Tips to Help You Invest In A Tech Startup in Zambia
Zambia is yet to have a technological innovation, be it an app or a tool, that blows the world’s minds away. Most of our technological creations are tailor made to suit our local needs. There’s nothing wrong with that if it solves a problem we face locally, but what about the people in other places that may also be interested in using it?
We’ll take what was a once a tech startup, Whatsapp, which is a social messenger that almost everyone with a smartphone has installed, beating out others like BlackBerry Messenger, which limited its use to only BlackBerry phone owners initially before they decided to make versions suitable for Android and iOS. This move was probably made to counter Whatsapp, which only required a user to register their phone number and talk to anyone with the app installed on their smartphone.
Founder of Whatsapp, Brian Acton, had previously sought employment with already well established startups-turned-success companies Facebook and Twitter, and got rejected by both in 2009
He then decided to start something on his own as a start-up which was Whatsapp, a social messenger app that developed so fast in its first 4 years, beating Facebook and Twitter users in the statistics shown below, and now Facebook just bought it for slightly over $22 billion. Kharma? No. Hard work and passion in a product you believe in.
Those first paragraphs were to motivate start-up creators to continue working on their projects despite obstacles and distractions, but that’s not the point of this article. It’s directed at investors who want to invest in tech start-ups in Zambia.
Tips to help you Invest:
- Potential: There is a high demand for faster solutions to problems. If the start-up you want to invest in has potential and is responding to a major need from future clients, go fund it. Even if the need for a product is small right now but with a highly possible demand later on, you don’t want to be left out as one of the first affiliates and have a piece of the pie, which will make your investment value look like a speck f flour, hopefully.
- Talent: Look at how serious the start-up owners are about their product. Weigh their passion, seriousness, creativity and innovation levels. Have a moment and sit down and discuss with them all parameters of the idea/concept. There are 5 things to help you get motivated to invest. These are:
| The start-up team: | Are you comfortable with them? What does your gut tell you? If it feels right, go ahead. If it doesn’t don’t. There’s nothing worse than losing your money to a venture you had a bad feeling about. |
| Scalability: | How easy the product/service is to sell and how repeatable the business is i.e will it have a constant market after the first sales. |
| Business model | How they will make money and who their target market is. How they plan on getting more customers/users. |
| ROI | What the Return On Investment (ROI) will be, call it interest, on your initial investment, and how long it will take them to pay it back. |
| Exit Strategy | What the benefit is to the you, the investor, at the end of the first stages of getting a start-up established, or in case it fails to take off (think liquidation). What are the guarantees you have? What’s in it for you especially after the value of the start-up you invested in has increased? |
After considering those 5 main factors, then you can decide whether or not to invest. This is not just limited to technological start-ups, others too.
As for the start-ups themselves, use those 5 pointers to get your numbers in line before you make your presentation to a possible business angel/investor. They may help you avoid looking ignorant about your own brand and its future. Once those are in place, you have a high chance of making a convincing proposal that won’t be turned down.
Image Credits: Rachid Sefrioui Finaventures, Jail Break Modo, Dollarable
