Last week VC4Africa co-organized an innovative session at the SEED Symposium in Nairobi, Kenya, where investors pitched in front of entrepreneurs.
When speaking to investors we often hear that many entrepreneurs lack knowledge on the funds they approach and therefore waste time on both sides of the table. That’s why VC4Africa co-organized a session with SEED at their annual SEED Africa Symposium in Nairobi where the sides turned and the investors took the stage to pitch in front of about 75 social entrepreneurs.
The reverse pitching format, titled ‘Impact Investing – How it really works?’, aimed at connecting impact investors with potential investees in an innovative way. Representatives of Root Capital, PAMIGA, Acumen Fund, LGT Venture Philantrophy, Grofin and the ERM Low Carbon Enterprise Fund took the stage for a 3 minute pitch about what they are looking for.
Moderator Jasper Grosskurth (member of the VC4Africa Board of Advisors) asked this very diverse set of investors a couple of key questions, such as about their main frustrations while they are building their pipeline of potential companies.
‘Do your homework’
Emma Caddy of the ERM Low Carbon Enterprise Fund said that people should do their homework before any conversation begins. Kimathi Ikiao of the Acumen Fund added to this: “The due diligence process is building on a mutual relationship, entrepreneurs should also assess the investor to find out if it is a good fit for them. Be honest to each other, open your books and be clear about the parts of your business that you are struggling with.”
Another question that was asked was about the things the investors look at when they start talks. Renée Chao-Beroff of PAMIGA said that entrepreneurs who don’t know the ecoystem they are operating in have a much smaller chance to succeed when talking to possible funders. “Individual isolated entrepreneurs cannot succeed in my opinion, so if you are not connected to other players this is not a good sign.”
Winnie Mwangi of LGTVP added to this: “Of course we are looking at audited accounts and if there is a proper investment deck in place. But most importantly is the management team that is leading the company. We need to have faith in them to continue the talks.”
Rishi Khubchandani said that for Grofin the companies they start conversations with don’t need to have all ‘building blocks’ in place. “We also support companies to improve certain parts of their businesses, that’s part of our approach.”
Passion of the entrepreneur
After the investor pitches and Q&A, all investors took place on a table and the participants of the sessions choose the people they wanted to talk to. ‘How much information should I give during a first pitch?”, asked one of them. ‘The most important aspect of a pitch is the passion behind the story, it’s about the person who is talking to me. But if your numbers are great, don’t forget to mention that as well!”, said Emma Caddy.
When the session was over, the people around the tables didn’t want the conversation to end. Business cards were exchanged and talks continued later in the day. It was great to see how well the reverse matchmaking approach worked and VC4Africa is looking at ways to organize similar sessions together with our partner SEED more often. Besides the fact that entrepreneurs can learn a lot from these sessions, we also got feedback from the investors that they liked the fact that they learn more about other funds and expand their networks. To be continued!