Surprising data on Kuzana Startups

original data from our 140 applicants

Dear Shareholders and friends:

The kuzana program keeps rolling! Steep learning curve. Our investees are growing their revenues at 30% MoM which is pretty incredible!

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Ask: please forward this update to someone you feel would benefit like potential applicants or partners/investors.

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After receiving 140 applications, we have a unique data set on early stage “real” business in Kenya. Why not share?

28 day Avg Cash Conversion Cycle

Some had long cycles, particularly in primary agriculture (that is, the people who do the growing). That is part of the reason we prefer agri processing as the CCC is shorter and typically has less risk that primary agriculture.

Of note, no company had a negative CCC. Hopefully, we find negative CCC companies in the future.

92% of applicants were profitable

This underscores that the agriprocessing sector tends to have naturally profitable businesses, rather than the tech sector.

However, likely two of our first 5 bizi (investments) were not profitable in 2024, so we tended to go for companies with more potential than steady financials.

~35% of applicants were in our revenue “sweet spot”

Our sweet spot is $20k-$800k annual revenue.

Meanwhile about 5% were too big and 60% were too small. It feels like our targeting was good.

Focusing on Applicants in the sweet spot for a moment

Within our target revenue range, the median company had

• grown 33% YoY

• $90k annual revenue

• $8k in unpaid receivables

• $16k debt

• $160k fund raising target next 12 months

This highlights the growth in the sector, that we didn’t receive failing companies.

The bizi tended to have higher revenue than the median, higher growth rate, but lower fundraising targets. A general rule of thumb is that companies in this sector can raise as much capital in one year as they had in revenue the previous year; therefore applicants tended to have fundraising targets almost 2x higher than they could optimistically achieve.

Fundraising was the most mentioned request for mentorship

Already one bizi was able to raise $60k based on our introduction and two more are likely to receive a similar amount.

Of note, one bizi who was particularly eager for the sales&marketing training has increased their revenue 60% for the two months since receiving investment.

Quickbooks is King

Despite its prevalence in the applicant pool, no bizi uses quickbooks.

Surprisingly, Zoho was 3.5x more popular among applicants than the similar Odoo platform. This difference is statistically significant.

Therefore we dropped Odoo and quickbooks training partnership plans.

~70% applicants founded in last 5 years

95% registered in Kenya

We only invested in companies based in Kenya so this tells me applicants were well aware of the requirements and few wasted time applying that were not eligible.

We received feedback that our application process was quick and painless (presumably those who find it painful didn’t tell us)

Summary

We received 140 applications and the questions evolved over the course of the process so we don’t have all data for each company.

The data suggests our applicant pool composition was not significantly different than expected, aside from the high usage of Zoho. This sets a baseline going forward.

To receive 2x as many investable applicants we may need to get 2x as many total applications which would push the applicant target for batch2 to 280.

Practically though, I’m glad that we did not make 7 investments in batch1 as we had much to learn, and it would’ve been logistically difficult.

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Ask: please forward our update emails to whoever you feel would benefit, potential applicants or potential partners/investors for us.

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If you have any feedback and comments please do share with me.

Yours,

Kyle and team