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What’s an entrepreneurs biggest need? Most people will probably say it’s access to finance. But Seedstars co-founder and global venture builder Michael Weber says what entrepreneurs need most is support, talent and training.
Ventureburn caught up with the Seedstars co-founder at the Seedstars regional summit in Maputo, Mozambique last Thursday. In a wide ranging chat on Seedstars’ approach to investment, he shared his thoughts on what he’s learnt from Seedstars participants.
“Money is just one thing to execute the plan, but it’s not how things are going to be made right,” he says. He points out that startups that come through the programme are often short on developers, online marketers and business developers.
The most important thing is not capital, it’s all the other things that we can bring to the table says Seedstars co-founder
Outside of annual Seedstars competition, the organisation has its own training initiative — the Seedstars Academy — where between 10 and 100 individuals are selected per round and trained on specific areas including web development, online marketing and business development.
“So it’s basically a training programme, where we select those guys, we pay them to be trained for nine to 12 months, based on when they start and they join our companies, the companies that we invest in. That’s super valuable for any company that we invest in to get the access to talent,” he says.
In addition, Seedstars also has its own tech and online marketing team. “Most of the time it’s part of the investment. So we invest $150 000 cash and the entrepreneurs also get $50 000 worth of services.”
10 to 15 investments per year
The programme started in 2013 and Seedstars began investing in startups in the following year. Since then Seedstars has built up a portfolio of 25 companies — with most of these being fintech firms. Each year between 10 and 15 companies are added to its portfolio — drawn from the regional summits in each year’s competition.
The organisation invests between $50 000 to $500 000 in each portfolio company (at an average investment of between $250 000 and $300 000) for a stake of between two percent and 10%.
Thereafter, Seedstars works with startups for between three and four months, up until April each year when the global summit is held in Switzerland.
“That’s when we invite all the different regions, all the different winners, even the ones that we haven’t invested in, we invite them to Switzerland for the big show, that’s when we do follow on funding for the companies,” he said.
The company then invests between $100 000 to $400 000 on top of it’s initial investments — usually in three or four companies — in exchange for a further 15% to 25% equity stake (the average is 20% for the seed round).
Ventureburn was a guest of Seedstars at last week’s Seedstars Africa regional summit which took place in Maputo, Mozambique.
Featured image: Seedstars co-founder Michael Weber