Cellulant’s $105 million Valuation; Lessons from building a tech business

When I started Cellulant, I thought I would have retired by now- possibly working on my 3rd or 4th business.

15 years later- the journey continues.

This has largely been a factor of the need to scale and adopt to the digital revolution that is ongoing cross Africa. The digital revolution has not only fast-tracked economic development across the continent, but also produced a fresh crop of young and dynamic entrepreneurs. Tech hubs in major cities like Nairobi, Johannesburg, and Lagos are teeming with young men and women who are determined to roll out homegrown tech businesses that can rival Facebook, PayPal, Alibaba, and other global tech heavyweights.

Some of these young innovators have enjoyed a relative level of success. This is illustrated by the heightened investor interest in African tech startups, a majority of which are youth-led. In 2017, venture capital funding in African tech startups reached a record $560 million, a 53 percent increase from $367 million in 2016.

In view of the steadily growing capital investments in youth-led tech startups, it is tempting to sensationalize the achievements of a few young entrepreneurs and forget the multitudes who experience successive failures, despite the commercial viability of their solutions.

I have experienced firsthand how difficult and lonely the entrepreneurial journey can be- even in the midst of the progress. This is especially the case when you are trying to figure things out by yourself. Throughout my entrepreneurial journey, I have found three principles to be particularly useful for younger entrepreneurs who have tremendous talent but lack the benefit of experience.

1. Choose 1–2 Board members

In 2004, in the earlier days of our business, we convinced Dr. Samuel Kiruthu to serve as our board chair, a position he holds to date. We greatly benefited from his business acumen and experience, as he interrogated our financials more exhaustively and helped us establish strong corporate governance structures.

Bolaji Akinboro, my co-founder who heads the business in Nigeria, always reminds me that this was a watershed moment for Cellulant. Having a board that held us accountable to our business plan helped us realize that a business is not a hobby. People had staked their entire careers and reputations on us. Failure was not an option.

As an entrepreneur starting out, it is important to reach out to experienced people outside your core network to help you set up a board and establish solid corporate governance structures. This will help you both at the beginning and later on in the business when you want to raise capital from investors.

2. Your mission matters but how you achieve the mission might evolve

When Cellulant started, we were focused on mobile content distribution. The pivot into digital payments evolved as a result of going out to solve a payments problem that our customers were facing. As a result, we were able to competitively position ourselves in digital payments not only in Kenya, but across the continent.

While it is understandable for entrepreneurs to be sentimentally attached to their first big idea, evolution and adaption are necessary, especially if there are other commercially viable opportunities within your ecosystem. It is important to keep an eye out for big trends that have the potential of giving your business access to multiple markets. Investors are always eager to back businesses that have the potential for scalability across different markets.

3. Entrepreneurship is a journey, not a destination

In 2017, U.S. e-commerce giant, Amazon, reported revenues of $177.9 billion (approximately Sh17.7 trillion), which is close to six times Kenya’s current annual budget. One would think that Amazon is resting easy after achieving this kind of wild success in e-commerce. Quite the contrary. It is aggressively exploring other emerging areas in tech such as artificial intelligence. According to Mary Meeker’s 2018 Internet Trends Report, Amazon is now the top spender in research and development and capital expenditure in the U.S, surpassing even pharmaceutical companies which spend a fortune developing new medicine.

The lesson here is that entrepreneurship is a journey, not a destination. After hitting one milestone, you realize that there are several more down the road. As a young entrepreneur, you need to realise from the outset that entrepreneurship is not an easy fix to your financial problems, but a demanding journey that requires you to make a long-term commitment.

When Bolaji and I started out, we thought we would retire in 10 years. However, through the years, after getting a clearer sense of the immensity of the challenges and the opportunity in digital payments, it was apparent that we would be in this for longer. After making peace with this reality- we are completely focused on the mission of scaling digital payments across Africa. 400 presentations and over 60 investors later- we have gotten the financing that will power our new phase of our growth. The journey continues.

In conclusion? Each entrepreneur’s journey is unique, but there are some things that never change. These three principles are not prescriptive but will serve to guide anyone looking to start a business. Good corporate governance, an ability to swiftly capitalize on emergent opportunities before your competitors and long-term commitment will always position a fledgling business competitively.

@kenNjoroge is the Group CEO and co-founder of @Cellulant

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