Our Big Chief Victor Osaretin Asemota’s comments ignited a spirited debate on Radar recently.
We should leave them be. Anyone who requires ‘convincing’ will only cause you problems in the long run. When they are ready. They will come.
In 2011 I sat with Jim Ovia, the founder of Zenith Bank, one of the largest Nigerian banks. A billionaire, I guess. Somehow, we had piqued his PE firms’ interest. So I sat there in his VI office (which is larger than an entire floor at Iroko today), patiently waiting for him to give me a few minutes.
I then explained what we were trying to do. At the time, it was simply to digitise Nollywood. He asked me about my other ‘products and services’. I didn’t really understand the question. He told me it couldn’t just be entertainment. He then began to explain to me my idea was too small. Lacking ambition.
I told him Hollywood is a $30b/year business. From just entertainment
See, I didn’t need to be there. Tiger had given me a $3m term sheet and I was trying to wrangle a competing bid from his PE firm and to help drive a better valuation (which worked). But I sat there and accepted his logic. He is a big man of Nigeria. So everything he said was right, right? After some minutes of schooling me, he let me leave. No matter. I still respect his institution. Zenith Bank has been the primary Nigeria bank of Iroko for over 5 years.
Last summer I sat with a Southern Africa telecoms billionaire. We had a great chat in his beautiful home. He was interested in strategic relations with Iroko. He was technical, had strategic data assets, had oodles of capital but just didn’t seem to grasp what little we were attempting to do. Over 2 hours, I couldn’t really connect my vision with him. What we had seemed too small. Had taken too long.
I don’t think it was that they both didn’t understand, I think I just couldn’t explain it well enough to them in the time required. They had original interest, otherwise I wouldn’t have been in the room, but felt better placed to do it themselves or pass.
Iroko has never ever solicited investors. Ever. But we speak to them all. At least 50+ over the years. I believe initial understanding is the most difficult hurdle to overcome. If someone doesn’t understand your business, they can’t get excited or understand you. I can tell within 5 mins now if someone doesn’t understand Nollywood. Once I pick that up, I guide the conversation into information gathering for my benefit. I know an investor, they are not.
Canal+ understood our business. Their #1 PayTV channel in French speaking Africa is NollywoodTV (Iroko supplied 90% of the content on that channel). The first meeting was a dinner with the CEO at their private restaurant. Very French, we talked about nothing specific. Just wanted to meet me. They respected my understanding of content so from the outset, respected Iroko.
They understood subscription. They understood that to get 100k+ paid content subscribers in Africa (or any emerging market) usually costs $100m+. We were on our way to that on a fraction of that. We appeared capital efficient (HiTV cost $150m+ over its 3 year lifespan).
They understood that Iroko gets Nollywood and Product so they invested. The major discussion was about terms. Not whether they were going to invest or not. I am happy Jacques sits on our board today. He helps the other investors understand paid content in Africa.
I don’t understand e-commerce. I don’t understand the logic and economics of shipping physical goods. So I doubt you will see me investing in those types of business. I understand marketplaces, I understand market places and lead generation. Hotels / ToLet / OgaVenue is basically the same business at core. Speaking to Andrew, within 5mins, I knew the business, I had seen it before. I knew Mark knew it better than I would, ever. So even though I sourced the deal, I stepped back to let Mark lead it. Hotels has more equity in OgaVenue than Spark. For this business, Mark and his organisation is a better investor. The benefits are bearing fruit already.
In summary. Let them be. The money will come. It will just take time. Iroko investors made a (x30) 3,000% exit. Other stories need to be told to demonstrate the value creation. As a consumer internet investor, your ambition is (x10) 1,000% so your appetite has to embrace the risk associated with that.
These grand old men of Africa I doubt will ever understand until it’s patently obvious and/or too late. When they do, they need to have educated themselves. They’re not children. That education and enthusiasm for new things will lead them to invest in the young. Until then. Let them be.
I believe we need to move beyond the rhetoric that we ‘believe in the young’ and just give them more to experiment. We need 1,000 2-3 person teams with N2-5m just experimenting. I hope 90% fail. Because the 10% left behind will build out our community. It’s small today. Tomorrow it has to be bigger. We need to get building.
Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija
Jason Chukwuma Njoku is the founder of iROKO.