After the announcement of the USD 1 million exit of Kenyan entrepreneur Hilda Moraa of DEMO Africa 2012 alumni company Weza Tele, today we profile South African entrepreneur and VC4frica member Eric Edelstein. His company Evly was also launched at DEMO Africa 2012, and was also sold in an interesting deal. His advice: Try to build relationships with the right people on an ongoing basis.
Eric Edelstein describes himself as a financial analyst turned serial entrepreneur and occasional angel investor. He has been involved in Cape Town’s startup community The Silicon Cape Initiative both as an entrepreneur and angel investor, and has co-founded many of South Africa’s largest Internet marketing & product companies. These include the incuBeta group (responsible for Clicks2Customers, TrafficSynergy, & Yola), Springleap, and social marketing application Evly which was launched at DEMO Africa 2012.
In 2013, within a year after pitching at DEMO Africa 2012, Eric’s startup Evly was sold to South African digital marketing company group incuBeta, formerly Interface Media. Interestingly enough Eric had already sold another company to this group a few years before this. The group Interface Media even renamed itself incuBeta after that first sale, the name of the company that Eric and his business partners sold to the group.
Currently Eric is chairman of Entrepreneur Traction, supporting the South African startup ecosystem by helping a large number of startups in South Africa raising funding and getting their business models right. He most recently took a stake in the South African e-commerce platform Daddy’s Deals and now serves as its CEO.
How was it to pitch your startup Evly at DEMO Africa in 2012?
“The DEMO Africa pitching experience was fantastic. We met a lot of the right people from around Africa. This really helped us from an investment point of view and from a strategic point of view to get the model right. It allowed us to refine our pitch, and to find the right funders. Very shortly thereafter we received an offer to actually purchase the company.
As I had previously been involved with the company acquiring us this was a very quick process. Obviously it helps when you know the people you are dealing with, so it’s always best to build relationships with potential investors and potential acquirers as far ahead as possible, so when you are ready to do the deal you already have the relationship intact. From our side it was relatively straightforward because there was already a trust element between the different parties.”
What should entrepreneurs do who don’t have these kinds of connections?
“Try to build relationships with the right people on an ongoing basis, whether those people are potential investors, strategic partners, corporate executives at corporates, the more of these type relationships you build up front, the easier it will be both to do high level business development and sales, raising funding and potentially selling the company when the time is right. If you’re not building these kinds of relations, when you do decide to do one of these it will be a cold relation. Instead of going into cold calling, already having built relations up front makes it so much easier.
The benefit you get out of DEMO Africa is first of all meeting investors from all over Africa. Second of all you’re meeting potential strategic partners, who could be large corporates or large government organizations, or other entrepreneurs that can help you build your business quicker as well. All of these relationships come out of the people you meet at DEMO Africa.”
Are VC4Africa and DEMO Africa interesting for you to follow as an investor too?
“On a regular basis I also angel invest. My portfolio at the moment includes 42Engines, which used to be part of the Quirk Group and has been split off since WPP bought them, Springleap, Majestic and Yola.
I am a member of VC4Africa and definitely find value in hearing about the latest startups through the VC4Africa newsletter each week. I find it interesting and take a look at the latest startups through there. We do get a lot of deal flow directly to us, in the region of up to 50 requests for funding a week. What’s interesting for us: when a person applies to us for funding and we see the same startup listed on VC4Africa then they are taken a bit more serious.
I like to see who’s presenting at DEMO Africa and how they’ve done, I take an active interest and would love to come back again and see how the organizations have changed since I took part in it.”