LAST week a young man called Gimei Nagimesi shared an amusing tale that tickled my hopes.
This young man is the type who always stays in the background doing groundbreaking things. I know, for instance, that he was instrumental in the creation of the ‘Golola Moses’ brand and all those statements around ripping pages out of Facebook and hanging clothes on telephone lines.
His story last week had far less of a celebrity factor. He confessed that he is the type of person who can’t walk past a volleyball court, and so during a health run along the northern by-pass one day he got stuck playing his favourite game.
Before long he was a permanent fixture on that court and being the only urban professional on the court, Gimei found himself buying rounds of drinking water and kabalagala every so often from the cycling vendors that went by the court at a certain hour every evening. It became obvious that this event was a highlight of the day and Gimei suspected that some of them turned up to play purely for that kabalagala break.
Total cost of feeding the entire court per day? Less than ten thousand shillings (Ushs10,000).
He then began to look into the other permanent fixtures on court, and as he was doing so, one of them caught his attention for being keen and earnest.
The young man in question opened up to Gimei and told him he was generally broke but played every day to expose himself to opportunities. He then proposed that Gimei funds him with Ushs1.4million so he could get going.
What’s the business?
Gimei found the figure intriguing, and the response even more so, and probed further till the young man outlined his plan.
Where he lives, in the swamps somewhere off the northern by-pass, there are many school-going children who use each buy a book at the start of each school term. Annoyingly, the nearest source of stationary is somewhere in Ntinda, which involves some kilometres of walking.
The young man therefore wanted to make Counter Books and sell them to the many schoolchildren in his neighbourhood, and believed a profit could be made.
Gimei gave it a brief thought and figured that it made sense. Besides, to him Ushs1.4million was not such a massive amount of money so…he invested.
The young man took up the cash and embarked on the job with gusto NOT just buying books to re-sell, but buying reams of paper, glue, hard covers, and other materials; then spending hours making Counter Books himself, which he then sold out of his home.
Profit? Ushs500,000 in total.
Gimei was nonplussed when the young fellow showed up out of the swamps to hand over his 50% of the profits, a few weeks later. They’ve continued the cycle, unless some bureaucracy steps up to investigate, in which case it ended.
But not before another young fellow approached him and asked, in Luganda, whether if ‘someone’ funded him (this new young fellow) he couldn’t set up a kaveera water business of his own right there at the court for the players, so that they buy from him instead of buying from the cyclist going past.
Gimei now finds himself to be a venture capitalist of sorts, and the experience is enjoyably uplifting.
investopedia.com defines a Venture Capitalist as “an investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to equities markets.”
In developed economies venture capitalists are a serious factor of economic growth, because they are willing to invest in these small ventures that formal financing doesn’t trust or finds awkward.
In the United States, companies like Intel, Fedex, Apple, Google, and Microsoft started off with venture capital funding, and are now global giants. Their ideas, when they kicked off, seemed crazy or wild or simply untenable because they were different from what leading organisations like banks and financial analysts generally knew.
No bank or government agency would fund Gimei’s young Counter Book manufacturing friend, for instance, but Gimei now has the fellow earning a respectable income, while earning a profit of his own, and possibly also thinking about going to other parts of the swamp to do the same and multiply his earnings.
Besides just financing, though, venture capitalists also provide mentorship – which is probably the most important element in entrepreneurship, and what the boys at the volleyball court take from Gimei more significantly than kabalagala. See, anybody can get financing, in a manner of speaking, but the attitude and aptitude to run an enterprise are a different matter altogether.
Plus, venture capitalist funded companies and enterprises tend to introduce new solutions that regular businesses wouldn’t dare touch. That’s why we more of us use Apple products than Texas Instruments (I had a TI calculator back in the 1980s that was all the rage then!)
Venture capitalists also experience major losses when their picks fail, but these investors are typically wealthy enough that they can afford to take the risks associated with funding young, unproven companies that appear to have a great idea and a great management team – as Gimei would have exhibited if the young man hadn’t turned a neat profit.
The problem of youth unemployment keeps getting talked about with reference to government intervention and ‘support’, yet we all have the opportunity to make some market corrections and build the economy by being venture capitalists in some small way.
If we had as many entrepreneurship meetings as we do wedding, graduation and funeral fund raising meetings, I am certain things would be different. If we had gatherings at which we threw around entrepreneurship advice and funding rather than suggestions of which caterer to procure or what colour the cake should be, just imagine how many more jobs would be created in this economy.
We probably collect a hundred million shillings weekly for weddings, funerals and graduation parties, which certainly supports a certain segment of the economy, but Gimei’s story made me think more of what could happen if we collected that money to fund ventures instead.
A couple of Stanford University scholars did a study on the impact of venture capitalists on the US economy and found it to be large. Between 1979 and 2013, more than 2,600 venture capital-backed companies went public (onto the stock exchange there).
Compare that to Uganda where the Uganda Securities Exchange holds eight (8) companies – if you and I funded up a few earnest, hungry young fellows, maybe our companies might join the lonely eight on the Stock Exchange one day?