Article provided by Discovery Business Insurance.
Alexandria Proctor is founder and CEO of DigsConnect a start-up that began in university and a year later received the largest seed round of a student start-up in South African history.
Seed funding is often a make or break opportunity for a business. Alexandria Proctor received R12 million in seed funding for her student accommodation app.
She says the project started out as a side-gig while she was a student at the University of Cape Town. “DigsConnect is Africa’s largest student accommodation marketplace where landlords can list their spare room, house, flats, digs etc on our website or on our app. Students then go on and find a listing that suits their needs,” she says.
It was about finding a solution to an annual problem. Student accommodation makes news headlines at the beginning of every year, she says. “We all complain about many things in SA. So we should as start-ups, rise up to the challenge. Build a better solution. That’s what entrepreneurship is – finding a problem that a lot of people are facing, design the solution that makes life easier and then you sell that on to other people. If it adds enough value, people will pay for that.”
Solution discovered, now how to scale?
With partners, Greg Keal and Brendan Ardagh, Procter said the accommodation solution grew across cities as it expanded to the different university campuses. “We then had the conversation about getting some investment, expanding our team, because salaries and developer salaries especially are quite high, and we needed to do some marketing. We wanted to expand nationwide, across the world and we needed capital for that,” she says.
They sought investors who would add to their network, give guidance and create a sounding board for the business. “We were looking for all of that from investors because you want someone to be a partner with you, to walk the journey with you. The right connections can be worth way more than a monetary investment can ever be worth.”
They started by preparing their offering to take to potential investors in the country. “We spent more time preparing than actually doing the fundraising. If you just prepare properly than when you actually do it, the process is so smooth. We prepared a really cool pitch deck, we did all the numbers, and then we just started sending out emails.”
The team found a number of investors in the South African private sector, who were in their own network and who would refer each other to interesting ventures. “There are world class business leaders in our country. Sometimes people are specifically looking for certain areas of investment, prop-tech or health-tech or fin-tech or whatever it is. So they’ll refer each other to projects,” she says.
The next step was to pitch their idea to the prospective investors who bit. “As long as you’re authentic and able to talk about your company, the value it can bring, they will listen.”
Some asked further questions or referred the team on. Eventually the right (anonymous) investor came along. “It was like chemistry. We spoke about our company and what we were doing. They were asking the right questions and were so excited about what we’re doing. We felt straight away there was a connection,” she says.
How the investment benefits your company
Proctor says the team did not take the investment lightly. “One of the most dangerous things for young start-ups is to get too much money without a plan. You don’t want to have a change of mindset after getting your capital. You must remain scrappy and frugal, getting good return on investment (ROI). You have to be very careful with that.”
“We set out a very tight budget per quarter and outlined the ROI we wanted to get from it. Because it is not only our money, really. Now we have a responsibility as directors and as entrepreneurs to get a return for our shareholders,” she adds.
Money versus meaning
Proctor says she learnt about the housing problem while working on the Student Representative Council at university. Accommodation was a real problem which was affecting students’ ability to focus on their education. This was one of the first reasons she started the business.
“There’s money and there is meaning that you can get from entrepreneurship. I think it gives me meaning in life when you want to solve a problem. The bigger the problem, the more exciting it is. And that’s the thing about South Africa. It is such a cool place to live, to work, to build a company, because there are so many problems that are just begging for a solution. It really is almost a blue ocean of problem-solving.”
She says: “Africa as a continent has the fastest growing population in the world. It is just screaming opportunity at you. You just have to have the boldness to step up and say, I’m going to throw my lot into this. And never give up trying.”
The 15-episode The Healthy Business Show is brought to you by Discovery Business Insurance. For more insights from Alexandria, listen to the podcast below.