“Funding challenges exist and when we have been going around talking to VCs and talking to people who want to fund start-ups, they tell us the problem is not the money… the problem is the talent,” highlighted Brune. “So the problem is that there is a lack of experienced executors, creators, builders in this market.”
After investing in the first batch of start-ups in Nairobi, Brune said that the company decided to introduce their three month accelerator and mentorship programme to the companies they invest in. This was designed to help them prepare their product for the market faster, and groom the start-up for further investment.
“We saw there was a need to not just invest and kind of leave them alone, but to invest and kind of follow them and help them because there is just not a great high level of experience in building mobile web companies and tech start-ups in this market,” added Brune. “So the batch that we invested in Nairobi that went through an accelerator programme, I mean you can see a significant improvement on the progress and speed in which they brought products to market.”
After three months of assisting start-ups with the necessary market research, product testing and teaching them how to pitch to financers successfully, 88mph introduces their start-ups to their network of potential investors. Last week they introduced their Cape Town start-ups to around 100 investors who came to hear the pitches.
“That increases the likelihood that they will get funding enormously because otherwise the start-up will usually have to email or cold call investors, send in their business plans, try to get introductions through friends and family and then hit them up one at a time to do the pitch,” explained Brune. “I mean, this saves an insane amount of time, and you get 10 start-ups, 100 investors, I mean something with a good amount of follow up afterwards from our side… something is bound to happen.”
Applications for 88mph’s third round of investment in Nairobi will open on the 1st of May. Brune and Buch said they are looking for entrepreneurs who can offer a solution to a problem in Africa using mobile web technology. “We don’t invest in single people, we invest in teams and these teams should be diverse. So there should be a tech person, and a hustler… or a sales person,” said Brune.
She added that start-ups will be more attractive for investment if they can show they have also invested in themselves and said that this was exactly what 88mph did as a start-up when they were looking for funding themselves.
“I think a good indicator is that you always put money into people who themselves have skin in the game,” advised Brune. “If they stand to lose a lot, and then this doesn’t work, it’s a good bet that they are going to try as hard as they can to make it work, and those are the kind of people that you want to put money into. For Kresten and for some of the other guys here, they have their own money in the fund, and they started off being the lead investors. It helps build trust.”
“So this is a way of convincing people,” added Buch. “You have got to put yourself at risk here.”