Pause: If you are serious about raising capital…

__Make yourself investable.

“If I ask you to invest $1m in the tourism sector what would you do?” Some of you will remember this comment from a post a few months ago. There is a “language” by which you reply to such a question, which will suggest to me if I’m dealing with an entrepreneur. How you answer actually “locates” you in terms of the risk you would pose to my money.

One of you commented back something like this: “I will be back, and I promise, you won’t say IF I give you $1M, you shall say I WILL give you $3M. I accept this as a challenge!” I remarked this was actually the best answer possible, but the only thing one must avoid is the use of the word ‘give’. This is not a word investors like to hear!

Never confuse an investor with your uncle, or a charity organization wishing to do you a favor. Most people looking for investors scare them off because of how they speak.

In the past I’ve written about “the language of business and the language of investment.” Every game has its “language,” meaning that there are things you can say which tell people you know about the game, or likewise which show that you are a novice. For instance, if a cricket fan goes to a football match for the first time, and sits with knowledgeable fans, they will laugh at him if he starts to use expressions like “that was a great wicket!” Or if he calls the wicketkeeper a goalkeeper!

Similarly, if you go to a potential investor and ask him or her to “give” you money, they will be very wary about you. Or if you ask them for “help,” chances are they will not invest.

First of all, my money as an investor is not a donation or a gift. It remains at all times my money. When discussing with an investor, they want to first establish the risk to the money.

Another answer to that question was they would first “give” 5% of my $1m to the community! That would set off an alarm bell!

“I’m quite capable of ‘giving’ my own money, and I don’t need an intermediary,” the investor would tell you. Many people commented about the beauty of their area, and so forth…

__Boring!

No investor is interested in that kind of information because they can get it from other more accurate sources. I don’t want to hurt your feelings here but remember my words:

#1. Never approach an investor like a long lost uncle who owes you something because your father sent him to school.

#2. Don’t confuse investors with donors, who want to do something to help young people. A donor is a donor, and an investor is an investor.

#3. Don’t look for sympathy from investors, leave it for the donors.

#4. There is no one out there who will ever “give” you $1m. Certainly not if you are a first time entrepreneur. It would have to be quite an extraordinary innovation that you have developed. Being able to show that you are realistic and reasonable is very important.

#5. Even on Shark Tank, you rarely ever see investments that went to that kind of level. It is a lot of money! How you respond to such an opportunity must reflect your appreciation of the fact that it is a lot of money. The document you would have to put together for that kind of money will be very exhaustive.

#6. 99% of the people who say they need capital, fail to impress potential investors or even bankers, simply because they speak with the language that suggests they will lose the money!

If I say to you as an investor, that I want to invest $1m, don’t meander around telling me fables from your community.

-Show me you are smart and innovative.

-Show me that you have a business plan.

-Show me that you have the #3Ps, or at best appreciate them.

-Make yourself investable!

If I ask you to invest on my behalf, you are both a steward and a manager. The first question you want to ask me is: “What kind of return do you expect?”

Which means you must “know” already what is a typical return! I need you to learn the “language of the game.” No one is born knowing this language.

If you are on this platform for entrepreneurs and you prefer a sports channel to something like CNBC Africa or Bloomberg, then you are not in the league of people who will ever get an investment of $1m or more!

There is a passion which comes with someone who gets that kind of investment. It’s the passion of “soccer fan for his team”.

So some of you have been on this platform for years. Do you think you are now “investable”? How do you know? Give me a one paragraph pitch (and remember, share no business secrets). Shhhh.

End.

by 15 Replies

About Strive Masiyiwa

Strive Masiyiwa is the Founder and Executive Chairman of Econet, a diversified global telecommunications group with operations and investments in over 15 countries. His business interests also include renewable energy, financial services, media and hospitality. Masiyiwa serves on a number of international boards, including Unilever, Rockefeller Foundation, the Council on Foreign Relations’ Global Advisory Board, the Africa Progress Panel, the UN Secretary General's Advisory Board for Sustainable Energy, Morehouse College, Hilton Foundation's Humanitarian Prize Jury and the Kenjin-Tatsujin International Advisory Council. He is one of the founders, with Sir Richard Branson, of the global think tank, the Carbon War Room, and a founding member of the Global Business Coalition on Education. Masiyiwa took over the Chairmanship of the Alliance for a Green Revolution in Africa (AGRA) from Kofi Annan. He is also Chair of the Micronutrient Initiative, a global organization focused on ending child hunger and improving nutrition. In 2012, Masiyiwa was invited by President Obama to address leaders at the Camp David G-8 Summit on how to increase food production and end hunger in parts of Africa. In 2014, Masiyiwa was selected to Fortune Magazine’s list of the “World’s 50 Greatest Leaders”. As a philanthropist, he is a member of the Giving Pledge, and his contributions to education, health and development have been widely recognized. Masiyiwa and his wife finance the Higher Life Foundation, which provides scholarships to over 42,000 African orphans. In 2015, he was the recipient of the International Rescue Committee’s Freedom Award and was presented with a UN Foundation Global Leadership Award for the work of the Africa Against Ebola Solidarity Trust, which he chairs and helped establish to fund the deployment of African healthcare workers to combat the outbreak in West Africa.

15 thoughts on “Pause: If you are serious about raising capital…

  1. Strive Masiyiwa Post author

    Afterthought 1.

    Here’s an article that I think you will all find interesting: “How to be investable in 13 steps”. With thanks to the author, here’s a brief summary:

    1. What is the purpose of your company?

    2. What market ‘friction’ are you solving?

    3. Why now?

    4. What corporate assets can you leverage?

    5. What’s the solution?

    6. Are you 10 times better than the competition?

    7. What is your ‘secret sauce’?

    8. What is the addressable market? Is it big enough for investors to care?

    9. How will you make money? Is it enough to keep your startup above water and growing?

    10. How will you take your startup to market?

    11. Who else is going to participate?

    12. Who is your team? Talent is everything.

    13. From idea to scale, do you know where you want to go?

    https://www.entrepreneur.com/article/317863

    Reply
  2. Strive Masiyiwa Post author

    Afterthought 3.

    The other day someone from the US offered to invest in one of my companies, and I told him that as much as I appreciated the offer, I could not “meet the investment hurdle” that he had in mind. And with that we parted ways. He knew that he was dealing with a professional who understands the “language of the game”.

    Reply
  3. Strive Masiyiwa Post author

    Afterthought 4.
    A few months ago, I read about an entrepreneur who is developing an interesting platform in Egypt. I asked to see him when I visited Cairo. When he offered to come and see me at the hotel, I told him I wanted to see him at his business premises, even if it was his mother’s kitchen! You will never see a $1m sent to you in the post!

    Investors will never part with their money without meeting and getting to know you. They will want to come and see where you are working from, and look you in the eye. They will want to see who you work with.

    Reply
  4. Strive Masiyiwa Post author

    Afterthought 5.

    What kind of investment do you seek? Do you know? If not, you really need to do more homework. Maybe if your startup is beginning to grow, it’s time for an “angel investor”? If your business is more established, maybe you’re ready to look for a “venture capitalist”? Do you know the difference? Senior Class, can you help out here?

    Reply
  5. Strive Masiyiwa Post author

    Faith Takure writes,

    I still remember sir once u said in Zimbabwe U have a c.e.o who is loyal U left everything in his hands ,U trusted him with Econet .U said don’t employee relatives , must trust your employees ,even if you are not making to much profit U must pay them on time

    My reply,
    I don’t look for loyalty, I look for competence and integrity. I’m not running a political party.

    Once a week he submits a report, which goes to his Chairman [Iam not his Chairman], I get a copy of the report, as does the Group CEO in South Africa, and the Group CFO.
    The rest of the time I leave him alone. He has run the business with his team for more than 15 years.
    He is not running a tuckshop, but the biggest company in the country. Unfortunately a lot of people don’t give him the rest he deserves preferring to treat him like some kind of glorified messenger. This is because most people don’t really know how big companies are run.
    He is one of the best CEOs in Africa.

    When he took over the business it had less than 100,000 customers. It now has 12m.
    I have never met 95% of his current staff.
    His staff includes more than 10 lawyers, and he is supported by the two best external lawyers in the country:
    Beatrice Mtetwa and Tawanda Nyambirai.

    His name is Douglas Mboweni.
    “There is a friend, who sticks closer than a brother”.

    There is a board of directors, made up of 12 directors. The majority are independent of the company.
    I’m a board member but I have not attended a board meeting for more than 5 years. I don’t attend so that the board can deliberate more freely, and don’t feel dominated by me.
    I’m really the “Chief Entrepreneur”.
    I’m not a hands on manager of a mature business like that.

    Reply
  6. Strive Masiyiwa Post author

    #Pause:
    On Monday I have a meeting with someone I have always wanted to meet. As I mentioned in my previous comment it is someone I have never met before. I have been blessed to have met almost everyone you guys have already mentioned including the Pope, Jack Ma, Bill Gates and Mark Zuckerberg.
    I will give you a shout Out, after Monday, unless the media get it first.
    So keep trying!

    Reply
  7. Strive Masiyiwa Post author

    Prince Felix Sirengo writes,

    Dr strive,,,Is the education sector a lucrative business to invest in, I’m currently Training as a secondary school teacher,,and the business culture cultivated in me on this platform may not allow me get employed in the public sector,,I want to be an entrepreneur but in the education sector,,I want to be one of those fighting illiteracy levels in our continent but in entrepreneurship way,,,,I Know this is one of the problems that is retarding economic growth in Africa. way#FromKenya

    My reply,
    Google this guy:
    Sunny Varkey, founder of GEMS.
    He is a billionaire and friend of mine.

    Education is one of the biggest industries in the world.
    You could be the Sunny Varkey of Africa!

    Reply
  8. Strive Masiyiwa Post author

    Pause:
    Five tips:
    How to improve your skills in the “Language of Business”

    #1. Read books on business and entrepreneurship [for senior class members you should be on 4x books per month],

    #2. Watch business news, eg. CNBC, and Bloomberg. I watch both, every single day.
    I also listen to Podcasts of business interviews and discussions.

    #3. Follow business news in your own local newspaper. Force yourself to buy only the business newspaper. Drop the stuff that feeds you gossip and useless conspiracy theories.

    #4. Join business associations.

    #5. Hang around entrepreneurs and business people, and go to meetings and conferences to listen and participate.

    Reply
  9. Strive Masiyiwa Post author

    #Today’s negotiation tips!

    Do your research on the other party:
    -Find out everything you can about their business and history,
    -About the people you are actually meeting.
    [Use platforms like LinkedIn to find out about a person].

    #Respect for culture, and don’t get prematurely familiar [particularly in Africa and The East]

    Pay particular attention to people’s cultures if you are dealing with someone not from your own country.

    If you were trained in the West, don’t try and impose their cultural norms when working in many other parts of the world, because they generally don’t like it.

    I once worked on a deal which fell apart about because a young member of my team insisted on calling the chairman of a Nigerian company by his first name!

    Some people love titles, some people are happy with being called their first name. Knowing the difference matters.
    Only call the other party by their first name once they signal or ask you to, particularly in Africa.

    Young men [this is for you] only hug people who ask you to hug them!
    A firm handshake is universal but not a hug.

    Some cultures want you to look them in the eye….but in many African countries, it is the opposite for young people to look an elder [or the leader] in the eye, during a greeting.

    Reply
  10. Strive Masiyiwa Post author

    Omoruyi Folarin Osas writes,

    Investment Journey Breakdown

    1. Idea Stage – Founder(s) – You are the first Investor in your idea

    2. Raising Money from the 3Fs i.e. Friends, Family and Fools (It’s not an insult, it’s a business term)

    3. Seed Round – Investment from Angel Investors.

    4. Series A/B/C – Investment from Venture Capitalists.

    5. IPO – Raising money from the Public
    There are actually two other steps you could add to this list:

    My reply,
    There are actually two others I would add to this impressive list:

    #5. [Before IPO] you can actually approach institutional investors. There is a specialist group that is very demanding called Private Equity Investors [PE Funds]. These include the likes of IFC, CDC, Helios, African Finance Corporation (AFC), Carlyle, Blackstone.
    There are also what are called Family Offices [very wealthy families where a founder has died or retired, and they now simply invest the wealth they have], e.g., the Oppenheimer Family in South Africa.

    #6. Sell a stake or exit to a bigger player in the industry. Very controversial, but is also an option.
    I have used this approach but usually I have merged for “paper”. I did it with our New Zealand business. I merged the business with a bigger player and took shares, and a back seat.

    #7. IPO is difficult in Africa, because most of the Stock Exchanges don’t really work. They are just there for show, and are not able to raise capital for entrepreneurs.

    In all cases, do your homework carefully because any of them could be a trap.

    Reply
  11. Strive Masiyiwa Post author

    #Pause:
    Some people have pushed back when I said they should be reading at least 4x books a month.

    Let me explain to you why:

    As a young man, I was a ferocious reader. I could read an entire book in an evening, sometimes unable to put something down until the morning.

    What I did not appreciate at the time was how important the skill to read and absorb vast amounts of information quickly would one day mean:

    #1. I sit on many global boards, and simply reading board materials for a meeting is the equivalent of several books.
    There is nothing more useless than a director who does not read the board materials!

    #2. All day long I read articles, and other materials which help shape things I do in business. If I put together all the pages including on Internet, it is more than a book, daily!
    #3. Warren Buffett once said that reading takes 80% of his day.

    #4. Most serious leaders communicate to each other through articles and books. Every day I receive an article or book reference from a business colleague.

    #Leaders are readers!

    #5. You send me 5000 plus comments a week. I read most of them, unless you are being silly then my staff just delete them.

    It is my speed and capacity to read that makes this platform possible, otherwise I would not be able to do anything else!

    Reply
  12. Strive Masiyiwa Post author

    Answer to question I posed: my meetings on Monday!

    # “Learning the language of your game”:
    Also includes following the big things happening each day in the game.

    A soccer fan knows when Champions League games are played!

    The big business event at this time of year is the World Economic Forum, which takes place in a place called Davos in Switzerland.

    You can follow not only the WEF, but equally important there are a lot of side events taking place in the town of Davos, which are equally [and many times more significant], than WEF. There are also a lot deals, and announcements that are made from there to take advantage of the attention of the world.

    It’s an opportunity for you to soak yourself in the game [of business] and the global issues that affect it. Find a good website and follow what is happening. Every business site is following WEF, and Davos!

    Many government leaders come with delegations to try and mobilize investment attention for their country.

    Some countries like France, don’t go to Davos, but they invite some of the key business delegates to pass through their capitals, on their way to Davos!

    I and a number of leading African business leaders [including Aliko Dangote, Jim Ovia, Tony Elumelu] were invited to Versailles France, for a spectacular all day event with the French Cabinet. It is called “Choose France”, and involves the global top 100 CEOs from around the world and France itself, as well as global entrepreneurs. Invitation only list of 150. You can’t apply, and it is done well in advance [months]

    The highlight is for an opportunity to engage the President Mr Emmanuel Macron, over dinner, as part of an even smaller group.

    It was an honor for me to attend, as I have many French partners and friends.
    I also got to meet President Macron, whom I had never met face to face. He has an extraordinary intellect, and is passionate about Africa, something we chatted about [albeit briefly of course].

    “We are cutting deals”. The year has finally began!

    Reply
  13. Strive Masiyiwa Post author

    Emekaekwue Victoria Ifeoma writes,

    In the muslim world, it is unacceptable to give a handshake to the opposite sex. You only motion your greetings with a bow

    My reply,
    As a company with operations and activities in 29 African countries, these are the sort of things we are so careful about.
    Show respect to the cultures of others.

    Reply
  14. Strive Masiyiwa Post author

    Pause:
    Five tips:
    How to improve your skills in the “Language of Business”

    #1. Read books on business and entrepreneurship [for senior class members you should be on 4x books per month],

    #2. Watch business news, eg. CNBC, and Bloomberg. I watch both, every single day.
    I also listen to Podcasts of business interviews and discussions.

    #3. Follow business news in your own local newspaper. Force yourself to buy only the business newspaper. Drop the stuff that feeds you gossip and useless conspiracy theories.

    #4. Join business associations.

    #5. Hang around entrepreneurs and business people, and go to meetings and conferences to listen and participate.

    Reply

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