How Tanzanian entrepreneur overcame barriers to sell Kopa Gas for $25 million
What you need to know:
- Mr Mendes' journey began with a personal problem: running out of cooking gas and being unable to afford a refill costing Sh54,000.
Dar es Salaam. Andron Mendes, founder and CEO of Kopa Gas, shared the challenges he faced in building his energy startup, which was sold for $25 million in 2020.
Speaking at a panel discussion organized by the Tanzania Start-Up Association (TSA), Mr Mendes detailed the bureaucratic hurdles that nearly derailed his business.
One of the most significant challenges, he said, was the prolonged permit process in Tanzania, which made it difficult to attract investors.
At one point, he even had to lend money to an investor to keep the deal alive.
Despite these obstacles, Kopa Gas emerged as a success story when it was acquired by Circle Gas, a UK-based company specialising in clean, and affordable energy.
The acquisition marked a breakthrough for Tanzanian startups, showing that they can attract global investors.
Mr Mendes' journey began with a personal problem: running out of cooking gas and being unable to afford a refill costing Sh54,000.
Realising that many Tanzanians faced the same challenge, he sought a solution to make gas more accessible.
"I wanted to help ordinary Tanzanians buy gas in small amounts," said Mr Mendes.
His idea was initially dismissed as impractical, but Mr Mendes persisted and eventually invented a gas meter that could be mounted on gas cylinders, allowing users to purchase gas in affordable, small quantities.
In 2015, he produced a few meters and tested them in the market.
He then sought international funding, which enabled him to improve the technology.
However, his biggest challenge was raising the capital needed to scale up the business.
Mr Mendes found it easier to connect with investors in Kenya, but competition soon grew as some people copied his idea.
“In Kenya, startups can raise over Sh20 billion in their first year, but I struggled to get even Sh100 million,” explained Mendes.
He discovered that many investors avoided Tanzania due to complicated regulations, particularly those from the Fair Competition Commission (FCC).
“FCC clearance for foreign investors costs Sh25 million, which is a huge burden for small startups,” Mendes said.
Despite laws that allow for exemptions if a business benefits society, the process prioritised fees over impact, adding further barriers for new businesses with limited resources.
In 2018, Mr Mendes secured a loan to pay the FCC clearance fee, raising $2 million with his team.
This funding helped Kopa Gas grow and gain customer trust.
By 2020, the company had reached a significant milestone, attracting the attention of Circle Gas, which acquired it for $25 million.
Mr Mendes believes that the Tanzanian government must do more to support startups by creating the Startup Board to streamline the clearance process and improve the business environment.
“We need to review our local laws and make Tanzania more attractive to investors,” he said.
A more investor-friendly environment, he added, would help startups thrive and attract foreign capital, as seen in neighboring Kenya.
Mendes’ story is one of resilience, innovation, and determination.
His success offers valuable lessons for aspiring entrepreneurs in Tanzania and beyond, demonstrating that overcoming barriers is key to turning an idea into a global success.
