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Why Company Building Skills Is Key to Early and Growth Stage Enterprises

  • By Charles Nyadero
  • November 3, 2023

Working with early and growth stage companies offers insight and lessons on the entrepreneurial journey and business development. At Kenya Climate Ventures we are modelled to offer catalytic finance and technical assistance to businesses at this stage.

With strong enterprise development value proposition, we are proud to be following the works of Steve Blank and Bob Dorf in their great book of start-up owner’s manual. The duo summarizes building a start-up business to bigger corporate company into four C’s of customers development process i.e., Customer discovery, Customer validation, Customer creation and Company building.

In context customer discovery is the point that the entrepreneur tests customers perception of the problem and the customers need to solve it. Simply, a problem solution fit. At customer validation the entrepreneur tests that the business model is repeatable, scalable, sustainable and a higher volume of the product/service can be offered to justify a business case. Customer creation is at the point where the entrepreneur can confidently quantify their market size in terms of total addressable and serviceable market, it’s also the point which entrepreneurs talks of greater opportunities.

Engaged in the five thematic sectors aligned with climate action, mitigation, and resilience, Kenya Climate Ventures provides support to businesses in Agribusiness, Renewable Energy, Water and Waste Management, and Commercial Forestry. Most of the business models in this sector are still in the early and growth stage and quite too risky for commercial capital and probably the founders are still dominating much of the decision making and running of the operations. Our focus on the fourth C – the Company building – stems from our insights and day-to-day management of these companies.

Company building according to Blank and Dorf is a transition stage from start-up mentality to a corporate business that is professionally managed. The business is largely moving from informal to formal structures with key departments established like sales and marketing, finance and operations, corporate governance among others complete with the heads of department.

The tragedy of transition from start -up to company building is that the founder is no longer deemed the right person to successfully lead the organization, the board can graciously oust the founder and hire experienced operating executive and the business at this stage is deemed to out skill the founding team hence the need for getting more experienced staff that further means higher operating costs in the business. It’s a necessary painful moment when the passionate founder must relinquish most of the decision to the new management team as they take the role of a chairman or board member. Glaring at the increased operating costs   due to hiring experienced staff that in the short run reduces the net earnings, the founders are usually not comfortable as well to other factors of increased publicity and opening to competition.

From our experience, the way an entrepreneur handles the company building stage determines whether you will remain a dwarf or build a high scale corporate business. No business idea that has survived the start-up phase should struggle at the company building stage and that is why we are determined to start the difficult conversation with our investees on what it takes to build a company and the tough decision they should be prepared to take.

Take, for instance, Agri-tech or renewable energy entrepreneurs. Many of these founders come from backgrounds in agriculture or renewable energy, but they often lack the entrepreneurial, financial, or management skills required. It’s crucial for them to realize that building the company may not necessarily demand hands-on management from them. At times, they should consider allowing experienced experts to support them in running the operations. Additionally, some of the businesses are family owned that must be cushioned from the adage that the first generation builds, the second generation enjoys, and the third generation destroys through proper succession planning and building strong management expertise.

As we navigate the ever-evolving landscape of sustainable financing, it’s evident that our commitment to nurturing these businesses goes beyond mere investments. Kenya Climate Ventures (KCV) remains steadfast in its mission to support, guide, and empower these remarkable enterprises. We will continue to be their partners in progress, offering not just financial backing but also the expertise and guidance they need to flourish in the realms of climate action and resilience. Together, we will pave the way for a greener, more sustainable future for Kenya and beyond.