"It's a good idea to look at the investment process as a marriage" — Miishe Addy on how founders should approach raising venture capital 

March 9, 2023
5 min read
Miishe Addy. Equity Merchants featured image

Miishe Addy's first foray into entrepreneurship was with Skilltapp, a startup that matched people who needed help with tasks with independent contractors. In the two years, she led the startup, it did not raise capital from investors despite being located in  San Francisco, venture capital's spiritual home.

According to her, she never factored in funding while developing the business, so it never occurred to her that she could raise money from VCs. By the time she started her next startup — Jetstream — she fully understood how valuable venture capital could be, and within five months of its launch, she was raising money from investors.

"Right around the time that Solomon (her co-founder at Jetstream) and I were discussing supply chain issues in Africa and how to defragment the industry, I was also thinking about what type of business Jetstream was going to be and what resources we would need to pull in in order to get to scale.

"Because cross-border trade in Africa is a massive, massive opportunity, I believed strongly that if we were going to take the $32 billion freight forwarding industry and transform it into a catalyst for more sustainable commerce, we had to build a big company and that meant that we had to bring in investors with deeper pockets than my friends and family."

Before we continue, a little background on Jetstream and what it does. Imagine you're a coffee farmer in Kenya who wants to sell your product in South Africa.

What appears to be a simple process would ultimately involve more than nine parties, including customs agents, warehouses, transporters (air, water, or road), all of whom have different payment methods. Jetstream brings all these processes together in one place, providing its users with a platform that allows them to handle all their logistics needs.

How to identify potential investors for your startup  

After deciding to raise venture capital for Jetstream, Addy began speaking to investors shortly after Jetstream launched. Although it was her first time raising funds, she was careful to identify the type of investors she needed. One criteria she was particular about was getting investors who understood that startups in Africa functioned differently from those in Silicon Valley or Europe. Early investors, Hustle Fund and C5 Capital, for example, both had portfolio companies in emerging markets.

"I was looking for investors who knew African startups and how the business models in Africa don't look like those in the West. The first two investors that I identified both had portfolios in emerging economies."

According to Addy, startup founders raising capital must be proactive, reaching out to investors before they need to raise and thinking of the investment process like they would a marriage.

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"It's a very good idea to look at fundraising like a marriage, and just as you wouldn't propose to your significant other right after having met them, you shouldn't try to get investment from an investor you just met. The better way to do it is to start fundraising before you need the money and start to build relationships."

Founders, she says, should begin engaging investors and building relationships with them months before the actual fundraising starts. That way, both parties know each other well enough to make informed decisions.

For under-represented founders such as women or founders who were born in and have spent all their lives on the continent, she points out that they need to take the process of building relationships more seriously as investors don't just look at their business but at their backgrounds.

Creating FOMO as a startup founder  

Venture capitalists are constantly searching for exceptional founders building exceptional startups because their professional success depends on how many winners they back. Despite making data-driven decisions, it isn't unusual to find that investors suffer from a fear of missing out, and Addy believes a founder's ability to make investors feel they're missing out by not investing could help close funding rounds faster.

To do this effectively, she points out that founders must be confident in their startup's potential to deliver huge returns for VCs, adding that beginning the fundraising process before the funds are needed is crucial.

"The first thing to start with is just getting your mind right and making sure that the way you're presenting yourself to investors is as confident without being arrogant and as precise as it needs to be to convey your message."

Additionally, she encourages founders to set a deadline for fundraising as this would ensure that investors don't take so much time making a decision.

Raising funds as an under-represented founder  

In 2022, black founders in the United States raised $2.25 billion, equal to 1% of total venture capital funding to the US. Closer home, funding to female-led startups in Africa dropped from $290 million in 2021 to $188 million in 2022. What these two examples show is the difficulty of raising capital as an under-represented founder.

As one of the few women who have raised more than one million dollars in Africa, Addy is in a good position to share what that feels like and how under-represented founders can improve their chances of success.

"If you've been at this for a while, you've been a woman or an under-represented person your entire life, you probably have figured ways around it; you probably are more resilient than the average person. You probably have developed skills to navigate that bias that are sharper than the skills of someone who sort of walks in the door and gets the benefit of the doubt," she says.

Lessons from raising capital

With more than $15 million raised for Jetstream, Addy is one of a handful of female startup founders to have raised more than $10 million for their startup, so it's safe to say she knows a thing or two about the fundraising process. She has learnt to trust her intuition about an investor during fundraising.

"I think the biggest learning for me is how similar it is to so many other things in life and how as much as VCs try to present themselves as analytical and data-driven, it's a relationship. The intuitions that I have about the type of person that I'm talking to when I'm having conversations with VCs are remarkably aligned to how the investment journey goes."

While venture capital appears to be the go-to funding source for many African startup founders, Addy advises that they first decide what type of business they wish to build and then work backwards to decide the best funding options.

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Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.
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Accidental writer, covering Africa's startup landscape and its heroes. Find me on Twitter @chigo_nwokoma.

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