Kenyan restaurant guide website Eat Out has sold a minority stake to Dutch venture capitalist Africa Media Ventures Fund to raise expansion capital and bring on board expertise to help move to new markets.
The three-year-old local start-up sold 25 per cent of its business as it eyes roll-out in Uganda, Rwanda and Tanzania by the end of the year. Eat Out is owned by Websimba Ltd.
Both the proprietor and the fund declined to disclose the value of the deal, but it represents an important development in the fledgling web-based business scene.
Kenya has in the recent years increasingly attracted international agencies and multinational staff while a growing middle class is proving a fertile investment ground for the hospitality industry.
“We shall use the money to expand in the region and are currently working on the roll out,” said Mikhul Shah, Eat Out’s managing director and proprietor. “We had many offers from different venture capitalist since last year but opted for AMVF due to their expertise in our area of business and (their) interests in different parts of Africa.”
Africa Media Ventures Fund (AMVF) focuses on technology-based media companies that have the potential to become major players in their area of business and to expand in their regions.
“It (Eat Out) has a perfect fit with AMVF’s strategy focusing on technology-based media companies.
The fund is looking forward to working together on its expansion plans and any other developments that will come,” said Lot Carter, AMVF’s managing partner in an email to the Business Daily.
Currently, Mr Carter said, the fund’s focus was on Kenya and they were looking for companies involved in technology-based media and thosefocusing on mobile and online technology, “preferably with a local content component”.
AMVF has an informal partnership with iHub, Nairobi’s innovation hub, where they inform each other on developments and potential investments. It is from this partnership that the fund learnt of Eat Out, said Mr Carter.
“As both iHub and AMVF experienced a lack of knowledge among entrepreneurs concerning the creation of high quality business plans and implementation of those plans, we decided to work together to create a launch plan for a business track,” said Mr Carter.
Eat Out has become the leading online guide to restaurants in the country and is looking to roll out new products including Eat In, which will cater for home deliveries. Customers will be able to make mobile payments or pay using Visa for their deliveries.
Eat Out makes money by charging restaurants a listing fee of about Sh8,400 ($100) every month. The business was profitable from the onset with minimal capital required to set up the website.
Mr Shah expects the business to close the year with revenues of at least $250,000 (Sh21 million).
Other than East Africa, the company is eyeing to franchise in Zimbabwe and West Africa.
According to Mr Shah the company had received many interests from international venture capitalists but opted for AMVF due to its experience in IT and hospitality, as well as its interests in West Africa which would be helpful in its long-term expansion plans.