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“Africa Rising” is easily the most important story emerging from sub-Saharan Africa this century – more significant, in my opinion, than political unrest, terrorist threats, power hungry dictators, and the prospects of debilitating diseases. A combination of rising commodity prices, improving democratic and governance practices, and the adoption of technology, have helped many sub-Saharan African countries break out the vicious grip of persisting underdevelopment.
The Africa Rising Narrative has in recent years attracted plenty of attention from around the world, from writers, conference planners, investment banks, consulting firms, and foreign governments. The book, “Africans Investing in Africa: Understanding Business and Trade, Sector by Sector” is one of the latest additions to the burgeoning library of “Africa Rising”-inspired reports, surveys and analyses.
Edited by Terence McNamee, Mark Pearson and Wiebe Boer (and with an Introduction by renowned economics professor and development expert Paul Collier), Africans Investing in Africa is the outcome of a scholarly collaboration between two Africa-owned and Africa-focused philanthropic organisations, the Tony Elumelu Foundation in Nigeria, and the Oppenheimer family’s Brenthurst Foundation in South Africa. It comprises 16 essays, by a group of academics, researchers, business persons, consultants, and government officials, intended to collectively serve (as business leaders Tony Elumelu and Jonathan Oppenheimer write in the Foreword) as “an important manifesto for how intra-African commerce could help propel the continent to greater economic prosperity.”
(One important thing to note, starting out: even though “Africa” shows up again and again, this book is really about sub-Saharan Africa, not the entire continent – a reminder that the Sahara Desert is, for the continent, much more than a mere geographical divide).
The first section is devoted to “cross-cutting issues” – by which the editors mean the stuff that cuts across multiple countries: transport networks, borders, regional economic communities (like the EAC and ECOWAS), and the rise of pan-African “brands”.
The second section offers a number of case studies on “African champions” in various fields of commercial enterprise: Banking (South Africa’s Standard Bank, Nigeria’s United Bank for Africa, and the pan-African group, Ecobank); Cement (Nigeria’s Dangote Group and South Africa’s Pretoria Portland Cement); Fast-Moving Consumer Goods and Retail (Shoprite, Massmart, Pick ‘n Pay, Nakumatt, The Artee Group, SABMiller, Tiger Brands, Promasidor, Dangote, Zambeef, UAC Foods, etc); Information and Communications Technology (Cellulant, MTN, Seven Seas Technology Group), and Entertainment and Media (South Africa’s Naspers, Nigeria’s Nollywood and Kenya’s Nation Media Group).
Section 3 focuses on “emerging pan-African sectors” – oil and gas (in East Africa), private security, transport and logistics, and tourism and travel.
This book convincingly demonstrates the truism that Africa is not a country. Combining a bird’s eye view of the continent with Google-type Street Views of its business and policy and demographic landscapes, it shows the reader again and again that sub-Saharan Africa is an immensely diverse place, and that, even though its 55 countries often share common characteristics, a one-size-fits-all approach is a sure route to misadventure.
“Africans Investing in Africa also offers reminders of China’s impossible-to-ignore status in Africa. Contributor Lite Nartey reminds us that 20 per cent of South Africa’s Standard Bank is owned by the Industrial and Commercial Bank of China; the acquisition, in 2007, at a cost of $5.5bn is said to be China’s biggest single foreign investment ever. And in the chapter on cement, Lyal White tells us that the largest builder of cement plants in Africa (a continent he describes as “the last great cement frontier”) is a Chinese company known as Sinoma.
Indeed, one important question African countries have to face up to and answer is this: what lessons can we learn from China’s methods (propelled by a seemingly unassailable self-confidence), and what mistakes are to be avoided? Africa turning eastwards, while not without its own controversies, has no doubt helped create a counterbalance to an insufficiently beneficial economic monopoly previously wielded by the West. It is now up to Africa’s governments to exploit the presence of this alternative influence for the benefit of their citizens.
Another significant underlying theme of the book is the dynamic relationship between the continent’s two leading economies, Nigeria and South Africa. South Africa is generally treated as being in a class of its own. Nigeria’s emergence last year as Africa’s largest economy notwithstanding, South Africa continues to be the bigger brother. It singlehandedly accounts for half of the continent’s entire manufacturing exports, is the only African country in the G20, and its financial markets and infrastructure remain miles ahead of the rest of the continent.
And you only need to compare the footprints of South African companies in Nigeria (and the rest of the continent) with those of Nigerian companies in South Africa to realise just how much of a gap exists between South Africa and the rest. For every Nigerian brand (Dangote, Globacom) making an inroad across Africa, there are several South African ones: Africans Investing in Africa regularly mentions Shoprite, Pep, Mr. Price, Woolworths, MTN, Promasidor, Naspers, Tiger, and Nampak. Nigeria has as much to learn from South Africa as from China.
For foreigners looking to invest in Africa, it can be an immensely bewildering place. By offering a detailed, immensely knowledgeable map of a territory regarded as the world’s last investment frontier, this book will be a great starting point for new and existing investors. But of course, it really sets out to speak, not to outsiders looking in, but instead to insiders wondering where (and how) to start looking. It is meant to inspire and embolden a new generation of African entrepreneurs and businesses to spread their wings across their possibility-filled continent, and build business empires the world will take notice of.
As the book makes clear, one of Africa’s big tragedies is that so little of its trade is carried out among its countries. In fact, only about 12 per cent of all African trade takes place among African countries, the lowest in the world, compared to about 50 per cent for Asia and North America, and 70 per cent for Europe. From such a low base, there’s great potential for new grounds to be conquered across Africa.
And this is where politics and governance and policy-making come into the picture. Africa Rising is a great story, but without the wholehearted commitment and participation of African governments, it’d be an incomplete story; an impossible-to-complete one in fact, rather like attempting to soar on a single wing. No matter how ambitious African investors, entrepreneurs and businesses get, there’s a limit to how far they can go without supportive African governments.
This is why this book should be read even more wholeheartedly by government officials and policymakers than even by entrepreneurs themselves. Heads of State, Ministers (especially of Finance, Trade, Investment), law enforcement agents (especially Customs and Immigration) – all of these people need to pay attention, and understand that, more than anything else, the job of African governments is to get the hell out of the way.
African governments, like all governments everywhere else, ought to be at the forefront of infrastructure development in their countries – electricity, transportation, etc. But they also need to realise that, as important as ensuring the rapid development of critical infrastructure is the task of dismantling the visible and invisible barriers that stand in the way of trade and entrepreneurship: the red tape that turns border posts and ports into a waking nightmare for business people; the impunity of intellectual property pirates, land-grabbers, and abusers of legal procedures. (Jacqueline Chimhanzi highlights a comment by Ghanaian President John Mahama that there are six border posts to be surmounted between Nigeria and Ghana, West Africa’s leading economies; while Terence McNamee and Daniella Sachs, authors of the chapter on tourism and travel, note that “land tenure and asset security are two of the greatest factors inhibiting investment in many African countries.”)
If every African government, at every level – central, state/provincial and local – woke up every day asking itself this one question: “What obstacle can I take out of the way of potential African investors today?”, Africa would be a much better place – more confident, more prosperous, more equal – for its hundreds of millions of expectant people.

Africans Investing in Africa: Understanding Business and Trade, Sector by Sector; published by Palgrave Macmillan, 2015
Munchery is Eating the Restaurant



To all my fellow entrepreneurs here is one article you all should read; A case study of a fast growing brand... This is not magic it is what strategy can do for you... read well, understand and share
How would you measure the value of a company? Especially, a company that you started a month ago – how do you determine startup valuation? That is the question you will be asking yourself when you look for money for your company.

Let’s lay down the basics. Valuation is simply the value of a company. There are folks who make a career out of projecting valuations. Since most of the time you are valuing something that may or may not happen in the future, there is a lot of room for assumptions and educated guesses.


Why does startup valuation matter?

Valuation matters to entrepreneurs because it determines the share of the company they have to give away to an investor in exchange for money.  At the early stage the value of the company is close to zero, but the valuation has to be a lot higher than that. Why? Let’s say you are looking for a seed investment of around $100, 000 in exchange for about 10% of your company. Typical deal. Your pre-money valuation will be $ 1 million. This however, does not mean that your company is worth $1 million now. You probably could not sell it for that amount. Valuation at the early stages is a lot about the growth potential, as opposed to the present value.

How do you calculate your valuation at the early stages?

  1. Figure out how much money you need to grow to a point where you will show significant growth and raise the next round of investment. Let’s say that number is $100,000, to last you 18 months. Your investor does not have a lot of incentive to negotiate you down from this number. Why? Because you showed that this is the minimum amount you need to grow to the next stage. If you don’t get the money, you won’t grow – that is not in the investor’s interest. So let’s say the amount of the investment is set.

  2. Now we need to figure out how much of the company to give to the investor. It could not be anything more than 50% because that will leave you, the founder, with little incentive to work hard. Also, it could not be 40% because that will leave very little equity for investors in your next round. 30% would be reasonable if you are getting a large chunk of seed money. In this case you are looking for only $100, 000, a relatively small amount. So you will probably give away 5-20% of the company, depending on your valuation.

  3. As you see, $100,000 is set in stone. 5%-20% equity is also set. That puts the (pre-money) valuation somewhere between $500,000 (if you give away 20% of the company for $100,000) and $2 Million (if you give away 5% of the company for $100,000).

  4. Where in that range will it be? 1.That will depend on how other investors value similar companies. 2. How well you can convince the investor that you really will grow fast.


How to Determine Valuation?

Seed Stage

Early-stage valuation is commonly described as “an art rather than a science,” which is not helpful. Let’s make it more like a science. Let’s see what factors influence valuation.


Traction. Out of all things that you could possibly show an investor, traction is the number one thing that will convince them. The point of a company’s existence is to get users, and if the investor sees users – the proof is in the pudding.

So, how many users?

If all other things are not going in your favor, but you have 100,000 users, you have a good shot at raising $1M (that is assuming you got them within about 6-8 months). The faster you get them, the more they are worth.

Reputation. There is the kind of reputation that someone like Jeff Bezos has that would warrant a high valuation no matter what his next idea is. Entrepreneurs with prior exits in general also tend to get higher valuations. But some people received funding without traction and without significant prior success. Two examples come to mind. Kevin Systrom, founder of Instagram, raised his first $500k in a seed round based on a prototype, at the time called Brnb. Kevin worked at Google for two years, but other than that he had no major entrepreneurial success. Same story with Pinterest founder Ben Silbermann. In their cases, their respective VCs said they followed their intuition. As unhelpful a methodology as it is, if you can learn how to project the image of the person who gets it done, lack of traction and reputation will not prevent you from raising money at a high valuation.

Revenues. Revenues are more important for the B-to-B startups than consumer startups. Revenues make the company easier to value.


For consumer startups having a revenue might lower the valuation, even if temporarily. There is a good reason for it. If you are charging users, you are going to grow slower. Slow growth means less money over a longer period of time. Lower valuation. This might seem counter-intuitive because the existence of revenue means the startup is closer to actually making money. But startup are not only about making money, it is about growing fast while making money. If the growth is not fast, then we are looking at a traditional money-making business.

The last two will not give you an automatically high valuation, but they will help.

Distribution Channel: Even though your product might be in very early stages, you might already have a distribution channel for it. For example, you might have sold carpets door-to-door in a neighborhood where almost every resident works at a VC firm. Now you have a distribution channel targeting VCs. Or you might have run a Facebook page of cat photos with 12 million likes, now that page might become a distribution channel for your cat food product.

Hotness of industry. Investors travel in packs. If something is hot, they may pay a premium.


DO YOU NEED A HIGH VALUATION?

Not necessarily. When you get a high valuation for your seed round, for the next round you need a higher valuation. That means you need to grow a lot between the two rounds.


A rule a thumb would be that within 18 months you need to show that you grew ten times. If you don’t you either raise a “down round,” if someone wants to put more cash into a slow-growing business, usually at very unfavorable terms, or you run out of cash.

It comes down to two strategies.

  1. One is, go big or go home. Raise as much as possible at the highest valuation possible, spend all the money fast to grow as fast a possible. If it works you get a much higher valuation in the next round, so high in fact that your seed round can pay for itself. If a slower-growing startup will experience 55% dilution, the faster growing startup will only be diluted 30%. So you saved yourself the 25% that you spent in the seed round. Basically, you got free money and free investor advice.

  2. Raise as you go. Raise only that which you absolutely need. Spend as little as possible. Aim for a steady growth rate. There is nothing wrong with steadily growing your startup, and thus your valuation raising steadily. It might not get you in the news, but you will raise your next round.


SERIES A

The main metric here is growth. How much have you grown in the last 18 months? Growth means traction. It could also mean revenue. Usually, revenue does not grow if the user base does not grow ( since there is only so much you can charge your existing customers before you hit the limit).


Investors at this stage determine valuation using the multiple method, also called the comparable method, well-described by Fred Wilson. The idea is that there are companies out there similar enough to yours. Since at this stage you already have a revenue, to get your valuation all we need to do is find out how many times valuation is bigger than revenue – or in other words, what the multiple is. That multiple we can get from these comparable companies. Once we get the multiple, we multiply your revenue by it, which produces your valuation.


INVESTOR’S PERSPECTIVE

It is important to understand what the investor is thinking as you lay down on the table everything you have got.

  1. The first point they will think is the exit – how much can this company sell for, several years from now. I say sell because IPOs are very rare and it is nearly impossible to predict which companies will. Let’s be very optimistic and say that the investor thinks that, like Instagram, your company will sell for $1 Billion. (This is just an example. So do not get caught up in how unrealisict that is. This is still possible.)

  2. Next they will think how much total money it will take you to grow the company to the point that someone will buy it for $1 Billion. In Instagram’s case they received a total of 56 Million in funding. This helps us figure out how much the investor will make in the end. $1 Billion – $56= $ 940 million That is how much value the company created. Let’s assume that if there were any debts, they were already deducted, and the operational costs are taken out as well. So everyone involved in Instagram collectively made $940 Million on the day Facebook bought them.

  3. Next, the investor will figure out what percentage of that she owns. If she funded Instagram at the seed stage, let’s say 20%. (The complicated piece here is that she probably got preferred shares, which just means she gets the money before everyone else. Also, there might have been a convertible note as part of the funding, which gave her the option to buy shares later on at a set price, called “cap”.) Basically, all of these are just anti-dilution measures. The investor that funded you early on does not want to get diluted too much by the VCs who will come in later and buy 33% of your company. That’s all that is. Let’s assume in the end, like in How Startup Funding Works, the angel gets diluted to 4%. 4% of $940 million is $37.6 Million. Let’s say this was our best case scenario.

$37.6 Million is the most this investor thinks she can make on your startup.  If you raised $3 Million in exchange for 4% – that would give the investor a 10X returns, ten times their money. Now we are talking. Only about a 3rd of companies in top-tier VC firms make that kind of a return.


DOES THE VALUATION REALLY MATTER?

Consider two scenarios – Dropbox vs. Instagram.
Both Dropbox and Instagram started as a one-man show. Both of them were or are valued over $1 Billion. But they started with very different valuations:

  1. Drew Houston went to Y-Combinator, where he received about $20K in exchange for 5% of Dropbox. Valuation 400K (pre-money).

  2. Kevin Systrom went to Baseline Ventures and received $500k in exchange for about 20% of Brbn (predecessor of Instagram). Valuation $2.5M.
Why were the valuations so different? And, more importantly, did it matter in the end?


OTHER THINGS THAT INFLUENCE VALUATION

Option Pool. Option pool is nothing more than just stock set aside for future employees. Why do this? Because the investor and you want to make sure that there is enough incentive to attract talent to your startup. But how much do you set aside? Normally, the option pool is somewhere between 10-20%.


The bigger the option pool the lower the valuation of your startup. Why? Because option pool is value of your future employees, something you do not have yet. The options are set up so that they are granted to no one yet. And since they are carved out of the company, the value of the option pool is basically deducted from the valuation.


Here is how it works. Let’s say your pre-money valuation is $4M. One million is coming in new funding. Post money valuation is now $5M. The VC gives you a “term sheet” – which is just a contract that contains the conditions upon which the money is given to you, and which you can negotiate. The term sheet says that the VC wants a fully diluted 15% option pool in the pre-money valuation. This means that we need to take 15% of the $5 million (post-money valuation), which is $750, 000 and deduct it from the pre-money valuation ($4 million minus $750,000). Now the true valuation of our company is only $3.25 Million.
http://business.tutsplus.com/tutorials/how-to-calculate-the-value-of-your-early-stage-startup--cms-65

https://www.equitynet.com/crowdfunding-tools/startup-valuation-calculator.aspx

http://fundersandfounders.com/how-startup-valuation-works/
Sources:


 Crowdfnding in Nigeria is still kind of new; I have spoken to numerous Nigerians asking them if they know anything about crowd funding from banks to academic institutions and many more; they just aren't familiar with the word. This article explains reasons why 
you should crowdfund your projects or ideas. 

 with new startups like FINOFUND for Nigerians, Nigerians now have the opportunity to take advantage of the crowdfunding opportunities in the country and contribute to creative ideas of many Nigerians...

 copied about.com/money: 
Crowdfunding (What is Crowdfunding?) is the biggest thing to happen to finance in the last decade. Entrepreneurs, small and large companies, and individuals are finding a new channel to fund their ideas, projects, and business online. Participating in crowdfunding isn't only about doing good-- it's about finding efficient ways to raise money by democratizing the risk and rewards by pooling tens, hundreds, and thousands of contributors/investors together to contribute in your project or invest in your company. With crowdfunding, the future of finance is here.

1.  Because other funding sources are drying up (Forbes)

"In the funding days of old (think three-four years ago), venture capitalists were throwing their money at companies with large user-bases without stopping to consider the plan (or lack thereof) for monetization. Businesses like Tumblr, Twitter, and Instagram were lauded for their growing numbers and flashy design, but all eventually reached huge struggles with the need for profit. While they eventually did prove successful and figured out a way to monetize, startups copying their business model will not be given the same chances these days. Monetization has to be given higher priority nowadays.
Another contributing factor to this crunch is the ratio of seed stage funding and Series A investments. While they used to be leveled, there is now a staggering difference. Series A rounds have flat lined, while earlier funding rounds have flooded the market, leaving thousands of startups floundering for follow-up funding." 

2.  Immediately land customers (EliteDaily)

"The supporters of your crowdfunding campaign are your customers. Crowdfunding is basically a way to pre-order products before they are produced -- this is invaluable for a startup.  Too often, people produce products before knowing the depth of their customer base. Utilize crowdfunding so you have customers before your product is produced."

3.  Contributors can help you build your company (Forbes)

"To all the skeptics, I’d like to introduce a phenomenon that we at OurCrowd have named, crowdbuilding. Through our equity crowdfunding of over 30 startups in 2013, we’ve identified an interesting phenomenon: that the risk involved in startup investing incentivizes equity crowdfunding investors to get involved and assist their investments in any way they can. Ultimately, this personal involvement exposes these fledgling companies to a lot more then just 'dumb money.'"

4.  Conduct market research, build audience (Fullstart)

"Our Kickstarter campaign got a great response. In addition to covering the production costs of making an app, there were additional benefits we didn’t see coming. First, Kickstarter provided effective market research and publicity for us. We developed an audience that cares about our product, who can get others around them to be excited about it too."

5.  Participate in the world's incubation platform (Guardian)

"Crowdfunding is quickly becoming the world's incubation platform, changing the role of gatekeeper and finally giving the world true choice in determining which ideas come to life. Such meritocracy has never existed in the world of finance before. Thus, crowdfunding is changing finance for the better." 


6.  Create more equality and opportunity in emerging markets (McKinsey)

"By enabling crowdfund investing, governments in the region can harness the power of the social Web to provide more equal access to capital, reduce friction in the process of investment, and improve communication between investors and entrepreneurs. Because crowdfund investing platforms promise efficiency, transparency, and market validation, they can also be an appealing vehicle for individual and institutional investors, as well as public sector investment funds that focus on small and medium-sized enterprises (SMEs)."

7.  Connect with a younger audience (NYTimes)

"Crowdfunding is particularly attractive to younger donors who are looking for a more direct connection to the causes and people they’re supporting,” said Katherina M. Rosqueta, executive director of the Center for High Impact Philanthropy at the University of Pennsylvania. “I think of it as a tool, one which might bring stories and issues to particular donors who wouldn’t otherwise be aware and prompt them to give." 

8.  Crowdfunding provides financing for public projects that lack funds (Slashdot)

"According to the BBC, the Ukrainian Ministry of Defense has set up a way for people to donate small amounts of money via text message; in theory, the funds will go towards equipping Ukrainian troops. “The campaign has also been hijacked by Internet mischief-makers trying to trick Russians into messaging the same number,” reported the news service.
The Ukrainians aren’t alone in attempting to crowdfund public security services. In October 2013, citizens in Oakland, California started three campaigns to raise money for security patrols. Each of those campaigns, started on crowdfunding Website Crowdtilt, wanted between $20,000 and $25,000; dozens of people contributed. While upscale neighborhoods regularly pay for private security patrols, the Oakland scenario sparked a debate over whether crowdfunding could be used to pay for a broad range of municipal projects."

9.  Helping build small business ecosystems outside the U.S. (HuffPo)

"Equity crowdfunding is helping entrepreneurs market their companies and fundraising efforts in a new way and not just raise capital, but in many cases attract the attention of mentors, advisors and partners.
If you're an entrepreneur, investor or someone who wants to support local entrepreneurs then now is the time to get involved online by joining an equity crowdfunding platform and connect to your local community online."

10.  Screw the big banks (Economist)

"Peer-to-peer lending is growing fast in many countries. In Britain, loan volumes are doubling every six months. They have just passed the £1 billion mark ($1.7 billion), though this is tiny against the country’s £1.2 trillion in retail deposits. In America, the two largest P2P lenders, Lending Club and Prosper, have 98% of the market. They issued $2.4 billion in loans in 2013, up from $871m in 2012. The minnows are doing even better, though they are growing from a much lower base.
Neil Bindoff of PwC, a professional-services firm, speaks of a “perfect storm” supporting P2P’s growth. Interest rates are close to zero, the public is fed up with banks, costs are low (one third of a typical bank’s, according to Renaud Laplanche of Lending Club), and e-commerce is becoming part of daily life. People use the internet for peer-to-peer telephony (Skype) and shopping (eBay), so why not loans?"

So Nigerians, lets get funding and funded. check out finofund projects and find the one you would like to support.
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;Proudly social I am a New School; A young budding creative and innovative business developer, social entrepreneur and free lance blogger. Co-owner RIcci's, co founder Finofund.com; Belief the unbelievable, as your level of success is determined by your ability to belief in what common people perceive as unbelievable" "The word impossible comes from the word possible which reads ' I'm possible '

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