Abedi Muange, the advisory consultant on fundraising, partnership and growth strategy at LearnQuick. Photo | courtesy.
The terms ‘entrepreneurship’ and ‘start-ups’ have become buzzwords among Gen Z, energizing a spirit of enterprise among young people. With many seeking to be self-employed, it’s a fertile ground for innovation, put differently, they are brimming with business ideas.
However, having a great idea is just one piece of the puzzle. Knowing how to raise funds to bring it to life is another challenge altogether.
Some entrepreneurs manage to bootstrap or get initial support from friends and family to build their dream companies. However, some ideas require significant capital from the onset. So, where can you find funding to turn your brilliant idea into a reality?
To better understand what investors look for before investing in start-ups, I spoke to Abedi Muange, a seasoned advisory consultant at LearnQuick, a company specializing in fundraising, partnership, and growth strategy.
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According to Muange, investors are deeply interested in the founders themselves not just the business idea. They assess the founder’s ability to execute the idea, their understanding of the problem they seek to solve, and the scalability of the start-up.
“Investors often look beyond just the product or idea. They’re investing in people. The key traits they look for include a strong, coachable founding team with a clear vision, a deep understanding of the problem they’re solving, and the ability to execute,” Muange told JEDCA MEDIA.
He added that investors care about the size of the market opportunity, how urgent the problem is, and whether the proposed solution is scalable.
While ideas and business landscapes may evolve over time, Muange stressed that investors also pay close attention to the composition of the founding team. This includes their experience, skillsets, expertise, and how well they work together.
“Teams that have worked together before, or have a proven track record, tend to get more attention. As founders, show your strengths but also your self awareness. You have to know what gaps exist and how you’re addressing them. Also having a few strong advisors or strategic hires helps, too,” Muange says.
Muange, who is also the co-founder of Ndai Africa, pointed out that many entrepreneurs make critical mistakes when seeking funding. One of the most important skills, he said, is the ability to clearly communicate your vision and strategy not just presenting a flashy business plan.
“While a detailed business plan is helpful, most investors are more interested in your pitch deck and how clearly you communicate your vision, your strategy, and your traction. A common mistake is overwhelming investors with too much technical detail or focusing too much on the product and not enough on the problem or the market,” he explains.
Muange emphasized that storytelling is essential when pitching to investors, noting that the simplest, well structured pitches are often the most attractive.
Other red flags for investors, he said, include being defensive or uncoachable, presenting unrealistic projections without supporting data, lacking clarity on the business model, and not knowing critical numbers like your profit margins.
In evaluating start-ups, Muange said investors are keen on several key performance indicators (KPIs) such as traction, revenue growth, user growth, customer retention rates, and conversion rates.
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For business-to-business (B2B) companies those that sell products or services to other businesses Muange highlighted the importance of presenting Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR) to investors.
These metrics, he said, help predict a B2B business’s growth and stability, giving investors a clear picture of the start-up’s potential. If the metrics are compelling, investors are more likely to put their money in.
Muange also pointed out that investors are not all the same; each evaluates start-ups based on different factors. He advised entrepreneurs to carefully assess their companies to determine the most suitable funding path.
“Bootstrapping or friends and family can work early on to build your minimum viable product (MVP). Angel investors are great for pre-seed or seed especially those with relevant networks,” he says.
“Venture Capitalist (VCs) come in when you’re scaling and need capital to grow fast. While crowdfunding works well for B2C (Business to consumers) or product-driven ventures that need community support. The key is to understand what each option brings beyond just money, network, experience, distribution, or credibility and align that with where you are in your business journey,” he concludes.
