Affiong Williams, founder and CEO of ReelFruit.

Nigerian dried fruit snacks producer ReelFruit recently raised $3 million in series A funding from investors Alitheia IDF, Samata Capital and Flying Doctor Healthcare Investment Company. The capital will go towards building new processing facilities in Ogun State and expanding sales into the US and other international markets.

In an interview with James Torvaney, the company’s founder, Affiong Williams, reflected on her fundraising experience.

1. Fundraising takes time and persistence

When I look at other founders that have successfully raised, one common thread is persistence. Most of those who have raised successfully have a minimum five years’ track record in their line of business.

When you look at the agribusiness start-up space in Africa, there is not a huge amount of capital available. Ideas are not enough to raise money on, particularly when you are raising money towards physical assets.

I started ReelFruit nine years ago and worked towards this funding round for the past five years. At times, I was spending three to four full days a week focused on fundraising for months at a time, supported by a full-time team. Just building the data room (all of the necessary financial, operational, and other data investors need for their due diligence) took months of work. This all has to be balanced with keeping the day-to-day operations going. I’ve seen a number of entrepreneurs having to retreat from fundraising because they are spending too much time away from running the business.

That said, I am glad we fundraised when we did. If we had raised money in the first year or two we would have likely misallocated the funds and wouldn’t be a company today. We have a much better understanding of the business now.

ReelFruit produces a variety of dried fruit snacks.

2. Establish traction and prove you have a viable model

Investors looking at pure tech plays often focus heavily on the individual founders of the business. If the model does not work but the founders are good, they can always pivot into something else.

Agribusinesses, on the other hand, are heavily invested in physical assets like factories and machinery. It’s much harder to pivot because you can’t just uproot a factory or repurpose your processing equipment. So even though you have assets, some investors are more wary because they see them as potential liabilities should things go wrong.

So there is a bigger burden of proof. You need to show investors that there is a proven market for your product and that you understand that market. We were losing a lot of sales because we could not process quickly enough. We had to keep track of all the unfulfilled orders to prove to our investors that the demand was there.

Tomato Jos is another business that comes to mind. They had to spend more than five years proving they could farm tomatoes at scale, proving the model works, before they raised significant funding.

3. Focus on milestone based fundraising while you are validating the business model

Previously, we focused on raising smaller amounts (less than $100,000 at a time) for specific purposes – for example, to build a new factory or launch a new product.

This allowed us to raise more quickly, as funding was tied to a particular metric, such as production volume or growth in a particular market. It also helped us focus on specific goals in the short and mid-term, as opposed to spreading ourselves too thinly.

Now that we have proved ourselves and have demonstrable results, we can raise ‘big idea’ funding for more general growth. The danger in raising big amounts too early is that it creates an expectation that you scale whatever you have in place already. Companies can get pressured into doubling down on an idea that hasn’t been validated and, if that doesn’t work, investors can lose faith in your decision making and push for more say in the management of the company.

4. Find investors that fit your business’s personality

A lot of companies spend a lot of time speaking with investors that are too generalist. This can waste a lot of time, and draw you away from more relevant investors.

Realistically, especially when you are working in an area such as agribusiness, there are only a limited number of investors with the appetite and expertise to invest in your business.

At a certain point, we stopped speaking to investors that were not zeroed in on what we were doing, and focused on the few investors for whom we fit the criteria the most strongly. After this we made much more progress.

Another point is that these relationships take time to build. Most of the investors who have invested in ReelFruit now are people we have been talking to for a number of years.

5. Understand what specific investors are looking for

Different investors are looking for different things. You need to understand exactly what each investor needs to see, and focus on that. Are they looking to double year-on-year growth? Do they want to diversify the customer base? Do they want to export to a new market? Businesses that are trying to do everything at once don’t end up demonstrating anything, just fragmentation.

Because the agribusiness sector is more asset-driven, our investors tend to be more focused on business fundamentals, and have more of a longer-term outlook. In our case, investors were looking at our traction so far, and the growth potential of the market. We had to show not only that we could grow within what we were already doing (branded retail) but that we understood different customer segments and could become a big manufacturer, with B2B and export customers. We had to demonstrate that unit economics will work – that unit costs would fall when we scaled production – and that we had mapped all the places throughout the country where we could source the raw materials, to show that we could keep production running consistently even if specific areas had shortfalls in supply.

On the other hand, different sectors have different drivers. For example, technology investors might be much more concerned about international competition than we are, because it is a lot easier for technology to cross borders. It’s important that you have a really good grasp on the key factors that matter to your investors.

Nigeria: Agribusiness CEO shares fundraising…