Getting investment for a startup can be tricky. Investors do not typically want to give away funds to an entrepreneur who has no reputation or proven track record.
However, for many startups who lack the funds to fully implement their business ideas, gaining this track record can be difficult. For example, they might have to hire specialised skills just to bring their product or service to market.
One startup that has had experience with this challenge is Ahonya, a Ghanaian e-commerce platform for electronics and computers. The company was founded a year ago by Gerard Yitamkey, Nana Addo and Philip Adzanoukpe, when they noticed a need in the market for an “Amazon of Ghana”. However, they required investment and partnerships with other companies (such as a mobile money provider) in order to bring their concept to market.
“Before we started, we were just a bunch of guys in college and if you walk into a company like MTN to present your idea to them, they look at you and think, ‘well you think you can do this?’,” said Yitamkey, CEO of Ahonya.
“So you have to do something extraordinary in the beginning before someone will notice you and take you seriously, and that can put a lot of pressure on you,” he added.
With no funding or well-known business partners, proving that Ahonya could provide a legitimate service in Ghana was a challenge. For starters, many consumers in West Africa do not trust online retail services due to experiences with fraud.
“So how do we get orders? We didn’t have money to do a lot of marketing, so what we did was we leveraged on Google Trader and other platforms that were popular,” explained Yitamkey. “So we listed all our products on Google Trader and expected that at least people would click on it, and those that really need it will buy from us. And then we can show that growth to investors.”
According to Yitamkey, this is what helped Ahonya be one of the three companies to be selected last year by the Kenyan-based Savannah Fund for its accelerator programme, out of 170 applicants. “If you show them something really cool or something amazing, they will take you really seriously.”
Ahonya has since completed the accelerator programme and received US$25,000 worth of investment for 15% common equity in the company. While the company is just a year old and still in its infancy, it is looking for steady, long term growth and has landed over 600 sales of electronics in the Ghana market so far.
Yitamkey’s advice to other entrepreneurs on the continent looking for investment is to prove their business idea has potential. “Because if you don’t have any numbers to show, it’s more like you just have the dream, but these companies and investors want to see that you have done something,” he concluded.