Bamba Group hit national headlines last year after it secured an investment of Sh25 million on television.
The firm got the largest amount pledged in the first season of KCB Lions’ Den, a TV show that gives entrepreneurs the opportunity to raise money from investors.
But for Bamba Group – which was founded in 2013 by Shehzad Tejani, Al Ismaili and Faiz Hirani, who are in their early 30s – this marked just a portion of the cash they’ve been able to raise since the company started approaching investors.
We sat down with Shehzad, who represented the company in the Den alongside head of sales Harman Johar, to find out what his startup’s winning formula is.
What is Bamba Group and what solutions do you provide?
We are a technology-based data collection agency.
Our differentiating factor is that we are able to link our clients to almost anyone that they’re looking for. We use basic SMS, mobile-based technology to get information; that’s how we are able to reach millions of people.
Our database currently has between four and five million people across Africa.
The gap we saw was that it was difficult to collect data from remote areas. We saw that the only thing available across the African continent where there is no electricity, water or an Internet connection is the mobile phone.
The technology we have built asks the questions, gathers the information and finds the people that the client wants. We keep enhancing it on a day-to-day basis and it also learns from what we do. On its own, it’s able to do a lot of things on the back-end that don’t require human intervention.
What was the ‘aha’ moment that made you pursue this line of business?
I wouldn’t say there are ‘aha’ moments in business. Well, there are, but they’re not the ones that change and shape your business. You can’t do what you do today if you hadn’t done what you did yesterday. It’s all a progression.
We had mostly been working with NGOs that didn’t have tools to collect data in remote areas – that’s how the company started nearly four years ago. We then went from customised software to software that collects data for everyone. It’s all about the learning process.
At what point did you decide you needed external investment?
It was at the point where we had reasonable, sustainable revenue.
We realised that we had a product that we could sell and it was time to build that product and make it much better. We needed to scale up and we required money to do that. We, however, knew that this was a path we were eventually going to take.
The idea had been to first put in our own money, serve clients and then sell the company to investors who were in that space.
How much had you put in before you approached investors?
It was a two-year process and in total we put in between Sh10 million and Sh15 million.
We were three founders (Shehzad, Al and Faiz) and we were able to sustain the company until we knew clients were willing to buy into it.
What criteria did your company have to meet to gain the trust of investors?
The biggest was product-market fit. Your client will only be interested in something you can sell, and you have to show them how you can do what you do better than anyone else, and how it’s different from other products in the market.
Second, have your stuff ready. You have to prep. You can go online and find other pitches that have been done and also what investors are looking for. Finding an investor is about developing a relationship and you, therefore, have to present yourself well so that they can connect with you.
Was Lions’ Den the first pitch you made for funding?
No, it wasn’t. Lions’ Den was part of a big round that we were doing. We were looking to raise Sh100 million, and we got Sh25 million from the show.
The other Sh75 million had been raised from outside Kenya. Our CEO spent the better part of a year fundraising. There is not much money in this part of the world, and we had to go where the money is.
When we first decided to raise money, we spent six months in Kenya trying to do that and we didn’t get anything. We then went to the US and advertised ourselves to investors and gradually started getting some money. When we got to Sh75 million, we came back and that’s when we went on Lions’ Den.
Why did you go on the show if you’d been able to raise money elsewhere?
For two reasons: The money and for marketing.
Lions’ Den is a huge platform and it was the first time that it was being done in Kenya. I believe in marketing myself, so going on the show was a no-brainer. You need to put yourself out there and grab these opportunities when they come, otherwise you’re not doing your job.
How have things changed at Bamba since you took on investors?
Our investors are great. We have only done the angel round of funding, and so at this point we have only given up equity in the company.
The investors are involved on a regular basis, but not day to day because they trust us. We keep them appraised of what’s going. Your investor only wants to get involved when he doesn’t have to come in and run the firm. You should send them reports every two weeks and go to them to for advice when you need it – don’t let them come to you. That way, they will be at peace.
There are also other benefits. Darshan Chandaria (the Lions’ Den investor who pledged Sh25 million of his own money) has already started referring clients to us, which is helping to grow the business.
When we proceed to Series A of funding, then we will have to give up board seats and have investors coming in on a day-to-day basis, but we’re not there yet.
What’s next for Bamba Group?
We raised Sh100 million at a valuation of Sh450 million. It has gone towards building software, enlarging our database and selling the programme to clients.
At the end of this year, we are going to start fundraising for another Sh300 million.
When we were looking for the first round of funding, we were oversubscribed by 50 per cent but we turned down some investors because at that point, it would have meant giving up a lot more of the company. Instead, we decided to run with the Sh100 million, use it to achieve our vision and increase our valuation to about Sh1.2 billion. Now when we go in for more money, we won’t be giving up as much equity as we would have had to before.
In the coming years, we are looking to enter the Latin American and Asian markets.
