Leverage as an Essential First Principle for Emerging City Founders

Building a Startup is hard. It's even harder building one in a disadvantaged or an emerging city where there are poor infrastructure, limited funding opportunities and support. This is why most talented people relocate out of such cities. In this article, I explore how Founders in such cities could explore leverage as a first principle to thrive.

Founders often times feel handicapped and without assets. If only they could take a step back. As someone who has built and supported many Startups in similar cities for almost a decade, I probably know a thing or two on how to thrive as an early stage founder.

What does Leverage as a first Principle mean?

Cambridge dictionary defines first principle as "the basic and most important reasons for doing or believing something"

Cambridge dictionary also says Leverage is "to use something that you already have in order to achieve something new or better"

As a Founder, It means to first look inward for and maximize resources within, which may not already be apparent. These could be talents, relationship, finance, insights, experience, skills and even opportunities.

Founders often treat Startup origination conversation as if it's purely about chasing ideas or Apps. The reason you find many conversations and web searches on "what business can I do using X amount?" But, regardless of where you're based, the genesis of any business is an opportunity that the promoters are sufficiently positioned and primed for - either by virtue of their insights, experience, network or access.

Building a Startup is no different. One of the most important questions investors ask Founders is: "Why you and why now?" The investor simply wants to understand what 'significant' experience and insights your team have and if there are verifiable economic trends underpinning your pursuit. Additionally, they want to establish if there's a founder-problem-fit as well as founder-market-fit.

Founder-Problem-Fit vs Founder-Market-Fit

Founder-Problem-Fit is a measure of the degree to which a Founder identifies with the problem he's trying to solve. It is an attempt to measure the Founders' motivation for solving the problem and possibly predict their perseverance threshold. It is believed that Founders with a direct or indirect negative experience of the problem they are trying to solve typically gets deeply motivated and often willing to suffer hardships to conquer obstacles on their way.

I had difficulty accessing support to scale our Cloud Accounting Software - 1Suite as a Founder based in Port Harcourt and this experience motivated me to build #StartupSouth to ensure others get the opportunities they need. Nine years later, I am still on this mission regardless of the challenges we have encountered on our path. Similarly, Ndifreke Ikpoku, Co-Founder of HouseAfrica was a victim of Land Sales scam and that motivated him and his Schoolmate Nnamdi Uba to build Sytemap by HouseAfrica.

Founder-Market-Fit

Founder-Market-Fit unlike Founder-Product-Fit is a measure of the degree to which the Founding team is sufficiently exposed to the industry by way of cognate experience. The thinking here is that people with domain experience solving problems they encounter in the line of duty will often have sufficient insight of the market as well as understand competition and industry trajectory.

Some examples of this in Nigeria would include GB of Flutterwave and Sola Akinlade of Paystack. While GB worked with Access Bank and saw first hand the opportunities in enabling real-time virtual payments, Shola saw first hand the opportunity in bringing more businesses online by enabling payment for their transactions while he consulted for Banks.

Where and What are types of Leverage

GB and Shola both had Insight because of their exposure to the Nigerian Banking system, had the skills to build the product and had people in their network who provided initial investment or connected them to early investors. ?Eric Yuan, Zoom CEO, as a former corporate vice president for Cisco Webex had leverage as well having gotten the inspiration from trying to solve Webex customers unattended complaints. CEO of Webex ended up investing in Zoom.

Founders - especially - those building from emerging and less resourced cities could exploit the following types of leverages:

• Leveraged insights. Insights come from sustained exposure and critical analysis of information. Pay attention to the gaps in your current job with a view to unearthing industry wide patterns that require improvement. Speak about and demonstrate these insights a bit more in your conversations with investors. This remains the most potent source of Startup ideas.
• Leveraged network Your network is your networth, goes the popular saying. Many of the resources you need may already be within reach in your circles but there may be a miss-match between current form and your expectations. What you are looking for may just be a connection away - with the friend of your friend. Develop your network - join Communities and put your network to work. Explore community bargains. As a rule, I tell founders to never pay for anything that can be gotten for free and there are so many of them - if you know where to look. Examples include office space, cloud credits, software credits, free advisory etc. The first full office I ever used was bequeathed to me by my Pastor. It was our former Church office that still had several months rent running complete with most of the fittings. Engage your mentors and existing investors - ask for help if and when you need it.
• Leveraged Traction: Traction is important for your fund raising goals partly because it helps you (primarily) and by extension, potential investors to validate your business model. One of the fastest ways to achieve this is to leverage your immediate network. Your family, communities and associations you belong to, church colleagues should be your first set of patrons either directly or by referring you to their network.

Conclusion

Building a Startup anywhere is daunting and even harder in emerging or secondary cities with limited infrastructures and institutional supports systems. However, if you are working on projects that you have great insights in, a sense of mission with conviction and sufficient leverage will help you succeed.

Resources:

1. There's a great article on Founder-Problem-Fit by the folks at Four Weeks Mba here.
2. Similarly, F2VC Team wrote about Founder-Markt-Fit here