I’m not interested in great ideas that are still sitting on shelves

Myke Rabar and his brother went from deejaying at house parties to building a multi-million-shilling conglomerate in the Homeboyz Group of Companies.

The group has 12 companies in the sectors of radio, television, events and software development, and employs 140 people. Myke was one of four investors in reality television show, KCB Lions’ Den, and he lets us in on what it takes for an entrepreneur to catch his eye.

As an investor, what do you look for when an idea is presented to you?

An entrepreneur is most likely to arrest my attention if they have diligently done their homework and covered the basics. I’m not interested in concepts that have been gathering dust on a shelf; you must have gone the extra mile and started implementing what you’re selling. From this stage, we can venture into conversations about the product, markets, delivery channels and projected revenues.

What creates good chemistry between an entrepreneur and investor?

Honesty, trust and open communication are integral to a smooth working relationship between an entrepreneur and an investor. Whereas investors can give sound advice to grow the business based on their expansive knowledge and experience, this can only work in an open relationship where an investor is constantly updated on the performance of the business.

How much does an enterprise’s social impact affect your decision to invest in it?

If your products and services do not have any impact on the society, then it beats the logic of being in business. As an entrepreneur, it is my firm belief that beyond a return on investment, the social impact of an enterprise is critical. Forty per cent of my decision to inject funds into a venture is influenced by this core component.

What is the best way for start-ups to raise capital?

The suitability of capital raising for any venture is based on the nature of the business. A long-term loan may work well for a capital-intensive venture that promises high, long-term returns. This may not necessarily be the best route for a trading business with a quick sales turnover. There are multiple factors that come into play if you are a service-oriented business that operates with minimal overheads. You may want to consider approaching family and friends for the initial capital before approaching a bank or an equity partner.

What is the best way to determine a company’s value?

There are various commonly acceptable ways to determine the value of a business, and this will vary from one enterprise to another. The simplest of them is looking at the book value, where one focuses purely on the financial statements: assets vis-à-vis liabilities. However, this can be the least reliable method as there are aspects of a business that are intangible, such as brand equity and sales projections. Business valuation is more of an art than a science, and valuing a start-up can be a little tricky. As a start-up, you have to do revenue forecasts and defend your value. The market forces and trends in your industry can also dictate the value of your business.

Why do so many people struggle to execute business ideas?

There are instances where potential entrepreneurs conceptualise ideas that they then file under a to-do-list to gather dust because they have no courage to start. There is a reason we call them start-ups — one needs start with whatever they have. I can name several bands and music production outfits that started in a garage. I always believe you have to have enough grit left at the end of your passion. You never give up; entrepreneurs are often times made of sheer grit. Timing and innovation are, of course, critical in business, but resolve counts for much more.

What do you think of the youth’s efforts to address the country’s high unemployment?

Young people aged between 18 and 34 constitute more than a third of the entire population, while 80 per cent of Kenyans are under aged 35. This youth bulge presents enormous socio-economic opportunities and I have seen them harness their numbers through collaboration. I have recently noted the emergence of several youth-driven innovation and business incubation programmes that are nurturing entrepreneurs and building enterprises from the ground up. The youth are quickly learning that they cannot sit back and wait for solutions contrived and administered to them by others. They are taking the initiative and collaborating to engage in income-generating ventures. Kenya is not short of ideas — there is a treasure trove of entrepreneurs out there with brilliant business concepts who need funding and mentorship. Homeboyz Group runs a business incubation centre, dubbed Y-Hub, that nurtures promising, innovative ventures that are in their formative stages. In fact, Lions’ Den lends itself to the same ethos espoused by Y-Hub.

Did you feel inspired by the ventures presented to you while in the den?

There were ideas that were a bit far-fetched. An entrepreneur does not operate in a vacuum; you have to provide affordable and realistic solutions that can resolve real-life challenges. Some businesses were inspirational and well thought-out in regard to their execution, while others were completely out of sync with market realities.

You watched more than 70 pitches in the den. Which presentations did you find the most captivating and why?

BTrack Global, the owners of a car-tracking device that uses Google Maps embedded into their iTrack Software, had a very interesting proposition. The fact that they had already done extensive ground work was a plus. The profit margins were attractive, save for the operational challenges they were facing, but that is a challenge we can resolve. Distant Relatives Eco-Lodge and Backpackers’ business concept was environmentally sound and socially conscious. These entrepreneurs saw a significant market gap and established a unique and affordable alternative to the expensive hotels and resorts that are the norm at the Kenyan coast. Their alternative accommodation offers a chance to pick from dormitories, safari tents and camps to private rooms and bandas. The fact that they are ranked first of 321 hotels in their category, have certification from Eco-Tourism Kenya and have more than 250 excellent reviews on TripAdvisor points to how much work they have put in. That is why I decided to invest in the venture – the concept is sound, has social impact and the opportunities for further expansion are immense.