A startup, in its broadest sense, is a young, ambitious company that is in the initial stages of its business operations. These companies are typically driven by a unique business idea or a novel product or service, which they believe has the potential to disrupt the market. Startups are characterised by their innovative approach, high growth potential, and scalable business model that can rapidly expand to meet the increasing market demand.
One of the most critical aspects of a startup’s journey is raising capital. This is primarily because startups, in their early stages, often operate at a loss due to substantial upfront costs and limited revenue. Therefore, they require external funding to sustain their operations, fuel their growth, and navigate the competitive business landscape. This funding can be used for various purposes, such as product development, marketing, hiring talent, and expanding into new markets.
Moreover, acquiring customers is a significant reason why startups seek funding. Customer acquisition is a costly process that involves marketing, sales, and customer service efforts. Startups need to invest heavily in these areas to attract and retain customers, which is crucial for their survival and growth. Without a solid customer base, startups cannot generate revenue or prove their business model’s viability, making it difficult for them to attract further investment.
Enter Stone Atwiine, the Ugandan entrepreneur who has defied the odds, amassing 500,000 users for his payment app, Eversend, with a modest $1.2M in funding. This feat attracted a lot of buzz among founders. It also opened up a long overdue conversation about the need for founders to use funding efficiently. This conversation has become even more prominent as the global funding winter continues. As per The Big Deal, Ugandan startups raised $58m between July 2022- June 2023, which is a $36m reduction from what they managed at the same stage in July 2021- June 2022. But Uganda isn’t the only startup ecosystem that saw a big downturn in funding during that time. The likes of Nigeria, Kenya, and Egypt all saw funding decline as this chart shows.
So how did Stone Atwiine Use the Funds efficiently?
Eversend was founded in 2017 by Stone Atwine and Ronald Kasendwa, two Ugandan men, and Emma Smith, a white American woman. Stone was inspired by his story of sending money to his grandmother who lived on a farm in Mbarara. She had to board a bus for an hour to reach the nearest Western Union branch. Eversend provides cross-border money transfers, bill payments, virtual cards and crypto investments. The startup has operations in Uganda, Nigeria, Ghana, Kenya, Rwanda, and South Africa, and recently launched in Cameroon. Users can send money from the United Kingdom, and other European countries. In a tweet, Stone revealed that the startup had surpassed 500,000 users with just 1.2m raised in funding.
In a Twitter thread, Stone explained the ways he grew his startup users on a shoestring budget. Atwiine’s first secret weapon is his unwavering commitment to data-driven decision-making. He has a laser-like focus on unit economics, closely monitoring the cost of customer acquisition and the revenue they generate. This data-centric approach ensures that every dollar spent is a dollar that can be confidently recouped. If the metrics don’t add up, Atwiine doesn’t hesitate to pull the plug on expenditure.
Understanding the market is another cornerstone of Atwiine’s strategy. He has a deep and ongoing comprehension of the African market, recognizing its unique response to incentives and its stark contrast to the blitz scaling style of Silicon Valley. Instead of luring users with free money, Atwiine opted for a higher pricing structure, sharing cost savings with customers by reducing prices. This approach has fostered a sense of loyalty and trust among Eversend’s user base.
Running lean is the third pillar of Atwiine’s strategy. With a lean team of 25 and a major office in Uganda, supplemented by co-working spaces in Lagos, London, and Paris, Atwiine keeps overheads low and directs resources where they are most needed.
Finally, Atwiine’s ‘revenue-first’ philosophy has been instrumental in Eversend’s success. From the outset, the company focused on Foreign Exchange services, a sector with substantial revenue potential, rather than plain banking services. This approach has allowed Eversend to identify its strengths and avoid offering services that could compromise the user experience.
While Atwiine acknowledges the potential benefits of substantial external funding, he is cautious about securing it prematurely. He believes that additional capital will be required to scale and innovate, but he also recognizes the risk of waste, particularly given the complex market lessons that Eversend is still learning.
Atwiine’s story is a testament to the power of sustainable growth, deeply rooted in data, market understanding, and financial pragmatism. His journey offers valuable insights for other entrepreneurs navigating the challenging terrain of startup funding and growth.