Last Sunday SafeBoda, the boda hailing company, had their
end of year party at the Lugogo Cricket Oval.
A notice ran online by SafeBoda, that their service may be
slower that day as their riders would be attending a company function.
It was a big party with hundreds of boda riders and their families
that went on well into the night. You kind of take it for granted but just by
the size of their impact employing riders and easing movement around the city,
they are a huge company.
If you have not been around, SafeBoda has organised hundreds
of boda riders – 8500 by some accounts, to provide safe transport – they
provide helmets for their passengers and obey traffic rules.
Their riders’
orange vests and helmets have become a regular feature of Kampala traffic.
"It has been reported that they do at least 15,000 trips a day. Assuming an average trip of sh3000 gross revenues would be about sh45m daily and a whooping sh16b annually. And growing...
This example alone goes to show that resources are not
lacking in this country, it’s just that they are not aggregated into meaningful
wholes. By extension it also shows that if one is organised the financial resources
will follow.
While SafeBoda have remained tight lipped about their
details of the business it was reported that last year they got funding from
international investors – at least $1.1m (sh4.1b), which monies have helped
them expand into the Kenyan capital, Nairobi.
The face of the business is former boda rider Rick Papa
Thompson, who has two other Co-founders Alastair Sussock and Maxime Dieudonne.
The three met up in 2014 and one can imagine that over a beer and many
scribblings on serviettes later they went out to conquer the world, well, at
least Kampala.
The innovation has been good for Kampala, good for its
promoters and likely to be good for its investors into the future.
It’s a nice lived-happily-ever-after-story which begs the
question that how does one need to structure their business to attract
investment?
Investors – local or foreign are looking basically for four
things, a business that resonates with their value system, a durable
competitive advantage, good management and that it can make money for them.
Their value system is personal to them.
They told me a story about a group of investors that were
set to commit to a huge agro-industry. One that would involve thousands of
acres, employ thousands as outgrowers, in its plants and all down the value
chain. They however pulled out because they were uncomfortable with our
insistence on heterosexual orientation in our law and socialisation.
The last three criteria can be determined by the company’s
longevity and good record keeping. Good record keeping gives the investor a
sense of whether you are making money, how much it would cost him to commit to
the venture and whether you are a one-man show or systems based organisation.
Falling short on any of these would mean you the seller,
would not get full value or worse, the prospectors will move on.
It goes without saying too that they are looking for a
scalable business.
Clearly in Uganda we are not doing very well. Last year the
East Africa Venture Capital Association (EAVCA) reported that while the number
of Private Equity deals in the region had gone up to $930.3m in 47 deals,
Uganda won only six of those deals and Kenya swallowing half of them.
This is easily explained given Kenya’s more mature private
sector and unlike Uganda, has not had its development trajectory interrupted by
instability.
This is important because most Many PE funds were looking
for deals with companies with an upper limit of $30m in revenues and not more
than 150 workers. The upper limit of their interests suggests they would not go
very much further down. How many companies in Uganda have a turnover of $30m,
the equivalent of sh111b?
You cannot fluke it.
"To scale a business to this size requires higher business skills than your regular shopkeeper, to win market share, hang on to it and exploit it profitably...
We are the most entrepreneurial country in the world and the
next big thing is obviously under our noses, if the SafeBoda story is held up
as an example.
That does not mean there are a lot of no brainer businesses
lying around waiting to be picked up.
Speaking to one such investor I suggested that a foray into
processing matooke may be worth his time. He had looked into it he said, and it
did not make business sense, yet. The banana is 80 percent water, so if you
were to dehydrate and make powder that could be cooked into matooke, he didn’t
think Ugandans were ready to pay sh30,000 for 2kg bag of matooke flour. That
wouldn’t be a problem if it could exported but he didn’t know a bigger market
than in Uganda for matooke, meaning it couldn’t be scaled. At least for now. He
thought that in 10 to 20 years when they were enough Ugandans to afford it, it may
be a possibility but not now.
