrywise

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Investment

30 Reasons To Invest In Egypt

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Egypt, one of the oldest civilizations, is today becoming one of the hottest investment destinations. Seven years ago, the Egyptian government adopted a long-term strategy to boost the performance and economic attractiveness of the country. Starting with monetary reforms with the assistance of the IMF, Egypt has implemented one of the most successful programs of economic turnaround. The Egyptian experience was praised by all international institutions and is presented as the example for developing countries to follow.

In parallel with monetary reforms, the authorities have been conducting many infrastructure megaprojects (transportation, energy, digital transformation, legislative) to prepare Egypt for a long period of sustainable growth.

The fruits of these reforms and huge investments are already having an impact on the Egyptian economy. Based on IMF predictions, Egypt will be one of only 18 countries to enjoy economic growth in 2020 (revised upwards to + 3.5% in September after a June forecast of 2%). Long-term growth should be close to 8%.

Growth is accelerating, and business opportunities are emerging like nowhere else in the world. Egypt is clearly open for business. Having worked during 20 years in 15 countries located in 3 continents, I can confirm that the magnitude of change achieved by Egypt, greatly surpasses anything I have seen before.

Below, you will find 30 strong reasons why you should consider Egypt as your next investment destination.

Investors will find many market opportunities in Egypt, as well as untapped growth potential

1) Vast market, thanks to a large (100 million) and young (average age 25) population, which is expected to reach 160 million by 2050.

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2) One of the most diversified emerging economies, making Egypt resilient to crisis and economic cycles.

3) No. 1 investment destination in Africa and the Middle East.

4) The eighth-highest contributor to global growth in 2019 (PPP-based), according to Bloomberg, thanks to multiple growth engines.

Infrastructure is ready to support business growth

5) Ranked 28th worldwide for road quality, thanks to the huge investments undertaken by the government (Egypt was ranked 115th as recently as five years ago).

6) Cheap, abundant, and diversified energy sources (gas, solar, hydro, wind, and nuclear).

• Excess capacity of 15 gigawatts -after a deficit in 2013- exported t oneighbouring countries.

• Regional center for gas transformation and export to Europe, thanks to large reserves and established processing facilities.

• One of the largest solar parks in the world, Benban, covering 37.2 km2 and visible from space, producing 4 TWh of electricity per year.

7) Determination to boost green energy production and use.

• Renewable energy target at 60% by 2035

First country in the MENA region to issue green bonds5X oversubscribed

• National program to replace gasoline by LNG and to rely in the near future on locally produced electric vehicles.

8) Tripling of Internet speed in just 12 months and still accelerating.

9) 887 new laws passed, and 294 international treaties ratified in the last five years to attract foreign investors and increase the efficiency of government services.

• new investment law.

• digitization of customs.

• digitization of tax collection.

• many more initiatives expected particularly in the new administrative capital.

10) Already signed trade treaties giving free access to 2.6 billion people including 47 European countries, and 19 Eastern and southern African countries (Comesa).

The geographical location of Egypt has always been an unmatched advantage throughout human history.

11) Proximity to many European markets, gateway to Africa, regional hub for the Middle East (confirmed by Amazon’s recent decision to set-up in Egypt its regional manufacturing hub ).

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12) What can we say about the Suez Canal, through which 10% of the world’s traffic moves?

13) Spared from most natural catastrophes such as hurricanes, volcanos, cyclones, and tsunamis.

The 100 million population offers an immense pool of talent

 Photo by ThisIsEngineering from Pexels

14) 569,000 fresh graduates in 2018, including 30,000 engineers and 8,000 doctors (compared with 6,000 annual medical graduates in Germany).

15) 125 general universities by 2030 teaching disciplines most in demand, such as robotics, artificial intelligence, health-tech, IoT, an increase from the current 72 universities.

16) Ranked 56th out of 172 countries in Government AI Readiness Index, jumping 63 places in a single year.

17) Wide use of European languages, particularly English, making Egypt a hub for international call centers (e.g. Vodafone).

18) Cheap labor, thanks to the low cost of living: average monthly salaries are $150 for workers and $400 for engineers.

19) Strong healthcare system, thanks to 1848 hospitals in 2018 (1400 in France) powered by a brand-new healthcare law based on best practices from the UK, US, and French systems.

Egypt offers a rich and mature business environment

20) 38 commercial banks, 39 insurance companies, many investment banks, numerous law firms, specialized local and international management consulting companies, multiple chambers of commerce for specific sectors or bilateral cooperation with foreign countries, several governmental bodies providing reliable data about the Egyptian market (CAPMAS, ECES), rich choice of office space, free zones benefitting from exemptions from customs taxes, sales tax, and many other fees.

The new administrative capital of Egypt

21) A sound banking system considered the most efficient worldwide (cost-to-income ratio less than 30%).

22) Egypt hosts 138 foreign embassies, higher than the 121 embassies in the UAE and the 112 embassies in the Kingdom of Saudi Arabia.

23) Price purchasing parity (PPP) of 4.33 according to the world bank , making Egypt four times cheaper than the US (and even cheaper compared to many European countries).

24) Ranked the eighth-safest country in the world, according to a Gallup Global Law and Order report, ahead of all European countries except Norway and Switzerland.

Egypt is beating all macroeconomic targets

25) Strong long-term growth prospects averaging between 6% and 8%; one of only 18 countries (and the only country in the MENA region) expected to have positive economic growth in 2020 (+ 3.5%), according to the IMF; same positive outlook for the European bank for reconstruction and development, making Egypt the only economy across all of the EBRD regions likely to escape recession in 2020.

26) Seventh-largest economy by PPP in 2030, according to Standard chartered predictions.

 Photo by Lukas from Pexels

27) Stable currency: one of the few emerging currencies to appreciate against the dollar in 2020 (+ 2.1% YTD on October 31st).

28) Political stability proven by the smooth democratic process to elect the representatives of both parliament chambers in 2020.

29) Shrinking trade deficit, increasing remittances (+ 7.8% year on year after seven months of 2020), rebound of Egypt’s reserve of foreign currencies to reach USD 38 billion, covering eight months of imports.

30) Second-highest real interest rate in the world, despite recent rate cuts, making Egypt the new darling of emerging markets, foreign investors’ holdings of government T-bills reached $21 billion in mid-October, up from $10.4 billion by the end of May 2020, only country in the Middle East and Africa to maintain its credit rating with a stable outlook at the big three rating agencies, despite Covid-19 challenges.

On top of all these rational reasons, Egypt offers a magnificent climate, splendid sandy beaches, rich coral seas, mind-blowing historical monuments, and a most vibrant social life. All these additional aspects offer a superb quality of life for foreign expats.

Last but not least, Egyptians are genuinely one of the warmest and most friendly people on earth, bonding easily and appreciating long-lasting relationships.

So, what are you waiting for? Come to Egypt and we will help you explore investment opportunities!

Author: Nadim Samna, Managing Partner at Stratexis

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