Five Pillars of Successful Fundraising from a Barclays Africa MD, Nothando Ndebele
Nothando Ndebele is a Managing Director and Head of Financial Institutions Group (FIG), Investment Banking in Africa, at Barclays. Before that she was Head of Research at Renaissance Capital for four years, where she was the top-rated Sub-Saharan Africa FIG research analyst over that period. She has also been an entrepreneur, founding a succesful investment management firm, as well as co-authoring 'The Fastest Billion: The Story Behind Africa's Economic Revolution'. She has over 17 years’ experience in African financial markets – both on the buyside and sellside, and has specifically covered African financial institutions for over 12 years. Over that time she says she's noticed a big divide between what investors are looking for and the understanding that some of her clients have had when it comes to raising capital. In her talk to The Africa List in Uganda, Nothando shared the advice she gives her own clients on how to prepare to be the kind of business that attracts capital at the right time and at the right price.
1. Be Exciting
Offer investors a robust, well articulated strategy about the opportunities in your sector and your market.
“It’s amazing how many people know their business really well in their head but they don’t have anything well written out on paper”. It's good to be a passionate leader, but you need to think about how you’re articulating your idea. A strategy that makes sense, and is credible and well thought out, which includes building out believable forecasts.
2. Be professional
Get your financials audited and your corporate governance structures in place before you talk to investors.
"You need to be a business that is easy to do business with which really comes down to professionalising your business as early as possible. Even if right now you’re a small company, set yourself the benchmark of the listed companies so that when you start talking with investors you’re already at an advanced stage."
3. Be future-focused
Demonstrate that you are developing talent. If there is a succession plan, you can prove the sustainability of your business.
"There is always pride in being the person who started something and being the key person but that comes with limitations. Nobody wants to invest in a business where you’re the sole person who understands it, or who they can talk to about it. Investors don’t want to be left with a business that can’t continue without you. You need to be able to demonstrate that you are developing talent, that there’s a succession plan in place and you’ve thought through the key future roles as this helps to prove the sustainability of your model.
When you start something the temptation is to keep it close to you. This is your baby, but if you do really want that baby to grow, you’re going to have to share it with others. One way of doing this is making sure you’re putting your senior team in front of your investors so they can see the different roles. For example, sometimes when we take clients on the road we sometimes say to investors 'we’re not bringing the CEO, we’re bringing the 3-4 senior management team and they are the ones who will talk to you about the business.'"
4. Be prudent
Have a disciplined approach to how you use and invest capital. Focus on showing that you're generating returns.
"People will look at how you’ve managed your existing capital to date - how you’ve invested it and how you’ve managed your expenses. When I look at some of my clients who have raised capital successfully and then have gone on to try and raise additional capital, they’ve struggled when investors have a view that they have been living a lavish lifestyle on that capital, expensive offices and exotic staff off sites - things that are not generating returns. So it’s important to show that you are making improving returns on that capital."
5. Be patient
It takes on average 18-24 months for investors to really get comfortable with you, your strategy and your team - so engage early.
"The last thing investors want is to see you coming through the door and expect them to write a cheque right there or even month. In our experience you need 18 - 24 months as a leadtime to getting capital - that’s enough time for investors to get really comfortable with your strategy, your management team and your story, so that when the time comes it’s almost a no-brainer.