Learn more about the entrepreneurs selected to fundraise in VC4Africa’s June Cohort. Below we interview Peter Maina of GMobile, providing a mobile app that lets you make calls through your computer’s or mobile phone’s internet connection, resulting in very low (local and international) calling rates. Inspired to raise capital yourself? Check out the call for applications for VC4Africa’s September Cohort. Interesting investment? Check out GMobile’s VC4Africa venture profile, on which registered investors can see all details.
What is your background and what’s the story of how you’ve set up GMobile?
“My background is quite diverse. After studies and work in African Wildlife Management and Natural Resources Management, I went on with Graduate Studies in the US, where I found the high cost of calling family in Kenya very troubling. On a meager student stipend I could only afford a 10 minute to call home once a month at most. By the end of the 90’s I had made up my mind that if I got a chance I would try to make calling home more affordable for the Kenyan Diaspora. It is then that a group of my friends and I started working on using PC to connect calls over Ethernet networks, and we got a contract to roll out DSL for what was then Qwest Communications in New Jersey and New York City.
In July of 2000 we registered an internet service provider company: GeoNet Communications LTD. First we bought VSAT (satellite internet) and VoIP (Voice over Internet Protocol) gateways that were shut down by the Kenyan KANU government, because they considered VoIP and satellite terminals illegal. In 2002 a new government came to power and economic policies started to change in favor of the telecommunication industry. In 2004, GeoNet Communications Group Inc. was incorporated in the USA, we started a fundraising campaign among friends and family, and in 2005 the Kenyan Government (CCK) granted GeoNet the needed Telecom Licenses.”
What are the business opportunity you address and the essence of your business plan?
“GMobile is a set of Mobile Apps running on any smartphone. The GMobile key proposition is to bring down the cost of making local calls from the current $0.04 per minute to about $0.01 per minute. For the consumer this means getting 10 minutes for 10 shillings rather than the 3 minutes they get now for the same 10 shillings. As more hotspots are available across major Kenyan towns and school centers, the economy of scale will dictate calling rate reduction. GMobile combines all communications to IP protocol, an efficient and cost effective use of infrastructure, with no need to operate separate transmitters for voice, data and video.
We have a policy of keeping our cost low by spending more of our resources on those segments of our network that are most critical. For example, by creating state of the art Mobile Apps, with data compression algorithms that deliver quality of service on a data link of 50 kb/s, we can afford to offer consumers a quality voice network even when they buy data from our competitors. We will have our own 4G and 4G/super-WiFi networks in select places in Kenya, but a customer does not have to be a GeoNet data customer to use GMobile. At the same time those customers that chose our data network will get an affordable flat rate for bundled services.
GMobile runs from a state of the art class 5 IP Switch. To get the GMobile App go to www.geonetphone.com and click download for the instructions. One must create account to download and activate the App. For the Diaspora of nations and business travelers, our voice service is available whenever they have access to a 3G, 4G or Wi-Fi data network on their Smartphone or internet device, their Apps stay registered to the GMobile network. The online account can be accessed at www.geonetphone.com. Credit can be added using PayPal, any major credit card or Mpesa.
We can complete calls to over 180 nations of the world. We pride ourselves at GeoNet on being a low overhead company that saves its customers about 90% of the cost of a call over the rates charged by incumbent telephone companies in many parts of the world.”
How have you financed the business to date? And how do you proof to investors that your business will deliver?
“After incorporating GeoNet Communications Group, Inc. in 2004 and seeing the new Kenyan government was creating favorable policies, we embarked on raising funds from friends and family. We approached the New Jersey Bureau of Securities and received approval of our offering statement. We raised just under $700k, most of which went to license fees and network equipment.
We have continued without further major funding by bootstrapping revenue as working capital. Occasionally, when we needed bigger sums to replace network equipment or make large payments, we had to approach the same group of friends and family, many of whom strongly believe in this project, for additional investments or loans. However, none of them have the resources to help us raise the minimum amount GMobile needs to effectively rolled out 4G network. That is why we are seeking new investors.
GeoNet continues to gain customers daily even without a sales and marketing budget. Customers can open accounts, download and activate the GMobile App, which keeps them connected to our GeoNet network and provides global access.
We have continued to meet our basic financial obligations, keeping an office staffed with contract workers open in Nairobi. Currently, we have only one permanent staff member, the CEO who receives about one third of the salary approved by the Board of Directors.
Considering how far we have come without significant external funding, we can expect to accomplish all our goals more effectively with the funding we seek now. Any investor coming in now will find a modern, state-of-art operational network with, licenses and ecommerce portals in place.”
What kind of investments are you looking for, and which milestones do you want to reach with them?
“We are looking for $1 million in hybrid investments. This will be used among other things for trading security (collateral) that our telephone partners in Kenya demand, to build hotspots and other technical facilities, and to hire and train a sales and marketing team. We will raise more funds for Network Expansion across Kenya. We may consider listing our company at the Nairobi Exchange to fund this process.
GMobile will help create 460 jobs over 3 years, of which 95% will be independent sales agents paid on commission. We have projected to acquire 20,000 prepaid user accounts in the 1st year after funding, and be cash flow positive at the end of the first funding anniversary.”
How do you see VC4Africa as a platform and as a community and how do you use it?,
“The platform of VC4Africa is a great asset to the African continent. There are many Africans with ideas to help their local communities, but can’t access funding for their projects and don’t even know where to start. So much development has been left to the public sector with all the incumbent political and policy instabilities.
VC4Africa should be supported by all multilateral development partners of African governments so that venture deals on this platform and the level of mentoring available can be turned into significant socio-economic gains on the ground.”
What would you recommend to entrepreneurs who consider applying for VC4Africa’s September Cohort?
“I would recommend that they prepare to give time to sessions with VC4Africa. It is worth the effort. Prepare all documents you are asked to produce. The coaching is a tremendous source of help and inspires hope. Having someone else with a desire to see you succeed work alongside you has a multiplier effect on the drive to succeed. I personally can’t wait to get over the business development stage I am at now and become a mentor. I want to work alongside people with a dream!”
Inspired to raise capital yourself? Check out the call for applications for VC4Africa’s September Cohort! Interesting investment? Check out GMobile’s VC4Africa venture profile. Only investors registered on VC4Africa can get access to private documents and all other details of the ventures, and express their interest to invest.