How Outbox fintech startup Ensibuuko raised USD 500,000 in equity financing
“Ensibuuko currently reaches 100+ SACCOs, has processed transactions over 1bn Uganda Shillings (USD 296,000) and employs up-to 10 individuals. Start-up Ensibuuko offers a cloud based management information system (Mobis) for savings and credit cooperative societies (SACCOS), embedded with mobile money capabilities to improve financial record keeping, build operational efficiency and cut costs.”
The year was 2013. Opio David and Gerald Otim walked into Outbox one evening determined to share their idea with management and seek advise on how they can build a focused execution engine for their idea. This was an idea that begun from a point of need where both David and Gerald were disturbed by the fact that many of the farmers they worked with were losing money to fraud due to limited transparency into the state of affairs within savings cooperatives.
On setting out to solve this problem, Ensibuuko was born as a startup that sought to enable individuals within Savings Cooperatives use mobile phones to save money, inquire about the status of their savings and receive loans. A few months later, user research demonstrated that poor record keeping was the biggest root cause for most of the challenges facing SACCOS.
This is the story that marked the beginning of Ensibuuko’s incubation at Outbox. Outbox is a part incubation, part co-working space in Uganda. It supports young African entrepreneurs with mentorship, trainings and co-working space.
Ensibuuko has now been able to raise $500,000 worth of equity seed funding to enable them accelerate the rate at which they recruit clients and also build product. This is indeed a great milestone for such a young company. Gerald Otim says “Now I can think more strategically on how to build the business without worrying about money for some-time”
Ensibuuko differentiates itself within the local market beyond just product. It’s product offering is low-cost and cloud-based leveraging private telco networks compared to its competitors. It also leverages mobile channels [SMS, USSD] and web interfaces. With regards to experience, Ensibuuko understands the importance of financial literacy to its clients which comes as a great addition to onboarding SACCOS.
One might wonder how the team was able to achieve this much in such a short time. Ensibuuko’s success came from how it used the support structures around it and actually followed through.
Incubation played a role in the success of Ensibuuko in the following ways:
Ensibuuko gained visibility by participating and winning at the East African ICT4Ag hackathon hosted by CTA. This was the very first challenge for Ensibuuko to build its first prototype with support from Outbox. Ensibuuko became a living proof that companies can be born out of hackathon challenges.
Towards the end of Ensibuuko’s six months incubation process, Outbox was able to introduce the team to a potential partner that helped provide them with seed funding. Talking about Outbox’s role in Ensibuuko’s success, founder and COO Gerald Otim says “Outbox ensured that we did not burn out of resources, by introducing us to a potential funding partner that enabled us to build and test the product, build team and gain traction. Outbox helped us find our first funding at a very critical time”.
Storytelling for influence
The Ensibuuko founders are not software developers as anyone may expect for a technology driven company. They are farmers. As such, this provided an opportunity for them to focus on their strengths — telling their story. This pushed the visibility of Ensibuuko forward. Other individuals were then hired to support with product development.
User centered design approach
Opio David shared that learning from the market is one of the great resource to win the hearts of your consumers. We took this advise carefully. The SACCO space taught us how it functions, the dos and don’ts. We made our client to be a great input in our product development. We made them become advocates of our/their products. Any start-up strive hard to bond with the end-users. Make the end-user take ownership of the product. Rukiga SACCO is one of the biggest SACCO in western Uganda. This SACCO in particular has decided to promote our product using its own resources. It’s because we have managed to bond with the SACCOs. It treats our product as it own. “No one can market your product better than the end-user”
Opio David, Co-founder at Ensibuuko says, “I believe the most successful people especially in business space are those who keep sharing their business cards and talking to almost everyone, telling their own stories. That is what partly defines Ensibuuko team. We met Outbox through networking spirit, the love to trust others to take on the lead in developing and un-locking our potentials and Outbox embraced it with love and passion. Our global family grew because of networking. Start-ups have to trust in others and share with passion about their ideas.”
Team can grow the company or break it, people invest in the team not ideas. Opio David says “There are so many cool ideas, life changing ideas — out there but they have failed to kick-off because of bad or wrong mix of team ingredients. From our own experience this is something we struggled with over-time. We had people on our team who were not passionate about the business and their goal was to make money. In times of limited resources, these people could not stay. For us we have we stood all times of challenges because we love what we are doing. we’re proud in our business and we selectively picked our team basing on their passion in the business.”
What did it take for Ensibuuko to raise USD 500,000
Ensibuuko had to demonstrate that there is a path to growth and thus returns for anyone that put their money within the company. The team had to also ensure that they find the right investor, one that understands the context within which the company operates. Numerous discussions were held with various investors that Ensibuuko did not deem a fit or vice-versa. This particular investment opportunity manifested from a mentorship program that one of the founders was participating in. A mentor wanted to invest into Ensibuuko.
“In this market, I believe that startups burn out before they become investment ready”, says Gerald Otim. “The early seed funding we raised from our incubation partnerships enabled us build early traction, build a team and improve product. This enabled us become investment ready. As such, our discussions with an investor were not from a point of desperation thus placing us in position to focus on where we wanted to grow the company.”
Gerald Otim says that “In a market like Uganda, grants play a key role for early stage financing. This is the kind of funding that enabled us become investment ready.”
On investment readiness, Gerald Otim learnt that team is key. “Our investor spent a lot of time getting to know us as individuals. He was interested in learning about our strengths, weaknesses and interests”, he says.
How will the investment help you?
Ensibuuko seeks to use the investment to grow market share within the Ugandan Market.
Gerald Otim shared that in his business, there has to be an investment upfront in equipment so as to on-board a Savings Cooperative. The business can now acquire more SACCOS despite the location. It has now hired more people to build product thus enabling the company grow fast. This will grow market share of Ensibuuko within the Ugandan Market.
Ensibuuko is now looking to become profitable in Uganda before moving to other geographies within the next one year.
The company now worries more about how it can push sales thus customers given that it has runway. It can now test various pricing models, various customer deployments, hire competent people so as to develop the market and build a quality product.
In the near future, Ensibuuko is also assessing expansion of markets into Nigeria, Rwanda and Tanzania.