At the center of the image above is Dinesh Patel, CEO of OrderIn which is one of the largest food ordering services in South Africa. Today, at AfricaCom 2017 during a discussion titled “Start with the problem not the solution – what keeps your target market awake at night”, he said that thinking that your startup has to raise capital is one of the worst advice you can be told or generally believe.
The panel also consisted of Chika Uwazie, CEO of Talent Base a payroll software for growing businesses across Africa (to the far left of the picture), and Zachariah George, Partner and Co-Managing Director at Startupbootcamp Cape Town (to the far right of the picture). Now, Dinesh didn’t just say what he said out of nowhere, it was in response to a question which asked for the worst advice that he has heard.
The same question was also given to Chika and interestingly, her answer was just as equally powerful as Dinesh’s. Chika said that needing to be raising raising raising or being given the idea to believe that, is the worst advice ever. So, at this point, you might be wondering, why would they be saying that your startup doesn’t actually need funding and what then would you do to turn your ideas into realities without funding?
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You could do without startup funding if you have a smart team
In his response, Dinesh further explained that actually, all you might need is just a smart team for you to gain traction without funding. To him, all these things, the decisions as CEO, come down to the smartest people, so unless if you have the smartest people in your team then you won’t make smart decisions.
He’s managed to get himself to have smarter people around him so he can focus on getting the funding later. You see if you can attract great talent, and empower your team to focus on the day to day running of the business then as the CEO you can focus on getting that funding.
PEOPLE are number 1, not funding. And having smart people will allow your startup to do without the funding for a while. This was his best advice also, to make people number 1 and to make sure that as CEO or founder of your startup, you’re not the smartest person in the room because then you won’t make smart decisions.
Now, that all sounds good but when do you actually know that you can go for funding? How can you do without funding for a while and then decide later that now is the time to get funding?
Only look at raising money when you’ve grown enough
When Chika shared her thoughts about the worst advice, she also added that you should only look for funding when you’ve grown enough. She also shared some light on why this is so based on her experience. You see when looking to raise money, the numbers are very important, you can’t just wake up and ask for investor money as some think so she suggests that you actually start the company without seeking external funding.
So you’ll end up fronting most of the initial capital from your personal funds and being cautious about your expenses. Then if you take a look at what Dinesh said and actually get a great team, the two will compliment each other and allow you to show traction since you’d have grown with very little when you do go looking for funding.
Make sure you start with the problem and not the solution
Something that Zachariah highlighted after Dinesh and Chika had shared their thoughts was that if you’re going to be starting a startup, start with problems that corporates actually have and not solutions. Most startups try to get funding too early because they feel they have a solution when in reality they need funding to scale up much faster than they would have and not to figure out what printer they want to buy.
So if you focus on getting a smart team, starting with problems and waiting until you’ve grown enough before raising money, you can actually do without funding. Zach also shared how starting with problems that corporates have is a good move because corporates have problems that they need to be solved.
It’s also a good move because you can tailor make that solution for them and build a startup which sells to businesses (B2B) versus one which sells to customers (B2C) since B2C is a harder model to pull off in emerging markets like Africa. According to him, some corporates have evolved to allow some experimentation within their organizations where you could get an allowance to test your solution in solving their problem.
So if you’ve got an idea of a startup, before running to look for funding, take a page from what Chika, Dinesh and Zachariah said and actually realize that you can do without funding if you get a smart team, consider selling to businesses instead of customers and only look at raising money when you’ve grown enough.
What do you think about what they said? Can a Zimbabwean startup grow to a stage where investors will consider investing without any previous funding? Should you build a smart team before looking for funding or just get to the ground running for funding? Join us at AfricaCom 2017 by letting us know what you think about all this.