Tosin Eniolorunda, CEO and founder of TeamApt in this interview with BusinessDay’s Frank Eleanya shares strategies for raising funding and how startups can bootstrap without going burst.
Tell us about TeamApt
TeamApt is a digital banking and payment infrastructure provider. At the moment we provide banking solutions like mobile and internet banking, robotics as well as payment infrastructure for banks. To really understand TeamApt is to go into the core of why we exist. TeamApt exist to provide financial happiness…that is our drive. We think that when people die what we should use as metrics of how well they lived their lives should be how happy they were throughout. We believe that money is an important part of why people exist. We build solutions that help people be happy with their money. We do it in four major ways; by helping people collect, pay, manage and grow their money. To do this, we work with banks, businesses and people. Since 2015 we have been building solutions that are central to this mission. We started with solutions that help banks like ALAT build their digital banking platforms. Today almost all the banks except one or two banks use our solution to service their customers. So increasingly we are in the forefront of the digital transformation.
We have built a robotics solution that basically mimics what humans do. That cut down the turnaround time that many banks use in resolving problems that their customers had. It also improved the way customers felt about their banks.
TeamApt is also going ahead to implement digital payment infrastructure like APIs that will help banks talk to themselves and do things like bank transfers. We are also building solutions that help businesses as well as consumers.
What was it like bootstrapping till this point?
It is something that is very dear to me. I have written and explained that a lot of startups should not get carried away in the money raising hype. They should focus a lot more on building their products. Money will find you if you have a solid product that people need. It is also worsened by the stories of some startups – especially high profile – that more or less shut down after many years of seeming growth. What this points to is that it is fundamental that you have a solution to a problem. That solution need to be built it in a way that you can scale.
What TeamApt has done is, from day 1 we focused a lot on delivering solutions to our customers and ensuring that they pay us. What makes a company go bust is when the money that you make is less than the money that you need to survive. Bootstrapping is growing your company little by little as fast as you can with the little money that you are making and putting it back into the business. In the beginning we had the idea but we picked something small and we were fortunate to have our first customer pay us. It is important that you get your customer to pay you upfront. For instance, you have a solution and you pitch it to your customer and he or she likes it, and you give the price, typically when you get a contract like that they will pay you some money upfront for mobilisation. That is the money you need to start. This is especially true for enterprise and business companies. When you are paid upfront you have float to run your business.
Secondly, you need to find a way to keep your cost low. How do you keep your cost low? One of the biggest costs for a technology company is our human resource cost. In fact we do not sell any inventory. The only inventories we sell are brains, so the challenge is how you get brains to work with you when you do not have a lot of money to pay. It is worsened by the fact that a lot of Nigerians are leaving the country especially the IT ones. Germany, Canada, Dubai, Estonia is becoming a lot interesting for these guys.
So how do you get them to stay with you?
There are three strategies; one of them is they need to believe in you. They need to be convinced you have a high chance of success and you have a clear vision. Secondly, you need to give them skin (equity) in the game, which means they are part owners. When they are part owners, they can weigh the suffering of now and compare it with the gains of tomorrow. That means, if by tomorrow the company blows, they will blow with it. Some of them will stay.
For those who stayed, you have to ensure you don’t compromise your integrity. They need to believe you and it means that whatever you say is what you will do.
Thirdly, you should do things that are not in the line of your business that can just bring in money. In the early days of AirBnB for instance, they sold cereals just to bring money. It wasn’t in line with their core business. In the early days of TeamApt we did businesses that were not in line with financial services to bring in money. If you have a solid business model I believe it will get you investors that will be interested in you.
What it all does for you is to give you the discipline and the culture that you need when the money finally comes. Our economy in Nigeria is not the same with the US or Europe where investors can just give you money on the hope of good returns. Investors that invest in Nigeria are a lot thriftier and they really want to see value. It actually takes a lot of time to raise money; in fact it is another reason TeamApt did not raise money on time. I am a single founder and if you spend 30-40 per cent of your time trying to raise money there are many other things that will suffer like company culture, engineering, customer service etc. when you are focused on what is most important you will get the money you need eventually.
Finally, when you raise money less, at the end of the day, the founder and the people retain more control of the company and they become richer.