Things You Need to Know Before Approaching Investors in Ethiopia
Entrepreneurs in Ethiopia seem to find themselves stuck after they have done the necessary research and preparations needed to launch their startup. The main problem being lack of capital, whether it be not knowing where to find these resource providers or investors, or not knowing what to do once they come face to face with them in order to convince them to invest in their business. Addis Alemayehou, one of the most successful entrepreneurs in Ethiopia, and chairman of Kazana Group, advised Ethiopian entrepreneurs that have a startup idea but are looking for investment on the free webinar held on Friday, October 23rd, 2020.
Once you have started your business, and before you go looking for investment, the first thing you should know is how to provide your services and/or products better. Ask yourself these questions: would you, yourself, use the same service or product?; and would you recommend it to your family and friends? If you answered yes, then you are good to go. But if you’re unsure, take a step back, try to figure out why you were unsure to answer, and then try to resolve those problems.
The next thing you should do is evaluate your business in terms of the number of job opportunities it creates, the return on investment, and the quality and uniqueness of the service and/or products it provides. If you find your business checking all of these boxes, then you are on the road to success. It means that now you are ready to start looking for an investor.
Things You Need to Know Before Starting A Business in Ethiopia
Usually, investors look for someone who is committed, willing to take risks, has researched well, calculated the outcome and outlined it on paper, and has a vision for their business. If you already have a vision for your startup, it will be easier to convince investors to see it too. However, there is a dark side to it as well. You have to understand that not everyone will be able to see what you see so you have to be ready for the word ‘No!’. It might seem like a nightmare, but it should be the reason that makes you and your business grow better. Addis says, “each time you are said no to, ask them why, then take in that feedback and work on fixing it, and come back stronger and better”. Addis also added, “ask them if it’s you or the way you're dressed, or if it’s the presentation. If you believe in your business 100 percent, then somebody else will too”.
Addis Alemayehou also informed entrepreneurs on how Ethiopian investors decide their equity and role in a startup when choosing to invest. He mentioned how the level of establishment of the business influences their decision greatly. If you have a business that is already established, proven to be good, and has already started generating revenue, then it’s highly likely that investors will settle for a lesser equity role than a startup on an idea stage.
Speaking of networks, Addis Alemayehou has also given key advice on how entrepreneurs can expand their network. He said on the webinar that entrepreneurs network starts from high school, and then goes to college. “You should fill your circle with people that are older than you, because the older they are, the wiser they get. Hanging out with people who are older, wiser, and more experienced than you is a ticket to the next level of growth. These people teach you more than school or college ever will. People don’t grow or get smart just because they go to school but from their experiences. So, be wise and hang out with someone who pulls you up a level”, Addis added.
“While pursuing the startup journey, mistakes are common. You make mistakes, and then you learn and grow from them. One common mistake entrepreneurs seem to make is picking the wrong business partner. You should really be wise when it comes to this. The partner you pick has to be able to go through the ups and downs with you without falling apart. Whenever one falls the other should be able to pick them up. You should make sure that the partner will not run off at the first sight of challenge”, Addis added.