It was a pleasure and honour to sit with Moushmi Patel. Moushmi, as well as being a fellow MBA graduate from GIBs, is a Chartered Accountant (SA) with a strong finance background; having been an auditor for PricewaterhouseCoopers and a banker at Rand Merchant Bank. She parlayed her financial background into her new role as Principal at Sanari Capital, where she is mainly involved in selecting deals to invest in as well as formulating the strategy around investing in these deals. Sanari, which means ‘like a buffalo’ in Tshivenda, is a South African private equity investment company, that specialises in founder-run, owner-managed and family-owned businesses with a plan to “scale-up”. Key take-aways from our interview included:
- Starting your journey as a Founder: Despite the opportunity cost of foregoing a job in a Big Corporate, Moushmi said yes to joining Sanari in its early start-up stages. The reason she made this surprising move, was because she wanted to build a legacy and had just finished her full-time MBA. This latter reason meant that she did not have to leave a cushy job. In addition to these reasons, she respected the team she was joining and was eager to work with them.
The lesson here is that the motivation to build a legacy can be key to building a start-up.
- Key Challenge: In a bit of poetic irony, Sanari Capital found it difficult to get initial investment capital into its first fund because they targeted international investors, who refused to invest in South Africa after ‘Nenegate’. They resolved this challenge by focusing instead on domestic non-institutional investors.
Key Lesson: Be flexibly persistent, particularly when customers give you negative feedback, be prepared to make modifications to your business model while continuing to push forward.
Key quote: “You have to be open to other ideas”
- Investment Criteria: founder run, owner managed or family owned enterprises between R200million – R500million EV (Enterprise Value). They invest in scalable businesses, in which they have expertise (excluding mining) that are profitable and have strong teams. They usually invest between R5 million to R100 million. They do not really focus on early stage companies, but in the rare event they do, they look at companies that have earned revenue and are on track to soon make a profit.
What Moushmi looks for from a potential investee’s pitch:
- Evidence of having made revenue;
- A team of people who have conviction and determination but also are open to criticism and can change;
What Moushmi generally recommends to anyone seeking funding:
- Keep presentation slides between 5-10 slides long, depending on investors. Some want a 50-page document, so be prepared based on what the investors prefer.
- Answer any questions as quickly as possible, do your research if you have to.
- Always focus on investors who have a similar vision and who you like and respect.
- Build relationships with funders early, do not go to them a month before you need capital.
- In order to build relationships with funders try to meet with an individual from the company informally, say over coffee, to discuss whether your idea would fit their criteria. Also, try and attend relevant networking events.
- Sanari Capital’s additional value-add: Vast experience and networks in certain key industries: technology, education, retail, green solutions and healthcare.
- Request: Promote Sanari Capital by emailing them or linking to them on Facebook, Linkedin or Twitter: @sanaricapital