There’s a saying that finding an investor is like finding a spouse; as a startup, you’re looking for a long term partner, that will bring not only capital but also expertise and mentoring. Ideally, the managing team and the investor should be on the same page while at the same time complementing each other's styles.
Just as you often don’t find your spouse on a dating site or by hitting on a stranger in the street, you might not find your ideal investor by sending an email. Most of the time, your investment partner is a friend with whom your relationship evolves, or someone you talked to at a party. Basically, it’s someone with whom you connected.
That’s what happened for Hmizate.ma, the biggest Moroccan daily deals website, which just raised US $1.6 million dollars from HummingBird, a Belgium-based venture capital (VC), and MENA Venture Investments. (Disclosure: MENA Venture Investments shares some of its management and investment team with Wamda Capital).
Being prepared for serendipity
When Kamal Reggad, the founder of Moroccan daily deals site Hmizate.ma, first got on a plane to head to Amman for Wamda's CoE E-Commerce event last year, he had never contacted an investor, either at an event or over email. At the time, he wasn’t even looking for capital.
Once he got settled on his plane coming from Istanbul, his next-seat neighbor became intrgued by the book he was reading- Steve Job's biography. Despite the early hour- it was 3am – they end up talking about e-commerce, the Moroccan market and Hmizate.ma. By the end of their flight, Reggad discovered that his neighbour was actually Pamir Gelenbe, Partner at Hummingbird Ventures. Impressed by how Hmizata.ma was self-funded and only a month from being profitable, Gelenbe asked to resume their discussion more formally, which lead to Hmizate securing US $1.6 million in investment last month.
Of course, his encounter may have been lucky, but luck isn't what secured Reggad the investment. He was prepared. Here are 10 of his tips on how he built the Moroccan daily deals site into a profitable company.
Starts with good bases
At the time of the launch, Hmizate.ma offered a deal every two days; now, Hmizate.ma offers more than 30 deals per day.
- Find the right product: In 2010, after
eight years of working in the tech industry in the U.S., Reggad
decided to return to Morocco to build his online advertisement
network. He quickly realized that Morocco was not ready, as there
were no real e-commerce websites, and therefore no advertisers. He
then pivoted his project into an e-commerce website, Hmizate.ma, which means “good deals”
- Know your market: In January 2011, Reggad
realized that Morocco lacks e-commerce websites because people
didn’t know and didn’t trust them. So, in order to gain trust, he
launched his website with a billboard campaign, a first for a
website in Morocco. After a three week teaser campaign, the website
registered 30,000 users.
- Don’t be shy about your project: Before
launching, Reggad shared his idea with his friends and contacts.
One of them asked to join as a silent partner, bringing along his
experience and his network in the ad industry, which allowed
Hmizate to launch a discounted billboard campaign.
- Invest your savings: Reggad put all of his savings, down to the last dime, into the venture. Not only did this allow him to launch his service, but it also demonstrated to investors that he really believed in his product.
Focus on the product
The daily deals website, which today has more than 300,000 members, is now the most visited daily deals website and the fifth most ‘liked’ Facebook page in Morocco.
- Focus on customer service: “Most of the
time we have the same deals as our competitors," explains Reggad.
"So the only explanation for our success is that our offers'
conditions are user-friendly and that our customer service is
- Differentiate yourself: Hmizate gets more
than 45% of its revenue from travel deals, which might not be
unique in the Middle East, where travel is known to be a healthy
segment, but it's perhaps unique for a daily deals website
- Expand: In June 2012, Hmizate.ma
launched Hmall.ma, the first online marketplace in Morocco for
offline vendors. Customers can find various products going from
hi-tech to fashion at a discounted price. The website continues on
- Show there’s a market and a revenue stream. This goes without saying, but by the time you start looking for capital, you must have ways to monetize your website. The fact that Hmizate.ma was a month from being profitable clearly made Gelenbe think the website was a viable investment.
Spread the word
Gelenbe didn’t know the Moroccan market at all, but he had heard of Hmizate.ma; to him, this was a sign the startup was doing a good job.
- Meet up with other
entrepreneurs. Investors would rather go to you
because they’ve heard about how good your doing in the media or in
the ecosystem, than have you come to them.
- Get your startup known overseas. If there's anything that other founders can take away from Reggad's experience, it's that they shouldn't limit themselves to their country or the Arab world, but rather should go and seek capital wherever it is.