During the fourth week of November 2017, my Co-founder, Victor Kisegei, and I finally had the opportunity to appear before a team of investors from Centum Investments. Centum is one of the larger investment companies in Kenya and we were given an opportunity to pitch about our e-commerce startup - StockPort.
Given that it was my the first time I got to pitch, I was extremely excited to share about our startup. So I rushed through the elevator pitch and the pitch deck that we had prepared keeping in mind that I have less than seven minutes to pass my ideas to the pool of judges that were before us. I focused on the market research slide of the pitch deck and tried to convince the judges that we knew what our customers want.
Pitching for funding
We launched StockPort during early October 2017 with our main target being students from Kenya's universities and other tertiary institutions. Our e-commerce startup is an online vendor of second-hand apparel which is widely worn by the majority of Kenya's youth because it is affordable considering the high levels of unemployment in Kenya.
I was confident about our research which was conducted at my university and thus concluded we had the correct product that actually matched our customer's needs. We actually had the right statistics on what the students were willing to pay for our products. We also took a good amount time during the pitch to explain and show all the numbers from our 5-year projection plan. I had no doubts about our projections since during August 2017 I had a meeting with Andri Ott from Ernst & Young who had positive comments about our numbers after going through the financial statements.
"People will only invest in you if they see that your target customers are actually willing and buying your solution."
Back to the pitch, we were not able to secure the funding for our e-commerce startup after competing against 5 other startups that came to the event. For me it was really a sad moment, feeling totally dejected having spent more than 4 months preparing accordingly.
However, I learned a lot after sitting down and brainstorming what could have been the reason for our failure. The judges didn’t provide a clear report why they rejected us for the other startups and we were actually using technology. One thing which I realized is that we lacked solid traction for our business. Having launched it a month before meeting the investors, we had not made a good amount of sales compared to the other startups which had operated for more than six months.
Traction is everything
It is important to concentrate on your traction as a startup during your early development stages. From the experience, I learned that no investor is willing to gamble their money on a project that does not have a reasonable amount of revenue. It is rather good to put all your energy into building your product with the little funds you have and start selling your solution. People will only invest in you if they see that your target customers are actually willing and buying your solution.
After you have generated enough traction, then you can be confident that your business is viable and thereby proceed to seek funding. Don’t waste your time building presentations and enticing business plans like I did.
The chances are high that you will be rejected.