Entrepreneur diaries: lessons I learnt from building a mobile startup in Africa

Editor’s Note: Nicholas Haralambous was the co-founder of mobile social network builder Motribe, which was recently acquired by Mxit for an undisclosed sum. The company was started two years ago with Vincent Maher and was invested in by local venture capital company 4Di Capital. He also just started an environmentally friendly online sock shop.

I have learned a lot in the past two years. Many of the lessons haven’t really even sunk in yet but I thought that I should start off by writing a list of things I’d learned while building my mobile company in South Africa. This list turned into quite a long post so I have decided to try and write a series of blog posts on the topic.

The first one will be titled: investment is scarce. You can read it below.

Here’s the list of topics that I’d like to cover in my upcoming articles:

• Raising money can distract you
• Don’t be ashamed of “sustainable” business
• Reading Techcrunch will fuck with your mind
• The West is coming, but they don’t understand… yet
• The people who will fix Africa’s problems are Africans
• Identify your customer & listen to them
• Erik Reiss had a point — ship your product
• If no one uses your product and you never earn money out of it can you really call it a product?
• Founders need to sell, whoever the fuck you are, sell

I felt quite nervous publishing this post. It means I have to stick to writing these articles. But nevertheless it must happen. So here goes.

Investment is scarce

I am not sure when it happened but for some fucked up reason getting investment is seen as some kind of success or final point in startup culture. For a short time that’s what I pegged as some twisted kind of success; financing. But the truth is something closer to financing equalling debt.

When Motribe began to really gain ground and we had solid user, client and revenue growth it looked like we needed funding. In hindsight the truth is that we needed to hunker down and continue to grow our revenue but having read so much and listened to so many people about funding being success, we decided to head overseas and get the lay of the funding land. We stopped in at New York, London and Austin while we also spoke with VCs in Silicon Valley, Germany and South Africa.

One of the interesting things I learned is that it’s not hard to find rich people. It’s also not hard not meet venture capitalists or network your way to high-wealth individuals willing to throw their money away. It is extremely difficult to find the right people or investors and the right kind of money. There is such a thing as the right kind of money.

What is hard is finding investors in South Africa who are able to invest more than a few million rand. The ceiling appears to be R5-million (around US$560 000) for young businesses. South African VC is still young and therefore fairly risk averse. That means it’s not really venture capital and more like private equity. Venture capital abroad is also a tough nut to crack open because there are tricks and traps all over the show. Some wanted me to move our headquarters abroad, others wanted a lead investor on the ground in SA to start the round off. Some wanted to see more growth, some wanted to see more revenue. To some we were too young, to others too old. Some wanted us to ask for more money and some less. Walking the streets of New York from investor to investor was incredibly tough.

I thought that I was doing the right thing and I’m sure that if closed a big round of funding while over there everyone would have agreed with me. But in truth I should have been on the ground over there doing deals, selling the product we had and hustling to make more money, not raise more money.

The long and short of it is simple: raising money is easier if you have a profitable business, so work yourself stupid to get to that point.

This article originally appeared on Haralambous’ blog and is republished with permission.