Start-ups: What East Lake Ventures is looking for?

Globally, business founders are continually looking for the right connections to the right person who has funds for investment. However, at the end of the day, it’s less about who you know and more about what you’ve got. The harsh reality is, there is no real shortcut to funding. For your information, investors know that about 20% of startups fail in the first year, and 30% fail in the second year. Point to note "investors are cautious and doubtful by nature".

Startups need to know how to attract investors if they want to get funded by them. At East Lake Ventures (ELV), we are looking for the following when making an investment decision:

Passionate business founder(s): Business founders believe in the product/service they want to provide. They are confident. But how deep is their passion? Are they willing to be told “No” over and over and over again and keep going?

Traction: Most of the time, a startup will have to demonstrate that it has a marketable product or service - typically, having begun operations and demonstrated significant ability to sell the product or service.

Growth Potential, the market size: We are looking for sustainable business opportunities in East Africa with growth potential. As a business founder, you need to have a market with significant reach. Not every service or product is going to have a worldwide market, however, a large enough market where the economies of scale can be incorporated into your operations to increase margins and profits. However, if the product or service is not new but a new entrant to an existing market, we are looking for sustainable ventures with ability to demonstrate competitive advantage.

Product or service differentiation - the competitive advantage: What makes your product or service unique? There has to be something about your product or service that sets it apart. If you have never before seen product or service and you’re the first to the market, that may be it. However, most startups are entering existing marketplaces. What then, makes you different?

The Team: In an effort to save cost, most startups have very limited staffing usually one or two founders of the operation. Whether a business has one or ten employees isn’t so much the issue—it’s whether or not the business has sufficient key employees covering the most important areas. In addition, we want to know that you (or your staff) have developed operating policies and procedures to control the business. No person has all of the skills necessary to run a business successfully. Business founders too often try to wear all the hats and centralize the control with themselves. ELV will find comfort in a business that has a team in place, where team members have expertise and have been given enough authority to oversee their area of operation.

Exit strategy: ELV will ask business founders the following questions: (a) How much do we need to invest? (b) When do we have to invest it? These questions can be answered by a well thought financial model which will include:

• detailed description of the assumptions behind the model.

• detailed financials e.g. income statement, balance sheet, and statement of cash flow.

• return on investment analysis.

• sensitivity analysis around key variables.

• cash sources and uses report.

It is recommended that such a model be prepared with monthly level detail, as this allows for monthly cash shortfalls to be identified. Preparing models with annual integrity can mask these details and potentially underestimate the cash investment required. We want to know when the business will begin to see a return.

So, if you’re a business founder passionate, in a market space that allows for significant growth opportunity, with a competitive advantage and a team with the authority necessary to execute the business and a defined exit plan. You are the right person we are looking for, we encourage you to submit your pitch deck directly to elv_admin@eastlakeventures.co