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Funding in different contexts: Landing international & local investors

 In a bid to explore different funding contexts, we had a chat with an investor operating in North Africa who shared abo...

Interview: Jerome Curry, CEO at Platform Capital

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Jerome Curry: CEO Platform Capital Group 

Jerome is a venture capital investor who has worked with multiple Fortune 500 organizations. He is passionate about community service and helping entrepreneurs move forward. In this interview, he talks about what he looks for to invest and areas of focus for entrepreneurs. 

 

  • Tell me about Platfrom Capital

JC: Platform Capital is a US-based venture capital firm that invests seed capital into companies but also has its own network of investors who are brought in to help finance larger rounds. The firm is keen on venturing into the African ecosystem. The firm is dedicated to developing a complete ecosystem for founders. Through our accelerator program, we are able to focus on what are the next steps for the entrepreneur. Those are the things that we really focus on to help them position themselves for what is to come. 

  • Have you had any interactions with African startups?

JC: I have. We've had multiple organizations that we've assisted in being able to develop their capital raising processes that have come out of Africa. Some of these were established businesses and then some of these were startups as well. So we've worked with both.

  • Have you had any of them go through your accelerator program?

JC: Our accelerator program just launched at a small part of last year. We did a domestic launch first, and then recently just in the last 30 to 45 days we debuted it for a program inside of Africa. So hopefully we're hoping to have our first couple of companies to go through the accelerator program pretty soon.

  • Is it open globally or do you have specific regions that you're interested in?

JC: Sure, for now it is open globally. There's no specific region that we've targeted as of yet. As things expand more, we may take a look at that, but as of now there's no specific region that we've targeted yet.

  • I saw the industries that you're really keen on are FinTech, salestech and there are a lot of African startups innovating in these industries. eggs me like Africa. With these, would you platform be focused on African startups as well?

JC: Absolutely.100%

  • Have you had any African founders pitch to you?

JC: When we did our debut program, we had a couple. I've also had a few that contacted me off of LinkedIn as well regarding their pitch and I provided feedback on what they could do better.

  • What do you feel they get right and what do you feel they should improve on?

JC: It's always very important to know what investor your targeting. Oftentimes when I look at the pitch deck, I look and I see all the great information about the company and that's great, but a lot of times it's not tailored enough to a specific investor or a specific group of investors. Now, does that mean you've got to have multiple pitch decks? Probably so. This is a different type of ballgame. This is a game for the investor. One thing that I encourage our founders is that I want them to take a look at their project through the eyes of an investor. Just step back and take a third eye view if you will. If you were taking the money out of your bank account and investing into this project, what would you want to see?

It's amazing what happens when they do this because there's some things that started to happen. They start to say, wait a minute, you know what, I wouldn't take out money because of this or I wouldn't take out money because of that or, you know what before I invest, I'd want to see this first. So I always like to help them to walk through that exercise of if you had to pull money out of your pocket right now, would you invest into this program or into your project? It helps you to be able to see the world as investors see it. We're putting our capital at risk with no collateral guarantee. In our minds this capital is going out there and we're hoping that it's going to bring back a return on investment.

It may or may not and we're accepting that as a loss. So as you can understand, if you start to do that. So if you were at work and if it was your job to invest say $500,000 into a company and your job absolutely depended on those companies being able to win, how would you position your company? What companies would you look for? What would you look for in those companies?

  • So it's almost like how people send their resumes and they have to tailor each of them to the different companies that they send them to. Out of the ones you got to see, how many do you feel were spot on in terms of aligning themselves to you the investor they were pitching to?

JC: None at that particular moment. That's why my partners and I are committed to providing educational resources, to providing videos and to providing the accelerator programs so we can bring things up to speed. Investors also look for ways to mitigate their risks. When investors look at a project, they look at it and say okay this looks good. I know an investor over at a certain firm likes to invest in these types of projects. He may want to take a look at this as well. So with that in my mind, I've got a strategy on how I can get maybe two or three other investors in and pool their money and resources.

When, when we look at a project we're going to look at the stage of investment. If it's a smaller round where, we can just write the check, then we can just write the check. However if it's a larger round, then more than likely we're going to look for a way to be able to spread the risk. We're also thinking about who else we can bring to the table.

  • In terms of investor alignment, is it a case of, let's say an e-commerce startup founder has reached out to you as a fintech focused investor?

JC: It was more so industry match at that time and also them not being quite at a stage for us to really be able to make an impact. They needed some more traction for us to be able to really get things moving and make an impact with an investment.

  • Is it possible to quantify the traction that you're talking about? Because from what I understand, you invest from seed all through IPO.

JC: It is because we have that network of partners that we will bring in for a larger deal. So we have our cheque sizes that we'll write out depending upon the deal size and then we have our network that we will reach out to depending on the size of the deal.

To answer your question the traction can be quantifiable but it's always going to be on a case by case basis. Every founder is not the same and every traction is not the same.

It all depends upon the industry. From the investor side, there is not a just a slammed up quantifiable process. I think any investor would struggle to tell you how they quantify their traction. We're looking at some of the things that can be quantifiable though like the past year's profit, what's your MRR? What's your ARR? What's your projected return on investment for the money? What's your valuation? Are you at the stage for a valuation? Now, do I have a profile that says they should meet this amount of traction? We don't necessarily have that, but we do look at those baseline numbers to develop our traction.

Some of the founders that I've been the most impressed with really understand their numbers and they really understand their business. And that's something that founders sometimes miss because they are very heavy into the product.

So they know the product in and out but they don't know the business. What we understand as an investor is that whatever this product is, whatever this service is, it's got to last. It's got to be able to go more than five to seven years. Why? Because we know that in the back of our mind, it takes that amount of time for a startup company to reach the level that they need to reach. So if we know this in the back of our minds, then it becomes paramount that whatever product or service that we're looking at has to be able to withstand seven years. It has to be able to withstand multiple iterations. So sometimes you have a founder that's just absolutely in love with their product and not strong on the business. But that product can change. It's going to have to change in seven years or something. It's got to be something different, something nuanced, it's going to transform. That, that next level up would be the next level up that's going to be moving forward. But if you're married to the product, then it's not going to work.

  • Do you generally feel like founders are often married to the product as you say, because they still have to sell the vision, sell the product, then the numbers will follow. What do you think about this?

JC: I think you have to have both. You have to sell the vision with passion, but you become equally strong on the numbers. You should have passion in evangelizing the vision, but you also must have the same strength and confidence in your numbers. Because without that the investor can look at it and say 'I like them, they're exciting but I don't see how I'm going to be able to get out of this business. I don't see how I'm going to be able to get my money back out of this business'. That's something that I think a lot of founders miss.

This also varies depending upon what stage that founder is in. For instance pre-seed money is always tough because you're asking people to take what you've written on a napkin and invest in it and turn it into a dream. That's always going to be challenging. I'm not saying that it's impossible but it's challenging. Now, is that the case everywhere else in the world? Yes and no. In some places it's easier to find capital, but I know pre-seed entrepreneurs work hard to push their business out. So pre-seed money is always a little bit tougher.

As you go into the different levels, it's important to understand where you are in your business and understanding your numbers. I can always tell when a founder comes on whether or not they're confident in their numbers, because if they're confident in their numbers, they want to tell you the numbers right off. They'll tell me the number of users they have or what project they're moving forward with and that's exciting. So they should want to keep the passion for the business and the passion for the vision, but also marry that to understanding their numbers and understanding where their organization is headed financially.

  • Investing is mostly a numbers game. You have to look at what returns you're getting from this startup. But are there any other elements that would make you want to invest in a startup apart from its return potential?

JC: If I had to have a priority list, I would say number one is the numbers, the return on investment. Number two is the type of industry. And then the third thing is the founders and their background and ability to be able to carry a project. I think if an entrepreneur is strong in all three of those areas then it really works out in their favour. I always say there's so much experience that one can leverage that's out there and being able to find someone that can sit on an advisory board for you that has 20 or 30 years of experience in business and maybe have, and could have experience in exiting.

For some of the strongest presentations I've heard both domestically and globally, one of the things that I saw was that the investor team had someone on their team that had exited out at two or three times. When they say that we automatically know it's not a matter of if they're going to get the money, it's a matter of when because they've got someone on their board that has exited two to three times. That means that they have the experience to be able to carry this project through. Now, what does that mean for a founder in Africa? They may have to work hard to find someone of that caliber.

There may be concessions or maybe equity involved. But what happens though, is that if they can get someone of that caliber on the team that has helped companies to exit, that does an amazing job when presenting.

Just having them automatically adds so much more value to the project or processes. However, this doesn't happen overnight. It's going to take some work and some conversations. The entrepreneur may have to go through a few people but when they find that person that's willing to sit on that advisory board and get on some of those calls with investors, it will absolutely change their entire presentation.

  • So that's one way of positioning themselves. How else do you feel African startups can be noticed more by international investors?

JC: There are firms investing in Africa and others are looking for a pathway there. So just really building and maximizing relationships. One of the things that I would say is they want to maximize relationships with people that have a heart for what you're doing and have a heart for international affairs. If they're looking at those types of investors, then it's a lot easier. Look at people who have invested in Africa or find different networks, different incubators or different accelerators that have programs inside Africa. Look at relationships because that's what this is - a relationships business. You're looking at building a relationship with someone over a period of time for them to be able to write a cheque for your organization.

  • Is there something you could say just from your own observations that African founders could borrow from the founders that you've interacted with?

JC: One of the things that I can provide that I would say in meeting with founders and talking with them is determining what's the wow factor for your project. They should identify what's going to be the thing that helps them to really stand out and spend time developing that. I had a great conversation with one founder. He said something really interesting. They spent almost two years just in customer research because they had to make sure that when they did their product, that it came out right. By doing that, they were able to acquire a huge user base who were entering into a pay program.

There was a lot of work that they had put in on the customer side first, before they even came to the investor, because they knew they had to get that work done first. That's really impressive.

While waiting for funding, really look at how far can you take your project and you'll be surprised how far you can take it. I would encourage being creative while they're waiting for that round of financing to come in and see how much traction can they get, work on the product, talk to more customers and look at other areas in the business and not get stagnated on one point. They shouldn't get stuck on one point which is getting the money because then the business may get stuck. They should find their resilience strategy for when the money doesn't come in.

Therefore, when they get ready to present, they're not presenting something that's three or four or five months old that they don't have any recent developments. What have they done recently? That's something that I hear sometimes where the entrepreneurs say they've just been waiting on a round. But did they maximize every resource, every connection, every customer or every moment?

You'd be surprised how much further they can go by doing the research, making the product and process better and not being stagnant. Then by the time the money comes in, it just takes the startup to the next level. I think that sometimes founders need to take a look at it from a different aspect. This money should be their runway and it is not a stop gap to keep them from going out of business.

When it comes to getting funding, think about it like this. That person that's investing has to look at the project and they also have a thousand other projects domestically that they can put invest in. And so the project has to be so good that it beats those other projects.

  • Are there plans for platform capital to set up an office in Africa?

JC: Definitely. There's definitely going to be some traction there. We're definitely going to be setting some things up on the ground there soon.

  • Which countries have garnered your interest so far?

JC: Probably more than likely Kenya. We've also taken a look at South Africa and Rwanda. We do have some relationships in those particular areas that we've worked with before.


Click the link below to find a related whitepaper dubbed "Why it's time to invest in digital Africa." The whitepaper addresses the challenges faced in the digital Africa space and offers actionable development perspectives. 

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