Tanzanian Founders Are Hesitant to Go Public After Raising Fund. Here’s Why I Find This Conflicting

I understand why founders wish to keep private the news about their funding rounds and revenues. But it is stories like those going public that expose our ecosystem to much-needed growth.
Zahoro Muhaji9 December 20224 min

Somewhere in Dar es Salaam beachfront restaurant overlooking the Indian Ocean, I am in a very good mood, sipping wine with my two other colleagues. We are all in jovial and celebratory mode, cheering with our glasses as we watch a beautiful sunset.

Across my table, two young tech startup co-founders, in their mid-20s are excited and very happy. They have every reason to. They have just closed their first seed round of funding of $500,000!

I am also happy for them. Till a month ago, I had never met them, only saw their not-so-active social media page for their startup. One night out with friends, one of the co-founders approached me.

Tipsy, and like he was unsure, he asked me if I was Zahoro Muhaji, they know, CEO of Tanzania Startup Association (TSA) when I said, “yeah.” He asked me if I would be willing to speak to their American investors.

As part of due diligence, the investor had requested them to find someone who has knowledge of the regulatory environment they can speak to, just to get familiar with what it is like to operate in this market. I agreed.

Fast forward to a term sheet signed, I took a long sip then turned to them: “So guys, congratulations once again, when are you planning to go public with this information of your funding round?”

Dead silence greeted me from my comrades! After a long pause of silence, and looking at each other, they turned back to me, politely and almost like they are whispering for anyone but me to hear, they said: “Bro, we don’t plan to tell anyone, it is our secret.”

I was curious, why?

They told me, they had a bad experience after they participated in a startup pitch competition and won a grant of $20,000.

The money was meant to help them kickstart their business, but their family members had other plans.

One of them said, as soon as the news was out on papers and social media, it was when he received a call from his relative and given the usual news:

“Hello Peter (not his real name), your uncle here at the village has swallowed an axe, we need money for the hospital.”

Now, they have got more money, the boys know what could happen to them if the news goes public.

Socialist legacy

Tanzania, a country with a socialist past, centrally planned economy and no to little private sector since independence till 1985, prided itself on being a country of peasants and workers.

A lot of us, Tanzanians, are first-generation entrepreneurs, surrounded by family, society and some extent a government with little understanding of what entrepreneurship is like.

It is understandable how some family members can make silly demands when they hear you have raised money from investors, and you are telling them the money is for scaling up and whatnot.

READ:#YoungBoldDigital: Why are Tanzania’s Local Investors Not Interested in Investing in Tech Start-Ups?

Though disappointed, I knew where these two co-founders were coming from.

As a person leading an association at the centre of nascent yet fast-growing Tanzania’s startup ecosystem, I am conflicted.

On the one hand, I understand why some founders wish to keep private news about their funding rounds, revenues, exits, profits et cetera.

On the other hand, however, it is stories like these going public that help shape the positive narrative and expose our ecosystem to much-needed growth.

A few days ago, one Tanzanian startup, Ramani, went public with news of their series A, a $32 million funding round. My phone was blowing off!

READ MORE: Retail-tech Startup Ramani Secures $32 Million Series A Funding

Calls came from ministers, Members of Parliament, private sector leaders, investors etcetera, many of them reaching out just to ask for more information about our ecosystem, asking for opportunities and how they can help.

Even those government officials who have been stubborn to work with startups, got back to me, as born-again believers.

It really helps the ecosystem. And now that we are working closely with the government to establish a policy and legal framework necessary to support the growth of startups, it is very crucial to have such success stories as examples.

ALSO READ:#YoungBoldDigital: How Regulatory Environment Is Working Against Tanzania’s Tech Start-Ups

But also to founders, it is inspiring to hear the success of fellow countrymen making it big in the same market you are operating.

A rough time

Honestly, Tanzania’s businesses and private sector at large, had a rough time in the last six years, with the government out and about with taxman raids, economic sabotage cases, forceful businesses closure et cetera.

Though now there is a breath of fresh air, as the government relaxes its witch-hunting and becomes more business-friendly, you can understand the hesitation of many startup founders shying away from media publicity and choosing to be ‘humble.’

No one wants a taxman with the bill in his hand just the next day after you announce your funding round, they know you are liquid! They are coming with three years back tax bill!

Such practice in the past has hugely impacted how our ecosystem behaves now. I was in Dubai with one of the well-known Tanzanian founders, and I noticed how big his operations are there, compared to here at home.

After inquiring how is that so, he told me: “Bro, at home, we are humble, small small, stay low and survive.”

I smiled and agreed as we drove around in his Mercedes Brabus!

Zahoro Muhaji is the CEO of the Tanzania Startup Association. He is available at ceo@tsa.co.tz or on Twitter as @ZMuhaji. These are the writer’s own opinions and do not necessarily reflect the viewpoints of The Chanzo Initiative. Do you want to publish in this space? Contact our editors at editor@thechanzo.com for further inquiries.

Zahoro Muhaji

Leave a Reply

Your email address will not be published. Required fields are marked *

The Chanzo Black@300x

The Chanzo Initiative exists at the interface between advocacy and journalism. It is founded to uplift the voices of the underreported, vulnerable, and marginalized communities in Tanzania with the goal to make Tanzania the best place to live for everyone regardless of class, creed, sexual orientation and nationality.

Subscribe to Our Newsletter

The Chanzo Initiative, 2023 © All Rights Reserved