Venture capitalist, Aaron Fu looks out for these 5 key qualities before investing in a startup
Aaron has more than 10 years of experience in financial services and technology across Europe, Asia and Africa with Standard Chartered and Société Générale
Nest has three different platforms which forms the entire group at the core there is Nest ventures which is the group fund, and has been in operations for the last six years and has invested in startups all over the world.
Nest innovations are where transformational programmes in innovation for entrepreneurs and corporations are harnessed, working to link startups entrepreneurs with corporate partners under their umbrella such as Barclays, Visa, Nissan etc.
Metta is an entrepreneurs' club that connects people, ideas and resources. It is both a physical and visual space. It launched in Hong kong in May 2016 and it just launched here in Nairobi in December last year.
Aaron who has more than 10 years of experience in financial services and technology across Europe, Asia and Africa with Standard Chartered and Société Générale, has seen hundreds of startups entrepreneurs come to pitch their ideas and either nailed it or missed it altogether.
Business Insider SSA, recently met him to discuss his experience in the Kenyan startups space as well as Nest & Metta general strategy for the African market.
He disclosed five basic criteria he looks for in an entrepreneur before considering to invest in their idea.
#1. Money is not everything
Aaron believes that if an entrepreneur comes to him and said money is their only problem that is usually the end of the conversation, because it is never the end of their problems.
“A lot of founders believe money can solve all their problems sometimes I talk to them about their marketing plans, of which they say yes! Of course if you want me to have 1000 customers give me $ 50,000 and I can go find 1000 customers to whom I would say that a ridiculous ratio”
He points out there is a lot more entrepreneurs can do without money at all, for instance even if it is testing phase, can you actually get your users to pre-commit to paying for your product after they are finishing testing with you. So instead of seeing a focus group as a cost center you can then start seeing it as a profit center.
Learning how to support your start up using a shoe string budget will also enabled you to value and respect money once you finally make it.
#2. Think beyond your idea, is it scalable?
A lot of entrepreneurs feel like they know the market very well, “A lot of entrepreneurs all over the world they start by solving a problem which is dear to them, which is super but they also need to think beyond themselves and think what is the market size for this idea”
Aaron points out if an entrepreneur is able to articulate in one year what their business would look like, what are the various resources they would need to get there, what are the challenges they would face during the way and if something happens they have a backup plan that would mean signing a deal or not,” if i sees something more concrete that to me would make a big difference”
#3. A five minute sales pitch will not cut it, you have to invest in more time to proof yourself
Aaron argues that it is difficult to meet a potential start up entrepreneur on the first day and seal the deal there and then.
“For us if you are a Metta member if we have known you for a longer period of time, if we have seen what workshop you have gone to, we have seen how much you have given back to the ecosystem that is a huge plus”
Their progammes, ranging from accelerators and innovation challenges, to hackathons and thought leadership workshops, are designed to create collaborative environments that enable rapid ideation, iteration and ultimately, commercial scale validation.
It is really difficult to gain that insight without actually seeing them in action, Entrepreneurs also feel it is quite difficult to present how great they are or how dedicated they are to their idea by purely just getting on stage and talking
#4. Are you the right person to transform your idea into reality?
Aaron says he likes to first examine if the founder is the right person to do it, the business model may be great but do they have the right talent, what is their background and work experience? Having a great idea is good but without relevant market experience to match it, it is a hard nut to crack furthermore the entrepreneur will not be able to foresee possible hurdles and trends as the market changes.
“We have invested in people who one of their core tenants is, I have already worked in five different banks each between us for three years each, we really understand the systems and we really understand how to talk to them and that really impresses us for sure”
So to Aaron it really comes down to is this the right person to do it.
#5. Do you have the right team with you?
One of the main things Metta looks out for, is whether entrepreneurs have surrounded themselves with the right team that shares their vision and are ready to support each other through ups and downs.
“For example if you come across someone who is building an artificial intelligence right, where is your engineering team? Are they sitting here, how strong is the artificial intelligence unit at the University of Nairobi that is a question mark for me, so then how will you compete with startups coming from London Paris or Hong Kong for that matter”
Nest & Metta Interview
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