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Infrastructural Support for Tech-Startups through Tech Hubs

Today’s article was written by Gift Agboro, Our Google Policy Fellow. This is especially for startups, policy makers and stakeholders in the tech ecosystem. Please forward to a friend and share on your social media. As always, we love to get feedback and suggestions, you can send them here. Happy reading!

Infrastructural Support for Tech-Startups through Tech Hubs

“Nigeria has vast digital possibilities and with the right policies and infrastructure, the balance could tilt significantly, raising millions out of poverty while moving Nigeria to the standout league”. [1]

The Nigerian tech-ecosystem can be characterized by the robust increase in tech-startups, investors, venture capitalists, and tech/innovation hubs. According to Disrupt Africa’s Startup Funding Report for 2018, Nigerian startups led the bulk of investment on the continent in 2018 with 58 startups raising a total of $94.9 million from various sectors.

The 2018 “Tech Entrepreneurship Ecosystem in Nigeria” report reveals that the innovation hubs and accelerator programs are the strongest links of the Nigerian Tech ecosystem. Innovation hubs are seen to be social communities, work-space or centers that provide knowledge, strategic innovation and support for startups. Hence, providing infrastructural support for hubs would invariably support startups using technology to solve a problem.

However, “Nigeria struggles with fundamental infrastructure problems that overshadow most of the initiatives undertaken to foster tech-entrepreneurship.” Also, the Economic and Business report for February 2018, the Financial Directives Company (FDC), stated that the under-investment in infrastructure in Nigeria over the years had widened the infrastructural gap across the country.

An article published by Punch, reveals that “Nigeria’s under-investment in infrastructure left it with a core stock of infrastructure of just 20 percent to 25 percent of Gross Domestic Product, compared to an average of 70 percent of the GDP for more advanced middle-income countries of similar size. Which brings to bear, the precarious situation in the infrastructural space in Nigeria as compared to more advanced countries.

A 2019 research and needs assessment exercise carried out by Ventures Platform revealed three top infrastructural pain-points faced by innovation hubs in Nigeria to include: “Poor Broadband Internet Penetration”, “High cost of internet service” and “Erratic Electricity Supply”.

On Erratic Electricity Supply

Across the power sector value chain, the infrastructure from generating electricity to transmission and distribution is grossly inadequate. Even if power generation goes above the 5,073 MW threshold, the transmission system is yet to be optimized.

²

A look at the government’s plan to reverse and reposition the electricity sector shows that government budgetary provision is grossly inadequate. The budgetary allocation of N85.9 billion is far from what the government needs to do in the immediate to reposition the sector towards growth. [3]

On Poor Broadband Internet Penetration and High cost of internet

In 2018, the Chairman of the Nigerian Communications Commission (NCC) announced the harmonized right of way charges across the country. This would require that telecom operators be required to pay N145 per meter to lay fiber cable anywhere in the country as opposed to N4,000-N5,000.

Despite this welcome development, some states still implore indiscriminate charges on Right of Way of about N1,500-N5,000 per meter. It is believed that the refusal to adopt this harmonized charges, could amount to withdrawal of telecom operators in laying fiber-optic across the country as it would be expensive for them to lay. The cause of action could amount to poor-internet penetration which may invariably translate to high cost of internet.

With high costs of internet, it would be difficult and in some cases too expensive for tech hubs to carry-out their day to day activities, one of which is supporting startups within their community who need internet.

Policy Recommendations:

In order to create an enabling environment for tech-startups to thrive in Nigeria, Ventures Platform organized the fifth edition of the Ecosystem Dialogue Series (EDS) themed “Infrastructural Support for Tech-Startups through Tech Hubs”.

The objective of this edition was to discuss challenges and policy recommendations to provide infrastructural support for startups by strengthening tech hubs as well as encourage wide-ecosystem policy participation to enhance policy intervention.

To address infrastructural problems stated above, recommendations gleaned from the event included: the need for Government to refocus its efforts at developing the country’s renewable energy potential, to serve as an alternative source for the increase in power generation. Also, the Government should adopt the public-private partnership approach that enables collaboration between government through its agencies and the private sector through service providers with the aim to provide infrastructural support for startups through tech hubs. In line with this, Government through such partnership with the private sector can provide sustainable, cost-effective infrastructure at innovation hubs and workspaces. Subsidized electricity generation, high-speed internet connectivity, designating vacant government buildings in the heart of tech-clusters for the use of innovation hubs.

The private sector can play a pivotal role in improving the power and internet situation. By focusing on creating a more enabling environment, the government will help enable greater private sector financing. Creating a policy framework that would ensure returns on investment in the sector would go a long way in assuring potential investors. [5]

Such partnerships with the private sector can be seen in countries such as France, South Africa and the United Kingdom(UK) where they exist partnerships between tech hubs and mobile operators as seen particularly with Orange, MTN, and Vodafone respectively.

Another key recommendation was the need for innovation hubs to form a strong support network amongst themselves to tackle these challenges.

Conclusion:

We can safely say that while the Nigeria Tech-Ecosystem is growing with full potential, there is still room for more growth and infrastructural development to meet up with international best practices as well as to set herself on par with other countries such as India which had readily created an enabling environment through its #StartupIndia policy.

The role of key stakeholders in government, academia, entrepreneurship, private sector and civil society groups can not be overemphasized. Hence, the “gospel” on private-public partnership does not only need to be preached but also implemented across the country.


¹ http://bit.ly/31Bm215 ² http://bit.ly/2wWv4Yt ³ http://bit.ly/2Im0ttF

http://bit.ly/2IlbZp6http://bit.ly/2x0wfGo

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Series V

Bootstrapping

The term, as used in the 19th century, meant “to pull oneself up by one’s bootstraps” and it was often used to describe scaling a fence. (This implied someone was attempting a far-fetched or impossible task).

It is also widely attributed to “The Surprising Adventures of Baron Munchausen” by Rudolph Erich Raspe, where the Baron pulls himself out of a swamp by his hair.

Recently, Alex Konrad of Forbes wrote about how Mailchimp has an estimated valuation of $4.2billion — without a dollar of venture funding, and the consensus was that raising venture capital ≠ success.

Is it possible to build a successful startup on a shoestring budget? Yes, but it depends on what kind it is, and what ‘success’ looks like to you. Some sectors are capital intensive, and it’s unlikely that individuals/FFFs can afford the investments required. But if you’re building, say, an internet startup with a SaaS business model, it’s generally easier to get by without investment — as long as you’re willing to be patient about growth.

Because you can’t launch a startup into a vacuum, you need to figure out where your customers are/where they will come from. So, you either: run ads (expensive) or build your community (longer but cheaper). You have to work as hard as you can to make a dent and get people to notice you. It is also essential to define what success means for your startup and to enjoy what you’re doing.

Budgeting

One thing to keep in mind is you don’t want to have all your money in the bank in the beginning. Sometimes, you can pay for needs as you go. You need to understand how much it will cost you to build, and where it will come from, but you don’t need to have it all at the inception.

A way to save cash is by making small tweaks to your hiring process. For instance, Kendall Ananyi of wifi.com.ng (VP portfolio) said last year that in the early days, they didn’t hire anyone who didn’t already own a laptop.

Being your company’s sole funder can be both a blessing and a curse (and a choice many businesses don’t have). Every founder should be conscious of the point at which they’re no longer capable of going at it alone. Venture Capital is only one tool in your toolkit, and like any other, you ultimately have to decide whether it matches the use case you imagine for it.


Links from the Internets

  • Podcast: Shola Akinlade on getting into YC, building Paystack, growth, and the future. [Link]
  • Marketing: How trial length affects SaaS conversions. [Link]
  • Product: The art and science of Product development. [Link]
  • Bill Gates on Paul Allen. [Link]

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Healthcare that matters.

Source

“There are perhaps few industries that have more to gain from the Internet revolution than medicine.” — NYTimes

We’ve only just begun to witness the integration of technology into healthcare. It is a fascinating time to see health tech startups leading this charge, using mobile technology, cloud-based infrastructure, machine learning, and a multitude of innovations that will help us impact the lives of many positively.

According to research conducted by Mckinsey and the World Economic Forum, many of the most compelling innovations in the health industry come from emerging markets. This sounds right for two reasons:

  • First, necessity begets invention: in the absence of adequate health care infrastructure, entrepreneurs and existing providers must improvise and innovate.
  • Second, because of the weakness in infrastructure and resources of emerging markets, entrepreneurs face fewer constraints; because the lack of infrastructure means low-entry barrier and change is welcome.

New approaches to healthcare delivery are not in short supply.

In Mexico, for example, telephone-based healthcare advice and triage service, MedicallHome is available to more than one million subscribers and their families for $5 a month, paid by phone bills.

It is not hard to see or explain the use of technology in healthcare but how might these new forms of healthcare delivery drive down costs and effect change within the context of Africa?

First, is by getting closer to the patients; entrepreneurs can lower distribution costs by moving the delivery of care much closer to the homes of patients. For instance, Visionspring’s early work involved training the locals or ‘vision entrepreneurs’ to conduct outreach and sell high-quality, low-cost eyeglasses in their communities.

Another way is to use existing technology to reinvent delivery; repurposing mobile phone systems, call centres, and other current technologies allow innovators to extend access, increase the uniformity of care, and improve labour productivity. In Mali, for example, Pesinet uses SMS to improve detection and early treatment of childhood diseases.

Expanding the skillsets of health workers through training is also necessary. The outcome of this is reduced labour costs and overcoming labour constraints. In Kenya, HealthStore has trained community workers to diagnose and treat the region’s top five diseases which account for more than half of preventable deaths there.

As African entrepreneurs continue to innovate, they need to exploit low and loose hanging fruits — existing technology and community members to implement change.


Links from the Internets

  • Management: Speed as a habit. [Link]
  • Product: Steven Sinofsky on how a company’s structure affects what it builds. [Link]
  • Fred Wilson on first mover disadvantage. [Link]

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On mentorship

Telemachus and Mentor

“Mentor” was a character in Homer’s Odyssey. He was an older friend of Odysseus. When Odysseus left for the Trojan War in The Iliad, he asked Mentor to look after his household and his son, Telemachus. Because it took so long for King Odysseus to get back, the townspeople assumed he was dead, and moved to split up his vast estate. Telemachus, his rightful heir, was too young to defend his property. So, it was up to Mentor to protect their interests. Homer wrote that Venus decided to intervene, she took the form of Mentor and visited Telemachus, helping to guide him on his journey to find his father.

Because of Mentor’s relationship with Telemachus, and the disguised Athena’s encouragement and practical plans for dealing with personal dilemmas, the name Mentor has been adopted in English as a term meaning someone who imparts wisdom to and shares knowledge with a less-experienced colleague.

Starting a company can be a lonely affair, starting entrepreneurs need a listening ear and many incubators, and tech hubs have programs to match startup founders with experienced veterans. In the traditional mentoring model, the engagement between the mentor and the mentee took place in a physical, face to face environment, but thanks to the internet, mentors can now sit in any part of the globe and make themselves available to mentees who are sitting in Lagos, Kigali, Nairobi, or wherever else.

For young entrepreneurs, finding the right mentor can mean the difference. Great mentors keep an entrepreneur honest, and keep their feet on the ground, but can also take them to heights unimaginable.

An ideal mentor has domain expertise and broad experience in a particular area; makes introductions when appropriate; doesn’t ask for anything in return, and shows empathy.

“At least for me, becoming someone’s mentor means a two-way relationship. A mentorship is a back and forth dialogue — it’s as much about giving as it is about getting. It’s a much higher-level conversation than just teaching. Think about what can we learn together? How much are you going to bring to the relationship?” — Steve Blank.

For founders: For each meeting, go with a specific challenge with sufficient homework, and data collection.

Funding is still scarce in these markets, but mentors shouldn’t be. We need more mentors — tech company founders, corporate executives, and captains of industry who will provide a great sounding board, help make tough calls, and help make introductions to potential customers, partners, or even investors.

The ecosystem will be better off for it.


Links from the Internets

  • Design: To mark its 10th birthday, Chrome launched a redesign of its UI. Hannah Lee unboxes it. [Link]
  • Management: Grammarly’s Itamar Goldminz on team diversity. [Link]
  • Marketing: PR advice from Facebook’s Caryn Marooney [Link]
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Series V

A short note on founder-friendliness.

We (VCs) often claim to be founder-friendly but what…does that mean?

The mechanics of the VC industry is such that multiple firms must compete for the best investment opportunities, and one of the ways to attract entrepreneurs with a choice is to brand yourself as “founder friendly”. Being founder-friendly is not the abdication of responsibility to deliver honest, critical, often difficult feedback to them. It is treating the founders as your customers and optimising for their success above your own. (Ironically, this helps guarantee your own.)

Founder-friendliness is not — should not be — a marketing term. It should come from the understanding that everything we do is in service of great entrepreneurs. Understanding that investors will not build the future, but exist to support those who will. Of course, this does not mean they should turn a blind eye to irresponsible behaviour.

And even more than the many things they can do, e.g., helping with organisational set-up, recruiting, corporate connections, etc., investors have an obligation to build a trust-based relationship with founders and to offer timely and valuable feedback when it is warranted.

Backing a super-smart, eager, hard-working team is not nearly enough: it’s doing the hard work of providing substantive feedback, but doing so with empathy. This gets to the essence of what being “founder friendly” should mean.

The objective is not [necessarily] to be a founder’s best friend but to be the partner that helps them be their best selves. And if this means having some hard conversations with bruised egos and hurt feelings in the short run, but with an eye towards longer-term payoffs, then it will be worth it.


Links from the Internets

  • Gradually, then suddenly. That is how disruption happens. [Link]
  • Mindshare before market share. [Link]
  • How to build products that scale in a country with no middle class. [Link]
  • Finance as a strategy. [Link]

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Customer discovery

We often see two competing mindsets while talking to entrepreneurs. On the one hand, you have those who idolize the visionary founder, who built the product, got to the market, and found that their intuitions were right. You might find them quoting Henry Ford as saying customers would have demanded a faster horse if he’d asked them. On the other hand, there are those who have outsourced their product roadmap to users.

In reality, both views are valid, and often at the same time. First, realize that most of us are neither Steve Jobs nor Henry Ford, yet we must build enduring companies. Next, even though the customer may not be able to articulate the solution, listening to them will tell you something about the nature of the problem. If Henry Ford had asked customers, they would never have asked for a car — but he would have learned they wanted to go faster. And the difference would have been his ability to sift through their feedback to guide product direction.

The process of navigating this maze is called Customer discovery. It is how you make sure the dogs will eat your dog food. It is how you check that you aren’t wasting resources on a product nobody wants.

Get out of the building

The first step is to get out of the building to test your understanding of the customers’ problem. Talking to customers is an obvious first step that gets ignored too often. At some point in the startup journey, founders may have sold themselves on their business concepts and created false confidence. Customer discovery is intended to expose the flaws in your logic, and that’s a difficult pill to swallow.

The art of questioning

If you ask customer X, “Would buy or use this product?”, Their answer would either be yes or no. But that doesn’t tell you much. We often hear things like “We spoke to x number of people, and 94% said they’d need our product”. Perfect right? But did those x number of people buy it?

It is tempting to ask leading questions that validate your preconceived notions without providing useful feedback. One day, though, we will all ‘realize’ that the emperor has no clothes.

In the same vein, you should employ both qualitative (discussions, interviews, etc.) and quantitative methods (surveys, questionnaires, etc.). You will find truth at the intersection between both of them. A deep understanding of your customer’s problems requires you to develop trust. Don’t force your proposed solution upon them. Let them lead the conversation, and you can learn what the real pain points are. Insights gained from discussions can be validated via surveys.

The result of customer discovery is that you’ll be receiving information to drive product and business model iteration. And so, it is crucial that founders, themselves, go out to talk to customers. This is a process that never ends. Great companies have developed a culture of new product innovation, and each time a new product enters development, you should dive back into learning, prototyping, and experimenting.


Links from the Internets

  • Lessons from Pillpack’s acquisition. [Link]
  • How design grows up. [Link]
  • This mathematical model could lead to a new approach to the study of what is possible, and how it follows from what already exists. [Link]
  • The Moat map and Network effects. [Link]

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In conversation with Dotun.

Today on Series V, we continue to discuss fundraising for startups in Africa. Catch up on the first and second parts here and here.

Last week, Kola Aina shared his thoughts on funding models. Today, Dotun addresses valuation and long-term thinking for African investors.

Dotun Olowoporoku

About Valuation

For startups with uncertain futures and no historical financials, the job of assigning a valuation is tricky. In these cases, startup valuation is more of an art than a science. There are many parameters to take into account like the market, the team, the product, and so on, but the most important of these is the market.

A lot of African founders compare their products with foreign counterparts, thinking they should raise at similar valuations, but forgetting that the market conditions are different. True, some products in Africa are unique to us, like USSD. But if your offering is Uber for x or e-commerce, and you are basing your valuation on comparables in other markets, you are going to get it wrong because the risk profile is vastly different.

How then deal should African founders approach valuation? In my opinion, by fixing the best price they can, but applying the necessary discounts to the numbers, they see on Techcrunch. Go for how much will help you get to the next milestone, and then determine how much of your company you want to give out for that amount of money. It is important to keep the next round in mind when pricing equity today. Rather than getting fixated on how much your company is worth, do a bottom-up analysis of how much your product roadmap requires, add an extra 20 %- 30% (because founders tend to underestimate how much they need), and give out a percentage you are comfortable with. Think “who is willing to give me $1.2million for X per cent of my company?”.

On long-term investors

African investors should not think of startups as a get rich quick scheme, but a commitment. Players in the African tech space should play chess and not checkers. They should be long-term in their thinking. It’s going to take time for the market to mature and they need to think beyond making money in 3 years. For instance, an investor in an African e-commerce startup should look far ahead into the future to a time where young consumers become the biggest spenders and the highest earners in the country. When that happens, most transactions will happen online. If you are betting on the technology companies that will deliver this future, you have to take a long view.

Plus, in cases where funds/investors do not have enough follow-on capital to deploy, they can provide portfolio support until the startups get to a stage where they are good enough for more money/foreign investors. They should also actively spend time building networks to secure follow-on capital for their investee companies.


Links from the Internets

  • CB Insights’ WeWork teardown. [Link]
  • Inside Uber’s rebrand [Link]
  • Lessons from Richard Zeckhauser [Link]

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In conversation with Kola Aina.

Last week, we started talking about fundraising, and we shared a few key points based on our investment conversations. Today, we will continue to explore this topic in depth.

This week, we have Kola Aina sharing his thoughts on funding models.

Kola Aina

Incentives.

First, it is essential to understand that not every company is venture-backable. There needs to be an implicit understanding that your investors expect some positive liquidity event within a time frame (usually 7–11 years). While startups are driven by their founder’s passion for creating something new, startup investors have a much different agenda — a return on their invested capital.

Founders need to understand the time horizon of their investors, the return profile they are looking for, and the incentive structure that guides their decisions. Depending on the discussion, different investors have different expectations and timeframes. For instance, if you’re raising impact investment, the return expectations might be lower, and there are other parameters your investors would use to measure success. It boils down to understanding your source of capital and the return expectations bundled with that capital.

Funding models that work best.

There are two ends of that stick. The first end is that capital is scarce and expensive here, and so there’s probably a higher expectation for profitability. Because of this fact, founders need to be able to stretch whatever capital they raise to stay alive for as long as possible. Some people argue that the expectation of being unicorns is not necessarily realistic in this market, so capital efficiency is critical. Several investors in this part of the world will be happy with a 10x return. That tells us something about whether to chase ‘growth’ or prioritise profitability. Becoming profitable stretches your runway to infinity, and understanding the balance is critical within the context of “Wakanda”.

On the investor side, I believe that a venture model that combines capital, mentorship, and proper governance is critical here. We don’t have a lot of repeat founders with experience, so investors must play the role of augmenting founders’ experience level and ensuring that the companies are properly governed without inhibiting them. There should be a lot more mentorship and support for the companies we invest in more so, because we do not have the depth of capital markets obtainable elsewhere. On both sides, startups and investors have to think much more in-depth and different than their counterparts in SV.

Alternative forms of capital returns

Our tendency to copy and paste what applies in Silicon Valley to Africa is wrong at the foundation. We must create models for Africa from first principles without reducing quality. I think that we should explore other ways to access liquidity for the right kinds of businesses, at the right level of maturity. Perhaps profit sharing or dividends is one option to explore. This may sound like a taboo in other markets, but in this part of the world where the investors that invest in a fund are not always as patient, there should be room for flexibility in the way deals are structured. As the ecosystem grows and as the patience of investors increases, we can focus more on increasing value and exiting in more traditional ways. But until we get there, actors in the space must begin to consider other paths to liquidity.

On the quality of our consumer market

There are several factors at play here. First of all, there is a high level of poverty. Until we fix that, we will continue to have consumers that have very little disposable income and have to direct most of it towards basic survival. Interestingly, I think that says something about the kinds of problems founders should build companies around. As opposed to building fancy, nice-to-have companies, it probably makes more sense to build painkillers — companies that address the key pain points of the majority of our consumers. I also think that the government and regulators have a role to play. For instance, in Nigeria, when you realize that 68 million adults are without bank accounts in a nation that is said to have 190 million people, you see that it is very difficult for the majority of the population to trade within the formal financial system, and so founders must be mindful of that even as the regulators and policymakers work to improve financial inclusion.

We certainly can’t absolve the government of their responsibility, but there’s work for every actor; founders, investors, and so on.

On fundraising

Fundraising is hard. You never want to be in a position where you need the money. You want to be in a place where raising is a strategic choice. As soon as you can, you want to be default alive as opposed to default dead. A good yardstick is to ask: If you keep growing at your current growth rate with your expenses remaining constant, will you reach breakeven before running out of cash?


Links from the Internets

  • Building in a small market: stories to tell. [Link]
  • Netflix has a site for their research. All of it. Bon appétit. [Link]
  • Uber’s bundles by Ben Thompson. [Link]
  • Disrupting addresses. [Link]

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Questions about consumer lending.

Photo by NESA by Makers on Unsplash

Nigeria is still a ‘cash-and-carry’ economy. Most consumers and small business owners and operators largely depend and rely on their savings and support from friends and relations to obtain funds to start and grow their businesses, and as a result, Nigeria is lagging behind in the consumer credit scene. Formal lending to consumers is still relatively low. To give an idea, Credit penetration in Nigeria is still below 30 per cent, while the average for Africa is 57 per cent. The global average is 132 per cent.

“Nigeria has 22 commercial banks, over 900 microfinance banks, about 100 primary mortgage banks. Nigeria has not experienced the kind of consumer credit you will expect.” — Tunde Popoola, MD, CRC FICO score.

It is hard to project credit demand in the coming years because of a number of hindrances — refusal to embrace new lending business models by banks; information asymmetry; data scarcity, but the proliferation of mobile creates opportunities for new companies to fill this gap (startups like BillionLoans, Klarna, Paylater, and Branch use hundreds of data points to approve a credit decision) etc. The result? There’s a new consumer lending startup showing up every day — and for good reason.

Mckinsey reports that 53% of income earners in Africa are between 16–34 — an age group that tends to be more aware and willing to try new products. They are in school, renting their first apartment, starting new families, etc. They are not just young; they are growing in importance and willing to spend.

This begs the question:

  • What is going to drive growth in this scene and this part of the globe?
  • How high does the ceiling go?
  • Who are the borrowers today?
  • How will their needs evolve?
  • Do the same solutions work across segments?
  • How might this work without smartphones? Can it even?

Usually, consumer lending startups serve those who have steadily growing income but are underserved by banks. The average consumer’s banking relationship is dominated by making payments, but banks are doing little about it (as this Twitter thread shows).

Given that the primary means of identification is BVN which is dependent on having a bank account, the majority of people are excluded. How then do we expand access? The national ID card often takes years to get a hold of, so, how do we verify identities? Should we push for a unified software platform like indiastack (Aadhar)? What are the broader, ethical, implications of this?

How about moving beyond credit for white goods and into other segment-specific solutions like healthcare? For example, unplanned health emergencies are one of the single largest cost for many middle and lower-middle-income families.

For FinTech startups, the big questions are around strategy, choice of segments; bottom of the pyramid, middle or top? Use cases, and distribution approaches. Pick too small a section — no matter how innovative — and it may be hard to monetize. The good news is that there are real use cases, large addressable markets, and viable economic models for the truly innovative.


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Much ado about PR (Pt. 2)

Last week, we introduced a framework that shows how journalists decide what to cover. This week, we cover ‘when’ the press is relevant and how to approach it.

Press is most relevant when you know exactly why you need it. e.g. why people should care about your product launch, the problem you’re solving, or a funding round. In each of these cases, you must have a strategic reason for engaging with the public, and as with everything else, you should start with ‘why’. Define your goals. Your ‘why’ could range from recruiting the best talent to securing a research grant to acquiring customers. All that matters is that you are deliberate about it.

On the other hand, Press is inconsequential when your product isn’t viable. Imagine you just launched and your press release is on a widely read and respected publication. But when new visitors flood your website, it buckles under the pressure. What, then, have you gained? Customers that churn before conversion?

More than a transaction

PR is not a series of transactions with journalists; it is a long-term consideration that helps you tell your story over time. But you must have a compelling story first. While PR might be exciting, the founder’s number one job is to focus on the product. You could have a puff-piece written about you, but if you get people interested and the product doesn’t live up to its promises, they will leave and won’t come back.

Without a solid product engine, PR is like putting lipstick on a pig: looks interesting from a distance, but won’t ever get invited to dinner (well, unless IT IS dinner).

“Treat PR like biz dev”

Cultivate a relationship with the press long before you want coverage. You have to build media friendships way before you need them.

For early-stage companies, founder-led PR is preferred primarily because your startup’s story/narrative is too important to leave to someone else; you know your domain and your business, therefore, you have something the media wants — the real inside scoop. Entrepreneurs should think, from day one, about how they can communicate directly with a variety of audiences: their customers, members of a Facebook group, Twitter followers, journalists, business partners and more. One positive side-effect of this is that it helps founders define their business in a clear and concise way (this will come in handy when you’re talking to investors or potential partners). As they say, one of the best ways to learn something is to teach it to someone else.

Thanks to the times we live in, different forms of PR abound. “PR” doesn’t always mean being featured in a big Tech publication. These days it could also mean putting out an excellent article about who you are; speaking engagements; podcasts; social media, and other channels you operate yourself.

Are we saying journalists are unimportant? We’ll answer that next week with picking the right reporters and getting them interested in your story.


Links from the Internets

  • Net present value is a science. Identifying the trust and passion of a CEO is an art. There are very important things you can’t measure. [Link]
  • It’s never too early to charge. [Link]
  • The today and tomorrow of Machine Learning. [Link]
  • Leading the people. [Link]
  • Money. [Link]

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