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Technology

What tech firms can do to catch eye of investors

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Tech investors look at the business opportunity a company is playing in and its potential market share. FILE PHOTO | NMG 

It has been widely noted that in Kenya a majority of the tech start-ups are run by indigenous founders, yet they receive the minority portion of capital targeting the technology and related sectors.

There is clearly a disconnect between leadership and investments. A pre-Nairobi Tech Week 2019 (NTW2019) focus group meeting facilitated by Moringa School, identified the key barriers for financing to be the inability to pitch and a mindset amongst indigenous tech start-up founders that the tech is an end in itself.

During the NTW2019, I moderated a panel on ‘how investors look at tech’. The panel included William Benthall, General Manager Kenya for Glovo; Steve Gugu, an entrepreneur, investor and advocate of things entrepreneurship and finance; Lawrence Muthoga, Breath and Community Manager, Microsoft 4 Afrika; and Olaf Seidel, Programme Director, Digital Solutions for Sustainable Development, Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ).

The panel discussed investors’ outlook on technology and how the owners of tech firms could best raise capital.

One of the topics that came up during the discussion was the April 2019 listing of Jumia Technologies AG (Jumia) on the New York Stock Exchange (NYSE), which according to Bloomberg, raised Sh19.8 billion. The company was the first e-commerce platform deriving most of its revenues from the African continent to list on the NYSE via an IPO. The question was : Why would investors put money in a seven-year-old business that had accumulated losses of Sh100.4 billion?

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Tech investors look at the business opportunity a company is playing in and its potential market share.

An investor wants to know what problem your product or service is helping to solve and how it is doing so in a way that is better and more effective than the competition.

Data on customer interactions provides feedback on your customers’ habits and how they are evolving. Investors want to see how you are using this information to enrich the customer experience so that they remain active and you acquire new customers, and the business expands its offering of products and services.

A platform that attracts more customer interactions makes it harder for such customers to switch to a competitor. Because of this customer loyalty, you could potentially charge a premium.

WhatsApp, has made it easier for friends, family and acquaintances to connect globally, securely and cost effectively. Instead of competing with WhatsApp, mobile phone networks add WhatsApp usage as an incentive to purchase their data bundles.

To properly leverage on technology, Kenyans should arm themselves with the necessary skills. According to the IT Skills Gap Report launched during NTW2019, the combined value of Kenya’s and Uganda’s ICT sector is projected to be $2.03 billion by 2022.

The report entitled The Development of IT Skills and Jobs in Kenya and Uganda, projects that the number of Kenyan and Ugandan IT professionals in employment will grow to 123,500 in 2022 from 100,400 in 2017. Currently, there are not enough students with the requisite IT qualifications graduating to fill these jobs.

Through working with potential employers, Moringa School seeks to seals tech skills gap by offering curricula that reflect industry needs, adding the practical application of theoretical concepts and the soft skills necessary to compete in a digital, global economy.

Mr Githui is director of finance, Moringa School.

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