Winning over investors was our greatest battle
SEE ALSO: The best business advice I ever gotWhat does Presta do? Duggan: We provide lenders with the tools they require to offer credit facilities to their clients via a mobile device. It is fully integrated with payment solutions meaning that once the loan application has been made, the evaluation and disbursements are done in real-time. Within five to ten seconds, your customer has access to funds and on the other side, for you the lender, all the record keeping has been done. We built the first version and signed up our chama. Our key market is small- and medium-scale lenders. Now we have 85 lenders using their platform. What challenges did you initially face when you started the company? Tom: Raising capital to set up the business was tough. Software hasn’t proven itself as an investment channel in this country. A person with a million shillings has the option of, say, buying land which in a few years will start yielding returns. How do you tell that person that they should invest the same million shillings in a software which in five years, for instance, will be making them one million per month? Software is an idea. You’re telling them invest in an idea. Changing a mindset is not easy, but we are seeing more and more start-ups proving themselves as investment options. How did you raise the capital? Duggan: One advantage with this kind of business is a lot of the initial input involved is technical. As long as you can pay your rent and at least earn enough to continue operating, you can pull it off for a while. We partnered with other people to give us their input to build the software, but then overtime we needed to start moving into the market which introduced additional expenses over and above building the software. It took us nearly a year to raise capital and during that period we were relying heavily on earnings from the previous company and savings. We also had support from friends and family. What are the emerging challenges now that the business is growing? Duggan: We are operating in a legal and compliance environment that is not clear. Some clients will ask for compliance certifications, but when we approach the Government, no one seems to have an idea what is needed. This is a challenge with the IT industry as a whole. We deal with this challenge on a case by case basis. How does your partnership work and how do you deal with disagreements? Tom: Disagreements sometimes crop up, as is expected with any other relationship. But we have learnt over the years that it is not about who is right, it is about what is right for the company. If you handle issues from that angle, you get to resolutions amicably. We divide up work according to our individual strengths. I mainly handle sales and marketing while Duggan handles the technical aspects. When it comes to staffing, we hire the best people for the job. It is not usually about who has the most academic qualifications. It is about what someone has done. If someone has built something impressive (this concerns the engineering bits), even if all that person has is a high school certificate, we will hire that person. What were your fears going into this business? Tom: Fear of failure, fear of a big player with all the marketing muscle building a similar product and fear of not scaling. We do have competition, but it the form of people offering different aspect of what we offer. Speaking of failure, what are some of the mistakes you made? Tom: We took too long to hit the market. We built the platform for over a period of six months before we got any paying client on board. That was a huge mistake because it drained our cash reserves. Once you have clients on board, they also help you refine the product and focus on what is important. Start earning early. Business is cash driven. Do the smallest thing you can, get it out there and let it start earning you cash. Duggan: Financial planning is important, another thing we learnt the hard way. Also, do your taxes. A mistake we made with their first company was thinking all the money we made belonged to us until the Kenya Revenue Authority came knocking. Find out what you owe KRA and file your returns. Any advice to entrepreneurs? Duggan: Don’t think small. If people reject your product, don’t automatically think something is wrong with it. Talk to 1,000 people first. If they all reject it, then something is wrong with the product. Also, software requires investment for it to pick up. You can’t go it alone. Most entrepreneurs want to own 100 per cent of the company not realising you cannot pull it off alone. You have to open up your company to people who can help you reach there. [email protected]
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