· 1 year ago

Shumuk Group CEO Indicates Locals Are not Ready to Invest in Ugandan Startups

On Wednesday, Kafeero Foundation launched Uganda’s first online Startup Studio called The Innovation Junction at their offices in Muyenga – broadcasted live on facebook and their live TV website kafeero.tv.

The event hosted Mukesh Shuklah, the CEO of Shumuk Group, who narrated his business experience in Uganda and how the East African community is making the manufacturing sector in the country an endangered species.

He gave advice to the young people who dominated the audience estimated at just above 30. Although his advice was targeted to an audience of young people starting up, it is safe to say that if one is involved or plans to venture into manufacturing, they benefitted more.

Nonetheless, he made an effort to tackle the pain points of starting out a business in Uganda. One of them – that he briefly hinted on – was getting access to capital (both venture and angel capital).

He pointed out that the Shumuk foundation is looking, and happy, to partner with organizations and people supporting young entreprenuers to access venture and angel capital.

“If you come with the proposals, we can really talk in terms of money as well as promoting the youngster. And, once we like the idea, we keep pushing until it succeeds. So, we are thinking in that line but you only have to join hands and see how to put it into practice,” Mukesh said

This was interesting and prompted me – during the Q&A session – to ask a question seeking clarity on the same issue.

My question was seeking to understand how startup founders in Uganda can stop looking at external capital and investment – and instead look within. This was partyly because, as black people, it is simply hard to raise external funding.

He agreed that people with money find it hard to trust you when you’re starting out.

“According to me, there are more people in this world with a lot of money and don’t know what to do with the money. The problem is that 90% of those people who have the money can not trust you”, Mukesh said.

Yet, if we’re to go by his example, it indicates that even people that have money locally don’t trust either local startup founders or aren’t willing to take a risk at all. In otherwords, they’re trying to shield themselves.

For lack of a better word – basing on his answer to my question, i think there’s no difference between what he is planning to do to help startup founders and what the banks, as well as money lenders, are currently doing. Which is ask for the impossible before you can give them the capital or investment.

They’re only willing to make an investment where their return is guaranteed. Which is not the case with startups. The proposed financing conditions suit a fully established business looking for funds for expansion or to produxe products to meet growing demand. Most startups are actually in dire need of risk capital – something the investor is ready to write off.

“Today, if i tell you that i have $100,000 can you manage? Tell me what you can do. After one year, it is not easy to give someone back $110,000. If you prove the capacity, money will flow to you,” Mukesh said.

Though, at the end of his answer to my question, he acknowledged that he doesn’t have the perfect answer to the problem on the table.

“I am sure there’s no perfect answer to this question, but i have tried,” Mukesh concluded.

This is quite understandable, given that he had never visited any innovation hub or incubation centre in the country. In fact, before visiting the Innovation junction at Kafeero foundation, he had no idea we had such destinations in the country.

“I used to see these things in other countries and ask myself, ‘why don’t we have them in Uganda’?” Mukesh said.

Yet, we have had Innovation hubs in the country for the past five years. Though the list has changed as some have opened and closed, Hive Colab and Outbox have remained intact. And, recently, the Innovation Village in Ntinda, Design Hub in Industrial area and Kafeero Foundation’s Innovation Junction in Muyenga have joined the list.

The ignorance on Mukesh’s part should be a very big concern. Yet, we can not blame him, but the people and organizatiosn that have mandated themselves to support startups in Uganda. You simply can not work in isolation.

Like the age old African adage goes, it takes a village to raise a child – it takes an ecosystem to raise self sustaining startups. Hence the need to keep the corporate sector close.

One of the reasons being that they have some disposable income that they can easily inject into the startups if courted as angel investors. Secondly, they’ve got the expertise and experience still lacking in the startup founders.