This week, we were proud to co-lead the $30m Series A funding for one of our portfolio companies, e-logistics platform Kobo360, building upon their $6mn seed funding in 2018. For African tech startups, it’s an indication of not only how much this sector is evolving, but also an inspiration for those at an earlier stage in their startup journey.
In light of this, I wanted to discuss what we saw in Kobo360, from an early stage, and use this to share three key lessons African startups can take as they embark on a similar path.
1) An extraordinary team with a clear strategy to win in a large market
From the start of our conversations with Kobo360, the combined expertise of their founders, Obi Ozor and Ife Oyedele II, shone through. From Obi’s logistics background and experience with Uber to Ife’s technical expertise, they demonstrated that they had the skillset to lead a business that could sit comfortably between the worlds of logistics and technology. They also showed an extraordinary ability to articulate and execute a strong strategy built around superior business fundamentals. A large underserved market that suffers from fundamental inefficiencies is what the Kobo360 business model is designed to overcome.
Having relevant experience or skills for your startup’s industry provides an investor with confidence that you can visualize an innovative way of defining your industry, that you’re aware of the key challenges your sector faces and also have the capacity to solve them. However, founders are only humans and can only do so much by themselves — the important thing is that they’re self-aware enough to identify their weaknesses and recruit people who can complement them. In recent months, they’ve built out a dynamic executive team who are helping them to execute on their vision.
2) Deliver on your targets — execute your strategy
Since joining the Kobo360 board, one thing that has stood out to me is their focus on execution. It’s something that flows through Obi and Ife to the rest of the team, keeps them on track for their goals and was a key reason why we decided to build upon our initial investment. Since their seed funding, they’ve expanded into Togo, Ghana and Kenya, which moves them closer towards their goal of building their G-LOS (Global Logistics Operating System) Network that will connect supply chain operations across Africa.
Every startup has aspirations, but it’s the ones who can evidence how they’re achieving them that will stand out to investors. If you’re a business currently targeting your next raise or even your first one, it’s vital that you can show how your current pool of funding has supported your business objectives. If investors can’t see this, it’s highly unlikely they’ll be willing to give you more cash. It’s more than okay — in fact it is very smart — to change your mind about elements of your strategy and how to execute, as long as you manage to dynamically keep a good level of consistency between (a) constantly improving your strategy and understanding of the market, and (b) between your strategy and your execution capabilities, starting with capital and human resources.
3) Attract a complementary set of investors at the service of your value generation strategy
At TLcom, we’re interested in scalable companies looking to solve key challenges in Africa by leveraging technology. Kobo360 fits right into that model. For decades, poor logistics has stunted the growth of African trade. When we came across Kobo360, their case for increased speed, transparency and efficiency in the sector was strong.
On top of this, their vision for building their thousand-strong driver fleet spoke to another core problem in Africa — unemployment. Not only are they getting the continent moving, they are also addressing the considerable problem of widespread unemployment across the continent. We need more start-ups and SMEs to catalyze Africa’s economies through mass-employment opportunities.
Every investor has their own unique criteria for investment so it’s key startups decipher which ones are right for them and make a strong case once they do. At the same time entrepreneurs should also investigate about the contribution that an investor can provide beyond capital. After all, the startup-investor relationship is a long-term one, so it’s important to find someone truly aligned with your vision.
TLcom brings a unique combination of a global 20 years VC track record and a strong on-the-ground presence in the key African VC clusters of Lagos and Nairobi. We can challenge your strategy and support your execution and we can offer access to local African networks as well as global talent and coinvestors.
Other investors can bring vertical industry expertise or other critical capabilities. In the case of Kobo360, lead Series A investor Goldman Sachs brings unparalleled access to global capital markets, investment experience in similar companies across several emerging markets, and global opportunities for exit in the form of M&A or IPO.
This list is by no means exhaustive and not every startup will secure $30mn in funding. However, they are basic principles that will ensure founders can move a step closer towards their goals. It’s undoubtedly a tough feat to be an entrepreneur (and even tougher when you’re based in Africa) however Kobo360’s success should be a source of encouragement to African startups that with the right guidance in place, their ambitions can become a reality.
We at TLcom congratulate Obi, Ife and the entire team, and what has been a transformational year, and we look forward to continuing working at the service of their value generation vision as they scale.
***Dr. Omobola Johnson is the Pioneer Minister, Federal Ministry of Communications Technology and presently, the Senior Partner at TLcom Capital. Passionate about ICT’s potential for enabling inclusive development.