FIP 101: Experience from a recent investment raise with Dr. Christie Peacock of Sidai Africa

This week on the Finding Impact Podcast, we are talking to Dr. Christie Peacock, founder of Sidai. We’re going to do an interview about her recent experience of raising a round for her social enterprise Sidai Africa. Sidai offers farmers solutions to the challenges they face growing crops and livestock productively and profitably. So Sidai trains farmers to help them farm more profitably, and provides support to franchisees, stockists and suppliers to help them grow their business. And they manufacture and sell a wide range of quality crop and livestock products.

On this episode you’ll learn:

  • Christie’s experience in trying to raise a round of equity investment, especially when not selling the latest “cool” app but selling a very practical and fundamental product for farmers which is a low margin business.
    • How many funders she spoke to, and the timeline.
  • Selling SIDAI to investors: the original business plan projection was that SUDIE was not going to be profitable for at least eight years although investors want to see profitability sooner.
  • Her advice to investors:
    • Perhaps the cost of impact capital is sort of going up because of early failures.
    • Instruments being used from the commercial sector are not so appropriate for social business which typically take longer to make money.
    • Similar to sophisticated grant makers, investors should have clear deadlines, milestones, timetables, etc., and make those steps as short as possible.
  • Her advice to social entrepreneurs about hiring a very good and experienced transaction advisor with a good track record:
    • They can really help you in structuring the investment and getting as good an evaluation as you can get, and
    • Can help in having the capital structured that’s helpful for the business and not just structured in the way the investor wants it.
  • So many impact investors that are new and are start-up’s themselves.
  • The “good no,” which only took six weeks, versus the “bad no” after 12 to 18 months of engagement.
    • It should only take one to two months if you’ve got all your documents in order, and people can come and visit.
  • Open Road Alliance and their report called Roadblocks which talks about some of the challenges that they funded:
    • The issue of investors stringing along social enterprises and then dropping them because the decision making is so far away from the people on the ground.
    • The specialty of Open Road Alliance is emergency bridge funding to fill a gap for entrepreneurs who have hit a roadblock for whatever reason, but there has to be a genuine external factor blocking the flow of investments that will be ultimately removed.
  • Communicating the challenges you’re facing as an entrepreneur in the East African market can be difficult because most of these investment firms originate their capital from overseas (not local Kenyan capital) and often these foreigners don’t come to manage the firms and it’s unlikely they have hands-on direct business experience.
    • The way to get around this structural issue is to have at least a local advisory board of local entrepreneurs who really know the sector that the funders are investing in and ideally you’d have a local investment committee to look at things quite independently.
  • The global investment network needs a code of good practice on investor / investee behavior, such as:
    • The clarity around the steps in the process,
    • The time required and when,
    • Level playing field,
    • Open communication,
    • Mutual respect, and
    • Good conduct.
  • Shout out to Christie’s excellent impact investor: AHL venture partners

Links to Resources:

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