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It is wrong and flawed for investors and entrepreneurs to focus on creating the next unicorn (a tech company with a billion-dollar valuation) charges investor Manuel Koser, co-founder and managing director of Silvertree Internet Holdings.
Speaking at a panel at the 2018 Africa Early Stage Investor Summit, hosted by VC4A at Workshop 17 in Cape Town, Koser says the focus on trying to create the next unicorn leads to what he calls a “dangerous obsession” by entrepreneurs on raising funding, over building a business that is customer centric. The panel was moderated by Burn Media founder Matthew Buckland.
“So what if you raise a billion dollars… (the question should rather be) have I solved a customer problem, did I generate a risk-adjusted return?”
Silvertree’s Manuel Koser says a focus on creating the next unicorn leads to a ‘dangerous’ focus by entrepreneurs on raising funding over building a business that is customer centric
In addition, he argues that because the chance of finding a unicorn in Africa is so slight, investors are better off backing several smaller sized businesses that are sustainable, need less capital and are less exit-centric.
“How we (Silvertree) approach it is to say that ‘there’s no way we’re going to build a billion-dollar business, there is no way we’re even going to build a $100-million dollar business, but can you build 20 to 30 million-dollar businesses in 10 years time sustainably solving customer problems’. Yes of course.
“There are lots and lots of problems and great entrepreneurs, great ideas and if you do 10 or 20 of those and add great entrepreneurs to that space, you move the needle and solve lots of problems,” says Kosers.
He says his investors and entrepreneurs should rather take their time — maybe 20 years even, he adds — to build sustainable companies like SA giants Bidvest or Pick n Pay. Stresses Koser: “What matters is ‘do your customers love what you do?”
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Featured image: Silvertree Internet Holdings co-founder and managing director Manuel Koser