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What investors look for before funding a start-up



When you approach investors for funding you need to know exactly what they are looking for in your proposal. You therefore need to cover these issues in your discussion with the prospective investor.

Obviously each investor might have his main issues that he wants addressed but there are general issues that apply to a majority of investors which you should highlight in your proposal.

An investor is firstly interested to know you and to be able to trust you. Investors are more likely to invest in people rather than just ideas. You should be a man of integrity whom he can entrust with his funds.

The business idea that you want funded might be good but if the investor doesn’t feel comfortable to work with you then there is no way he can part with his money and get into a relationship that will likely be sour.

It’s also about synergy. Is the investor likely to add value when he partners with you. An investor will likely invest in areas he is comfortable with, areas he has some expertise or has successfully operated in before.

This will enable the investor to engage with the entrepreneur well.

The other critical factor that an investor will want to get comfort on is the management team that will drive the business. Is the team capable of driving the mission?

Does it have the right skills? It’s therefore very key that you assemble the right team that will be able to take the business to a higher level.

An investor would want to know why you say that your team is qualified to do well in the industry you are getting into. What expertise does the team bring to the table?

What is your and team’s past record in a similar position? The investor should be impressed with the team. The team should at least be technical and business-oriented, the members should complement each other and show some previous experience in the industry they are facing, team members that have a proven track record of delivering goals on time, a team that can handle the responsibilities bestowed on them.

There should be a strong chemistry on the team, that is, they should be able to work together.

If an investor is to take a risk by investing in your business then you need to prove that the market size justifies one taking the risk.

Investors are looking for companies that will grow in which there will be economies of scale and also where returns on the investment will be attractive enough.

You should be able to establish how big your share of the market is likely to be. You can find out this by doing a market research. However if it’s a new product or service it might not be easy to establish the market size with certainty but you should therefore be able to say why you think the market likes your product.

The product or service that you intend launching should be one that meets a need. There should be a good fit between the product and the market.

In your presentation to prospective investors you need to show what differentiates you from the competition. What is your competitive advantage that gives you the edge over your competitors?

What is that differentiator that will outdo your competition in the long run? This could be a unique technology, skill or you might have patented your idea so that no one is able to copy you and compete with you. An investor is looking for long term profitability.

An investor would be interested to see your business plan. He wants to see in the business plan the clarity of your business model, whether the business is viable as reflected by the financial projections, how you will execute the plan, what’s the time line to get to profitability, and whether it does show that the entrepreneur knows what he wants to get into by how thorough the business plan is.

So make sure that you have prepared a very clear, concise and complete business plan, Ensure you write everything from the problem that you want to solve, the business model that shows how the money will be made, the market size, your competitors, your competitive advantage over the competition, the risks and challenges that the business is likely to face and lastly how the investor will make his money.

It will be clear to every professional investor that an entrepreneur without a business plan or who has a poorly written business plan is on the path to failure.

You need therefore to show the investors that you have done a thorough analysis of your business idea and how you will execute your plan.

Stewart Jakarasi is a business and financial strategist and a lecturer in business strategy and performance management.

He provides advisory and guidance on leadership, strategy and execution, preparation of business plans and on how to build and sustain high-performing organisations.  

l For assistance in implementing some of the concepts discussed in these articles please contact him on the following contacts: or +266 62110062 or on WhatsApp +266 58881062

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LEC to switch off households over debts



MASERU – The Lesotho Electricity Company (LEC) will from Tuesday next week begin switching off clients who owe it money.

The LEC issued a seven-day ultimatum to all customers who owe it on Tuesday last week. The deadline ends on Monday.

It is expected that the LEC will begin switching off households that have defaulted.

The state-owned power company, however, is not going to touch any government department or business entities that owe it on grounds that they are in payment negotiations.

The LEC move comes barely two weeks after it cut electricity supplies to the Water and Sewerage Company (WASCO) thus causing it to fail to pump water to communities countrywide for more than two days.

The LEC says it is owed close to M200 million by government departments, businesses and individuals.

The LEC spokesman, Tšepang Ledia, told thepost that the government and the businesses will not have their electricity cut because they are in negotiations.

“We are in negotiations with the government and businesses and hopefully they will pay,” Ledia said.

“We advise the ordinary people to pay their debts before the 20th of March 2023 or else we cut the services,” he said.

The LEC says it is running short of funds for its daily operations.

In December last year the company increased power tariffs by 7.9 percent on both energy and maximum demand charges across all customer categories for the Financial Year 2022/23.

Last week the LEC boss, Mohato Seleke, said postpaid consumers and sundry debtors owe the company M169.4 million.

He said unless the debtors pay he will be unable to buy electricity from ’Muela Hydropower Project, Eskom in South Africa and Mozambique’s EDM.

This, he said, could cause serious load shedding in the country and could be devastating for businesses.

Seleke said the LEC spends M630 million monthly to buy electricity.

“If postpaid consumers do not settle their debts this could prevent the LEC from being able to buy electricity which can lead the country to encounter load-shedding,” Seleke said.

Seleke said collecting debt from government department ministries was a challenge as there is an understanding that since LEC is a state-owned company, it will continue supplying government agencies with electricity and they will settle their bills when they have funds to do so.

Seleke said the LEC has lost M21 million to vandalism during this financial year.

Relebohile Tšepe

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Bumper payout for former mineworkers



MASERU – AT least 11 316 current as well as former mine workers are set for a bumper payout after Tshiamiso Trust began disbursing the first billion Maloti to workers who are suffering from silicosis and tuberculosis.

The payment comes two years after Tshiamiso Trust began processing claims for the historical M5 billion settlement agreement between mineworkers and six gold mines in South Africa.

Speaking at the payment announcement in Maseru last week, the Trust’s CEO, Lusanda Jiya, said it has been two years since they officially began accepting claims.

“Our people come to work every day with the mission of impacting lives for the better, and the first billion rand paid out to over 11 000 families is just the beginning,” Jiya said.

“We know that there is no compensation that will ever be enough to undo the suffering endured by mine workers and their families,” he said.

“However, we are committed to deliver our mandate and ensure that every family that is eligible for compensation receives it.”

Jiya said the Trust is limited both in terms of the time in which they can operate, and the extent to which they can assist those seeking compensation.

Broadly speaking, the eligibility criteria include among others that the mineworker must have worked at one of the qualifying gold mines between March 12, 1965 and December 10, 2019.

Secondly, living mineworkers must have permanent lung damage from silicosis or TB and deceased mine workers representatives must have evidence that proves that they (the deceased) died from TB or Silicosis.

Tshiamiso Trust has a lifespan of 12 years, ending in February 2031.

Over 111 000 claims have been received to date, through offices in South Africa, Lesotho, Botswana, eSwatini, and Mozambique.

The Trust is working with stakeholders in these countries and others to mobilise its efforts and expand operations.

The history of silicosis in South Africa goes back to the late 1880’s when the first gold mines began operations.

The gold was stored and locked in quartz, a special rock that contains large amounts of silica.

Crystallised silica particles can cause serious respiratory damage if inhaled.

In the earlier days of gold mining, dust control, health and safety standards and the use of PPE (personal protective equipment) were not as advanced as they are today.

Tshiamiso Trust was established in 2020 to give effect to the settlement agreement reached between six mining companies.

The companies are African Rainbow Minerals, Anglo American South Africa, AngloGold Ashanti, Harmony Gold, Sibanye Stillwater and Gold Fields.

The settlement agreement was reached and made after a ruling by the Johannesburg High Court as a result of a historic class action by former and current mineworkers against the six gold mines.

Justice for Miners is a coalition of interested parties in the mining sector launched at the Nelson Mandela Foundation in Johannesburg in 2020.

The Johannesburg High Court approved the setting up of the Tshiamiso Trust to facilitate payment by the companies to affected miners.

Keith Chapatarongo

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Farmers cry over cost of livestock feed



MASERU – Lehlohonolo Mokhethi is a farmer who has been running a successful poultry business, thanks to a small loan he got from a local bank.

He now has 300 chickens.

He says his vision is to rear 5 000 chickens by 2025 and employ 30 youths. But he is now grappling with a new challenge: the ever increasing cost of chicken feed.

That is threatening the viability of his business.

“The biggest challenge is that food prices increase every day, feeding is expensive,” Mokhethi said.

“It is quite difficult to make profit in business if each and every day food prices increase. Today I am buying a bag of food with a certain amount then the next day the price has increased,” he says.

“Our customers fail dismally to understand that food has increased and the Chinese are taking our market because they sell at a low price thus I run at a loss.”

Last week, a top attorney in Maseru who is also a prominent farmer, Tiisetso Sello-Mafatle, called a meeting for farmers to discuss these challenges.

She says the government must regulate the prices of livestock feed.

That is critical if the farming business is to succeed, she says.

Attorney Sello-Mafatle says farmers must come up with a structure for livestock feed prices which they would present to the government for gazetting.

“We should state our regulations and give them to the government to make everything easy for both parties because we cannot wait for the government to make regulations for us,” Sello-Mafatle says.

She adds that “farmers should be bullish about what they want and never have fear endorsing new things”.

“I will not be challenged or cry (because of) what life throws at me but I will cry when things are not happening the right way,” she says.

Mafatle says farmers need to know who they are and know the capabilities they have.

“This will help a farmer in becoming the best in any field they are in once they are confident about themselves,” she says.

Karabo Lijo, another participant, said they have to influence the cost of inputs in agriculture, especially livestock feed.

“We have to go back to cost-price analysis where as farmers we are able to derive the selling price and the break-even point in our production,” Lijo said.

“We can also derive the stable or constant mark-ups on our products,” he said.

“We need to do research to increase the ability to produce byproducts which are likely to have the longest shelve life,” he said.

The meeting urged farmers to diversify their products by introducing such things as mushroom farming. They said mushrooms can grow very well in Lesotho due to its favourable climate.

The farmers also demanded that there should be regulations on how land can be sold or borrowed in Lesotho.

Tholoana Lesenya and Alice Samuel

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