Technology startups across Africa are scrambling to access money to actualise their products and services into working profitable businesses.

And of late, Africa has witnessed a growing number of seed funding and venture capital (VC) firms setting up on the continent.

Such a company is GrowthAfrica, which deals with helping small companies grow in East Africa.

GrowthAfrica also runs GrowthHub, an organisation that provides a platform where startups can be incubated.

ITWeb Africa has caught up with Johnni Kjelsgaard, founder and group chief executive at GrowthAfrica.

Kjelsgaard has over 20 years experience working with business development firms and also as an entrepreneur, consultant, investor, advisor and mentor.

ELLY OKUTOYI: Kindly tell us what you do at GrowthAfrica.

JOHNNI KJELSGAARD: GrowthAfrica is currently best known for its entrepreneurship programmes, incubation programmes and acceleration programmes. However, GrowthAfrica has been around since 2002, so we are celebrating our 12th anniversary early next year.

What we have been doing mostly, and what is actually our core business is consulting for international companies. This is a business that has provided us with a chance to interact with local entrepreneurs, because many businesses from outside Africa want to do partnerships rather than coming by themselves. So, one of the things that we have been doing over the past years is to identify businesses that are coming into Africa and also local small and medium companies in the local arena.

In this process, we identified that there is a lack of financial support for companies in the SME sector and the early business stage, only to later realise that finance is not all that they needed.

From 2007-2011 we also ran a financial company called GrowthAfrica Capital which was in the lending business, where we gave out loans to SME businesses ranging between $2,000 and $30,000. We however sold off that business in 2011 because we weren’t any different from small banks. We had hoped that we would give a different twist to it, but the people backing us with finances only wanted us to give loans on collateral. This meant that we could not do very early stage business, since at this stage, entrepreneurs basically have nothing to put on collateral.

We stepped out of the business in 2011 and prepared the launch of the GrowthHub in early 2012. This has been a great a success as we have been able to develop and are continuously developing programmes for different stages of businesses.

ELLY OKUTOYI: Please explain a bit more about the programmes you have on offer at GrowthHub.

JOHNNI KJELSGAARD: We now have four programmes. The first programme is looking at the ‘ideation’ stage of a business, where entrepreneurs come with an idea of a business. Here, we take them through the proper thinking process of framing the idea and evolving it into a business concept.

The second type of programme that we run is an incubation programme, which is a sixteen-week resident programme that takes you from having an idea to essentially ending up with a working prototype of what it is that you want to do.

The third programme is where we take you from having a product to actually having a business, which is an acceleration programme and a twenty-week non-resident programme. This stage sees you build a business which includes thinking through all the different strategies that you need to think through. For example, what kind of team you need to build in order to become a business.

The final stage is when once you are in the market, you are selling your product, you are dealing with customers, with suppliers, partners and other various aspects, we help you know how to deal with all the challenges that come with it, and how to build your business to scale.

ELLY OKUTOYI: Another thing that will be important to know is the following: what sectors are you mostly interested in investing in?

JOHNNI KJELSGAARD: Basically there is no sector we do not look at. What we do look at is what people call ‘impact enterprises’. A lot of people define impact enterprises as different things, what we define it is as:If you are a business that is having a positive impact on society by addressing a certain issue, by providing goods and services for the bottom of the pyramid, then we are interested in you.

That could be agriculture, health, education, manufacturing or ICT, as long as you are living up to limiting your footprint and creating a lot of jobs especially for the low income earners and bottom of the pyramid.

However, what has happened today is that a lot of entrepreneurial drive in Kenya today is around IT and mobile, so roughly a third of the companies that we help end up being in IT and mobile. This is however not because we are focusing on IT and mobile alone, but is more testament to the fact that so many more entrepreneurs are interested in IT and mobile space.

ELLY OKUTOYI: So, how much do you roughly invest in the companies that you select?

JOHNNI KJELSGAARD: It depends on different stages that the company/business is at. At the idea elevation stage to second stage, where we take your idea to create a prototype, there is usually a competitive element where we take a cohort of 10-12 ideas.

Six weeks into the programme, five of them are then selected and each given $5,000 each to help them complete their prototype within the given timeframe. That is done in what we call a ‘convertible grant’, so we don’t own in on the shares, but if your idea becomes successful, we have the option of converting the grant into equity in your company.

The other stage is where you build your business around your product, and at the end of that programme we usually have pre-committed capital of around $100,000, usually going into two or three of the best companies in that cohort, again through a competitive selective process.

Finally, we have another stage that is more relevant to the graduates of the third phase and the last phase, where we work with roughly 38 organisations, seed funds, business angels and venture funds, who typically invest between $100,000-$300,000, with a few of them going below $100,000.

So basically, we don’t necessarily do the investment into the businesses ourselves but of the 54 graduates we have had so far, 16 of those have gone ahead to raise almost $4,000,000 in total investment.

So we can say that most of businesses, through the get exposure from our networks and through our programmes, are in better position to subsequently raise money for their operations.

ELLY OKUTOYI: How would an entrepreneur out there with a burning business idea get involved in one of your programmes then?

JOHNNI KJELSGAARD: We have intakes at least four times a year, so they should just be on our mailing list, so that they receive a notification when we call out for applications for a new intake. We already have several fine idea-business stage intakes already lined up for this November and March next year. However some of the programs are more sector-specific, and this is basically because of the funders who are backing the programmes.

ELLY OKUTOYI: What are some of the challenges you have been facing while operating in Kenya and other African countries where some of your startups come from?

JOHNNI KJELSGAARD: I am an entrepreneur myself having started ... companies over the last fifteen years in Kenya, Tanzania, South Africa, Ghana. I would say one of the greatest challenges is that things don’t just move as fast as they do elsewhere. I think you need to fill in into your business plan that things go a little bit slow.

If you have grown up in Kenya or Africa, you wouldn’t have so much expectation of just how fast things ought to move. However, having grown up in Scandinavia, and with most investors being from these fast moving countries, we have the expectation that things will follow a certain pattern and move at a certain speed. So as an observation and free advice to incoming investors, things do move forward here, though not at a speed you would expect.

I would also say that talent is also a major challenge here and not easy to come by. Talent is something that everyone should treasure. For example, we are in the process of recruiting people into our organisation and I would say it is really hard to find what you want.

ELLY OKUTOYI: What advice do you have for entrepreneurs out there hoping to one day attract investment and build the next successful company?

JOHNNI KJELSGAARD: One major observations we have made is that most entrepreneurs have not thought through their ideas wholesomely by the time they approach investors for money. I would advise such entrepreneurs to put themselves in the shoes of the investor, and think, if I was the entrepreneur, how would I analyze this business? A lot of entrepreneurs here think that their business is worth a lot of money, and as I always say: ‘an idea is worth nothing; acting on the idea is worth everything’.

It is only by thinking as an investor, will you be able to identify some of the things that every investor will be looking to understand about your business.