In recent times, we have seen a lot of Nigerian tech startups come up with innovations that have attracted capital inflows into the country as regards to fundraising.
The CEO of Big Cabal Media in this exclusive interview with Nairametrics speaks about the company’s recent $2.3 million fundraisings and how the company plans to utilize it.
He also delves into the startup ecosystem in Africa and shares insights on how young innovative companies on the continent can run their business to survive the slowdown in investor funding. Excerpts:
Big Cabal Media recently raised $2.3 million, can you lead us into how you got that funding and what you plan to do with it?
We closed our round of funding earlier this year with the lead investor, Mark Venture Capital, an American VC. We’ve been talking to them for a while and they liked our business model. They invested in some media and technology businesses in the US as well, so they basically understand us well.
In terms of how we’re going to use the funds, we’re investing in technology, we’re investing in video. We have a production anchor about creatives, which produces digital content for brands. We produce TV commercials; we’ve done work for companies like MainOne, Coca-Cola, Google, etc.
So, we’re addressing our production capacity and our production studio, while also investing in technology, and we’re growing our technology team.
In 2020, we launched Zikoko news and we are going to launch the second version of that this year. On the Tech Cabal side, we’ve already launched two products this year, a deal flow tracker and track base. And so both of those are now live, and we’re going to continue working on using new data and technology across both publications, while also investing in our content and growing our editorial teams for existing publications. We’re looking to launch two new publications as well. So, we are working on all of that.
In recent times, we have seen a lot of innovators and startups coming up in Africa, what do you think is driving the rapidly growing startup ecosystem on the continent?
A couple of things. One is that you’ve got a young generation of people who are eager to build to change the world around them to make Africa more efficient to make it work in ways or places where it has not been working. Technology is the biggest driver of change globally. And so whether you’re in pharmacy, whether you’re in agriculture, whether you’re in finance, you look around the world around you see inefficiencies, and it’s inevitable to think how can I do this better? So, I think that the recognition of technology as a driving force for change is one of the things that is making so many people move into the startup space.
I do think that that space has also been transformed because of the availability of capital. There are a lot of things packaged as startups today that ordinarily would have been done differently or with a different set of investors. They might not have emphasised the technology delivery aspect of their businesses as much, but because that is where capital is most readily available today. I think a lot of things are being packaged with the technology aspect of the business first so showing to investors, showing to the world, you know, by calling something.com because that is the space that investors are most interested in and excited about. And so if you’re looking to build something, you will want to emphasise the technology.
Your company can be said to be a beneficiary of the boom in the startup investment, but a lot of reports coming out recently are pointing to the fact that it seems the party may be over very soon for startups that are raising funds. What is your view about this?
What is going down in the investing space has not really hit the early-stage investments as hard yet it is still mostly later-stage investors that have slowed down. So, I think everybody should prepare for a tighter market fundraising, people should prepare for fundraising to become more difficult. If you have raised before the slowdown, use your capital well; stretch it as far as it can go to profitability and sustainability. And if you haven’t raised, you need to know that it’s going to be a lot more difficult.
If you have raised money earlier, you need to be striving for real revenue and real profitability as early as possible, because you might have to survive longer before you will be able to find another capital. And you might have to take a tougher deal when you get that capital. So, you just need to buckle up for a tough period.
One thing that’s also worth mentioning is that some really great companies get built in these kinds of conditions because they tend to be more efficient; they tend to make more pragmatic decisions and that is what the best startups need to keep in mind.
It is quite uncommon to see investors putting money into a media startup, especially in Africa. You are one example, how did you do it and what do you think African media need to be doing to attract the right investment that they need to grow?
The question in the mind of investors is: is this opportunity big enough to return multiples of the money I put in? So, if they put in a million dollars, they are trying to get $10 million or $5 million out. Then they also ask: Is this a big enough space, big enough opportunity? So, the first thing you have to do is to convince them that the space is large enough, and the opportunity is large enough for them to make a return.
And that applies whether it’s media or whether it’s gas or fertilizer. You know, once you can do that, the rest of the conversation becomes a little easier. in terms of the business space that you’re in, you need to show them that you’re doing something that is interesting and distinct and that you have an advantage over your competitor.
For Big Cabal Media, with those two brands that are very, very distinct in their space. Tech Cabal is about one of the most important technology publications in Africa. We’re covering the continents in ways that no other publications are doing. Zikoko is just immensely loved as a youth publication and it is one of the most influential.
When we told the investors that we can grow this business through technology, we could see that it was possible. So, for instance, just this weekend, Ziikoko did an event called party fuge, which was a festival for women only, 1000 women showed up for the event. All of the feedback has been immensely positive.
So when we tell them (the investors) that we can build a really big event business on the back of this audience that we have that loves us, we can show them that it’s possible to do so. When we say we’re going to build a really big advertising business they can see how we grew over 300% year on year advertising wise last year, and you can see the trajectory that we will continue to grow from an advertising perspective at the same pace. And that gives them the confidence that we’re building something that is truly massive, and that can return their investment and that is differentiated from the competition for us to win. So that’s what I mean. Those are the things that you have to do to convince an investor.
Looking at the traditional media, in Nigeria for instance, it may be difficult for them to present the sort of data that you presented to the investors as most cannot be said to be profitable at the moment, What do you think they are not doing right?
Your model has to change. Media globally is in flux and is facing a number of really big challenges. And so if you jumped in to operate with the same business models that we always have, with advertising as the only revenue source, for instance, it is just not practicable anymore. And so if you’re building a new business the way we are, yes, advertising can still be your base with marketing, a lot more expansively about what your business model is, how are you going to make money? How are you going to survive in the years when there’s a dip in the advertising market? Those kinds of things are the things that anybody building a media business has to take into account.
I think that’s critical. That’s a critical thing that traditional media outlets need to think about and work on as they do their business.
Now, having joined the Big Cabal Media since 2018, what would you consider as the most challenging situation you have encountered as a CEO?
The year 2020 was very challenging. COVID did a really bad number on the advertising markets and did bad on events. Our thesis has always been these multiple lines of revenue. We weren’t really anticipating a year when all the different lines of revenue would be affected separately. All our businesses faced real challenges and so financially it was very tough for us. Our audience grew significantly, but our revenues barely moved a little bit down year on year, but we continued to build the business. And that was really valuable. We went on to triple our audience last year. We built new products last year, so all of that showed that we could grow even in difficult times.
Talking about technology and media, how do you think the traditional media that we have today, for instance in Nigeria, can leverage technology to get better at what they do?
Sure, there’s a lot of meeting your audience where they are, that is, to recognise from a distribution perspective, what are the platforms on which your audience actually consumes content? I’m going to meet them there. There’s the need for a lot of investments in how you produce your content using technology to make your team more efficient, to make your content creation faster, or cheaper. Sometimes I think being able to work across the world or recruiting globally could help. We’re in a very tight talent market. And so for a business like ours, we’re hiring some key roles and we sort of decided, you know what, it doesn’t have to be someone sitting in an office, we can hire someone who’s anywhere on the continent.
You then use technology to ensure that your team is well synced and can work together productively. And so, I think those are some of the things that the best companies in the media space do. I think the last thing for us is actually creating products that serve our audiences. And so with things like our deal flow tracker, we’re applying technology to build products that serve our audiences, because we know we have such a great relationship with them. We know what it is that matters to them. We know what tools they need, we know what products might delight them, and so we are building those kinds of tools for that as well.