Valuraha Group: Could This Be The Birth of a Learning Revolution?
For us, Friday Feb 21st 2014 goes down in our history as a mile marker in this learning journey called education that we are on. It felt just like a Stanford E-Corner session sitting in Stephen Gugus Entrepreneurial Finance class listening to Lillian Mwikali and Theuri Chege (two extremely brilliant students) present a thorough valuation of our company in a manner youd think it was they who ran Valuraha.
Lets give you some background first. We are Valuraha Group (Ltd), a startup company that builds financial literacy tools with a vision to open up the Finance industry for all in Africa. Our mission is to create an entirely new generation of market movers.
How do we do this? Well, for starters, weve built a virtual NSE. Broken down, we have developed a virtual trading platform based on the Nairobi Securities Exchange. We enable you to trade securities under simulated market conditions using virtual money. The point of it is that individuals get to practice and learn how the market works before actually investing in real life. We are incubated at iBizAfrica, the business incubator at Strathmore University (SU).
Enter Stephen Gugu. Hes our mentor and… a finance guy, is how we could best describe him. He was previously a dealer and research analyst, now he dabbles in financial modelling, investment valuation, deal structuring for companies, entrepreneurial strategy…. We have a lot of respect for him. You can count on him for brutal honesty, no time for castles in the air. In addition to being Principal at Invhestia and Viktoria Solutions, he lectures at Strathmore University and at the Strathmore Business School (SBS). His class, Entrepreneurial Finance, is about studying the value and resource allocation in startup companies with an aim to help the entrepreneurs make good investment and financing decisions.
Gugus Entrepreneurial Finance class
Gugu chose to run his class differently. The easy way, would be to have his students evaluate listed companies like Safaricom or Barclays whose information is already available to the public. The problems with this approach however, is that such information wouldnt be useful to Safaricom and Barclays because such organisations use in-house experts hence making the students hard work futile. Thats the kind of learning that needs to be phased out.
Instead, Gugu tasked his students to evaluate startup companies incubated at iBizAfrica. They were required to carry out a case study of a company of choice, understand it well, carry out a SWOT analysis, quantify its market, draw up financial models based on revenues, expenses, projections and value the company. Luckily, he recommended us to Lillian and Theuri.
By taking this approach, he addressed two key things. One is the fact that its about time students start gaining actual working experience while still at university facing the real world, and secondly, startups are run by entrepreneurs who are gurus when it comes their field of business but their knowledge on entrepreneurial finance is quite limited.
Valuraha current status
That was us. For a while, wed been attempting to learn how modelling works in order to understand our business better. Were at that stage where weve exhausted our 3Fs funding contributions and are sourcing capital from grants, angel investors, VCs (…treading carefully). Every single person we had talked to has had one main question How much are you worth? Despite our best efforts we havent yet been able to answer that question as confidently as we would like to. Until now!
Since November we had indulged Lillian and Theuri as they continuously grilled us on every aspect of our business. We hadnt given a thought to outcomes of that exercise and information, we just thought that they needed help with the class assignment. Looking back, we are glad that it turned out to be time well spent.
On the last day of the Entrepreneurial Finance class, students present their findings. The entrepreneurs along with our incubation manager, John Matogo, received invitations to attend these presentations. And they were spectacular! The students portrayed deep levels of research, clear understanding of the businesses, paid attention to every last detail and summed it all up with a practical valuation and a 5- year projection. For the students, its class work; for us, its finally achieving a level of clarity about our business that we wouldnt manage on our own.
This is the kind of education we yearn for – the kind that inspires collaboration between industry and academia. Learning that is not only practical but also seeks to add value by solving existing problems. Investors would greatly appreciate a comprehensive breakdown of a startups potential for growth before putting investing in these companies. When startups are equipped with information on what they are worth, they are better placed to negotiate terms with potential investors. Established consulting firms such do not pay attention to up-coming ventures.
As founders of Valuraha Group, we are grateful to Lillian and Theuri for the amazing work they did on our company, it shall not be forgotten and we look forward to further collaborations in the future. We are grateful to Stephen Gugu for investing time in his students and us as indirect beneficiaries, and for his unorthodox way of running his classes. Thanks to @iBizAfrica and John Matogo for the exposure we get from being incubated. Last but certainly not least, we are grateful to Strathmore University, for this is where it has all come to pass. We do hope that SU continues to be that place where a learning revolution begins.