Connecting developers and investors to grow startups

September 26th, 2017, Published in Articles: PositionIT

Esri South Africa has in recent months started involving itself more with local technology startups. The geospatial company held its first StartTech Meetup in collaboration with Thmbprnt on 14 September 2017, connecting developers and start-ups with business development experts. Keynoting the event was Abu Bakr Cassim, co-founder of the investment platform Jozi Angels, and Michael van Andel, chairman of Gather Online.

Cassim explained how angel investing works – a form of investing in which an affluent individual provides capital to several startups in exchange for equity or a board seat. The investor’s strategy is to have at least one highly successful emerging company. Angel investors are usually self-organised and often use online platforms such as Jozi Angels to find startups.

Richard Kaufholz, Evette Bevis, Abu Bakr Cassim, Michael van Andel, Verosha Naidoo, Ihamo Mamabolo, Thulani Dube, Themba Zwane, and Ravi Pillay.

Richard Kaufholz, Evette Bevis, Abu Bakr Cassim, Michael van Andel, Verosha Naidoo, Ihamo Mamabolo, Thulani Dube, Themba Zwane, and Ravi Pillay.

Startups in need of funding should keep investor expectations close in mind, he added, including considerations such as market opportunity, scalability and momentum, team dynamics and return on investment. He further advised them to research their potential investors so as to identify value-adding relationships and understand the investor’s processes, realising that most investors will want to get involved in the running of the business.

Furthermore, securing funding also doesn’t solve all of a startups problems, and it remains hard work throughout. He advised startups to consider multiple sources of funding as opposed to relying on a single investor, as well as to leave enough incentive on the table to keep investors interested. Being able to demonstrate some traction or beta results, along with knowing how much money your business really needs is also important. A tip: let the investor make the first offer. Then, don’t get hung up on an initial evaluation. Instead, be careful of overly restrictive terms.

Other stumbling blocks are arrogance for its negative impact on business relationships, and non-disclosure agreements (NDAs) because they can be onerous for an investor who is often considering many applications simultaneously. NDAs could also prove futile if not enacted, and startups seldom have the financial and legal capacity to pursue infringements. Instead, continuous innovation remains the best protection of intellectual property, Cassim said. However, consulting an experienced attorney before closing a deal remains a good idea.

Developers were also advised by Michael van Andel of the importance in selecting quality and trustworthy team members. He also said clear communications between different stakeholders are vital to success. Having an international presence, such as an office in another country, could also help secure investment from otherwise risk-averse investors.

The evening concluded with a showcase of the Esri ArcGIS platform by Richard Kaufholz and Evette Bevis. Kaufholz said that the data from apps can be another revenue source as it provides insight into user behaviour – insights that the geospatial software can help visualise and analyse. He used the example of a transportation app from which the data could be used to identify public transport demands and service points.