Entrepreneurship has become a buzzword in various contexts.
However, many young people with pet projects or business ideas halt at the point of finances. It is no longer a secret that funding, especially for small start-ups, is not easy to come by.
What funding opportunities exist and what are the best ways to approach these sources?
It is important for young people to make use of the available opportunities; to learn how to get ahead by utilising the information available, because competition for the same sources of funding continues to be increasingly stiff.
We engaged five young people on their various paths to getting funding for their businesses or their initiatives with the view of not only showing that it is possible; but also to highlight the key learning areas that helped them secure funding.
OGAKE MOSOMI, 33
Ogake Bridal, Kilimani
Ogake learnt about Heva Fund through a friend who had previously benefitted from the fund, at a designers networking group that she is part of.
“With this information, I was on the lookout so when Heva Fund put up a call online, I applied and was lucky to be considered” she says.
The first stage of the process was filling in an online application form where she gave all the relevant details about her business; the point at which the fund officials decide whether one qualifies to proceed to stage two or not.
“Pitching was the second stage and for me, the most difficult. Here, I got to talk, in fine detail, about my projection I want my business to take, how I started it, why I was looking for more money to put into the business, a market analysis and other general projections about my vision for the business,” she explains.
At the time of applying for Heva Fund, Ogake’s business was already three years old. Her focus was on bridal wear, corporate uniforms and Afrocentric Bags.
“My undergraduate degree was in design and my masters in marketing, so by the time I was graduating, I knew I wanted to set up a business. But because I did not have any experience or collateral, I could not approach any bank for a loan.
I turned to my parents who loaned me Sh300,000 which I topped up with my personal savings of Sh200,000. I used this to buy sewing machines and fashion items which I sold,” she explains.
And continues; “The third stage of the fund application was the due diligence part where officials from Heva visited my business and counter-checked all the information I had given, including registration status of the business and financial reports, including tax compliance. The final stage was the approval and signing the contract to receive the funding from Heva,” she says.
Heva fund targets creatives who are already involved in their projects. The aim of the fund is to help entrepreneurs in the creative industries expand their businesses.
Apart from providing financial support, Heva Fund also assists in business support and has opened up many opportunities for me to learn more about my field, opportunities which, on my own, I would not have had access to. The fund also gave me an opportunity to network with other creatives,” she says.
Ogake currently has seven employees.
VIDAH JUMA, 24
Social-preneur/student, Moi University
Vidah is an orphan and like the story goes for many orphans, she experienced a lot of financial challenges while growing up.
“I performed well in high school so I got the government sponsorship to university. But the other things that I needed such as food and school provisions, were up to me. I remember I arrived at my hostel with just Sh100. That night, I offered to cook for my roommates and in return, they gave me food – I did not have to spend money (money I did not have) on food,” she says.
By the time she got to her second semester, her financial woes had worsened and her accommodation fees was delayed, putting her at risk of being thrown out of her room.
“I took up an opportunity to clean dishes at the school mess over lunch hour and in exchange, I got free lunch and Sh300 at the end of the week. The first Sh300 I received was the starting capital of by first business,” she continues.
She bought a packet of wheat flour and cooking oil and made Mandazi (Swahili bun).
“I used to bake at midnight, then wake up at 3am to make the Mandazi and by 5.30am, I would be done with the cooking. I then hawked the Mandazi around the hostels and by 7.30am, I was done and ready for class. This was my daily routine,” she offers.
After a while, she added eggs and mobile recharge cards to her business and after two months, she had made Sh16000. Within no time, she had enough money to buy a phone, pay part of her school fees and pay for her accommodation seamlessly.
“Hawking Mandazi put me in direct contact with many students who, because they knew me for my hard work and dedication, voted me in to student leadership in my second year. The money I earned from my position as a student leader went into setting up my first business, Fish Point Hotel, located at Moi University. I currently have 12 employees,” she details.
Vidah employs mostly women and youth; single mothers and generally those facing challenges similar to hers.
“I treat my business as a sort of rehab. My main aim in life is to give hope and encourage people realise that they can be self-reliant,” she says.
To cushion more people, she recently opened a beauty shop, Gift Beauty, still in Moi University which is managed by one employee. She also owns a Boutique shop in Migori, with three employees.
“I am proud of the progress I have made in establishing myself as a brand and I believe young people with a dream should not be held back by their challenges. Start with the little that you have; do not wait for someone to come and give you millions,” she advices.
GABRIEL ADIGO, 26
Fashion designer, stylist, model
Armed with Sh5,000 which his mum gave him as seed funding, Gabriel went to Gikomba open air market and bought clothes, which he resold to his friends at a profit.
“She gave me the money after she noticed my passion in fashion. For my first consignment, I spent Sh1500 and got back Sh3100, making 50 per cent profit. I was very encouraged by this and with every visit to Gikomba, I doubled my stock and so did my profit. This went on for a year,” he says.
It was through his regular visits to restock at Gikomba that he met his future boss.
“He also went to Gikomba to restock but unlike me, he did so in large quantities because he had a shop. He asked me to visit his shop and he offered me a job which I accepted. I joined him in 2014,” he says.
After working at the shop for three years, Gabriel had saved enough money and was ready to move out and begin his own outfit.
“I had saved up to Sh850,000 within the three years and also had gathered a lot of clients. But my boss invited me to stay on, this time as a partner in the business,” he continues.
Gabriel believes that the key qualities that made him attractive to his boss was that he is a trust-worthy person, has good rapport with clients and he gives the job his all.
“My key learning points have been investing in good customer service skills, discipline and the patience to start small. With these, a business that starts small has better chances of survival,” he says.
He is still planning to eventually move, because he wants to have his own brand and give another person a chance to grow.
JACKLINE EMALI 31
Secretary, Film Producer/Screenwriter -Kenya Scriptwriters Guild
“Crowd-funding means involving the community and soliciting for their support for your project either in cash – giving you financial support, or in kind by providing resources such as space, transport, a house for your project and generally just saving you financial costs for the project,” Jackline explains.
So far, Jackline and her team have successfully crowd-sourced for two film projects, On Your Marks, a short film that was used as proof of concept – to assess the possibility of a feature film being done and Alone, the first film by Kenya Scriptwriters Guild.
“Making films is an expensive affair; especially in our country, where the sector is still growing. Crowd-funding is a promising alternative to giving up,” she says.
To successfully crowd-fund, you must, first of all, believe in the product that you are creating because this is the only way you can convince other people to put their money or resources in it.
“I used the script to convince people to invest in our product. Start with the people in your circles – the people that you have interacted with and know what you do. Then expand to other people – do not be afraid to ask because the worst answer that you can get is no. Map out potential people who are likely to be interested in the project you are working on or people you can partner with; or just people who can provide a linkage to potential funders. Then go knocking on doors, set up meetings and present your idea(s),” she explains.
She further observes that since there will be a whole crowd of people behind the project, you must be as transparent as possible in what you want, what you have and what you are doing.
The people you are approaching should be able to access information on the different stages of your project, but most importantly, they must see the result of their support.
“Everyone involved becomes a partner at different levels, which means, they too feel an ownership of the project. And to effect this, as part of the campaign for the funding, explain exhaustively what you are doing through video clips, emails, personal visits and notes that are regularly shared on social media platforms. Like everything else, crowd-funding is not easy at the first attempt, but it gets better with continuous trying because you learn a lot along the way,” she explains.
Apart from approaching people directly, there are platforms such as M-changa, Gofund Me, Kick Starter and Indiegogo that you can enlist as crowd-sourcing tools.
ALFRED OGOLA, 33
After clearing high school, Alfred worked in a family posho mill for two years in upcountry without pay. He later came to Nairobi, but for two years, he looked job without success.
“My friends introduced me to a youth enterprise that offered mentorship, coaching, and sales skills to young people who approached them and demonstrated potential to learn and grow.
The organisation, now defunct, was called DS-Max Youth Foundation. I joined them around 2005/2006 and stayed on for three years,” he explains.
During those three years, he was trusted with little merchandise such as pencils, household utensils, mouse traps and hangers which he sold and as he progressed, he got an increment in the amount of consignment that he was given.
“After I won the organisation’s trust completely, I was posted to their Eldoret branch as the regional manager. My job was to recruit, train and mentor other young people who were willing to start like I had. By this time, I was put in charge of a larger consignment,” he says.
Alfred used the experience, networks, savings and the trust that he had built over the three years to approach telecom distributors and sold to them his training and sales skills.
“I now have my own company, Gooding Africa which I set up in 2014 as a social enterprise that turns job seekers into job creators. I have a contract with Airtel, as a full distributor also called a Direct Sales Agency (DSA). My job is to manage other sub-distributors/agents of Airtel products, who now get their consignments from me,” he explains.
His job has come with many opportunities for collaborations with other start-ups, something that continues to expand his networks. For example, through his networks and experience in sales, he is the youngest board member of BaseCoop Consortium Limited, a real estate company offering affordable housing.
“Not too long ago, someone spotted me at a function and, impressed by my work, introduced me to a new business model of worker owned service Cooperative. I am currently the Chairman of Brand Ambassadors Marketing Cooperative which partners with USAID and Global Communities to implement their program; which gives young people the opportunity to be shareholders, showcase their talents and skills as well as link them to existing opportunities,” he says.
Fundamentals to attracting financial support
Know whom you're pitching to: This may seem overly simple, but entrepreneurs will have most success when they seek out the ideal investors for their projects. Many angels tend to favour a particular sector, and angel-investing groups can revolve around a theme, such as clean tech, biotech, consumer products or even female-owned companies. Targeting your pitches is preferable to an impersonal mass pitching approach.
Pitch at your level: If you’re just starting out, start small in your search for investors. As a newcomer in the business arena, increase your odds of success by choosing small, lesser-known investors who frequently support your type of business. If, on the other hand, your business is well established and you have a million-dollar idea to expand your brand, then go ahead and pitch to the bigger investors after you conduct research on them.
Use social media: A strong, positive social media presence can entice investors. Connect with investors through LinkedIn and Twitter and let your personality shine. When you pitch to them, they’ll remember you as the social media star who freely shared inspiration and positivity. Social media is also an excellent way to get to know the investors. Make a note of topics they post about frequently, then use them when pitching.
Source: Forbes Businessnewsdaily.com