On February 1, Amitruck Company founder Mark Mwangi officially launched its plans to go international. He had just secured a seed funding of Ksh454 million.
According to TechCrunch, a tech publication, the company, which specializes in an app that connects truck drivers to clients with goods to be moved, had just closed another Ksh113 million funding bring the total to Ksh568 million.
Mwangi revealed that he came up with the idea to ease transportation of goods across Africa while delivering a return on investment to the truck owners.
“The most important purpose of this round is hiring. We are also improving our technology as we start our expansion into other countries in Africa," stated Mwangi.
Traditionally, most customers had to use third parties to access truck services and once transit of goods was done, the truck, in most cases than not, returned empty which was a loss to their owners.
Just like many Kenyans with an ingenious idea, Mwangi set up his start-up and needed input from investors to get it operating internationally.
How to Apply for Seed Funding
A seed funding is the initial round of funding in which a company secures capital from investors to help develop its products among other things. It may be succeeded by other round of founding including Series A, B and C.
First, after determining the value of the start-up, the founder must be ready to give out a share of their company or stocks in order to receive the funding.
There are numerous returns that investors may demand from a company to put up an investment including Equity funding where, in most cases, ranges between 20 and 25 per cent for the first round. Other investors may, however, not be ready to get shares so they give out a loan which, upon maturity, may be reclaimed or converted into stocks.
There is, however, a safer funding technique dubbed Simple Agreement for Future Equity (SAFE) which the investor gives out a loan but gives the option of buying future stock at a discounted price.
In the second step, the founder is expected to determine what kind of investor they want for their company influenced by the size and development period. There are various categories of investors including Venture Capitalists (VCs), essentially a company set up to fund investors, and Angel Investors who are wealthy individuals that provide funding to a company at the initial stages.
Other clusters of investors include Crowdfunds (such as GoFundMe where founders can crowdsource from the public to develop their ideas) and Incubators such as Y incubator that assists companies through the process of launching their companies.
Third, the founder approaches investors with a clear idea of what the company stands for, what its product is as well as the market solution it seeks to offer. Before approaching investors, the company is expected to have a product, a market and the team behind it.
Other important factors include company logo and profile, customer descriptions, tractions including results, breakdown of overhead such as utility bills, plan for future product development and how much has been raised.
You are also advised to have a list of potential investors into your company and prepare adequately before approaching them.
