Why I started company that does staff background screening in Kenya

While Marita Mutemi worked at American multinational conglomerate General Electric (GE) one of her targets was cost reduction as she sourced for professional services in the sub-Saharan Africa region. Marita ensured that background screening and due diligence for potential employees was made much easier.

“I noticed that most of my employer’s professional services were sourced from a US-based company and wondered why these competencies could not be sourced locally,” says Ms Mutemi

The same foreign company would then sub-contract another from Africa to do the work. So, she wondered why not get a company that could do it for the entire continent. But since she could not get one, she split the market into three regions – South Africa for Southern Africa, Nigeria for West Africa and Kenya for East Africa. She managed to source firms to do the work in Southern and West Africa but not for Kenya.

“I realised the opportunity and gap in the market and decided to localise that service,” she adds. And that was how she became the founder and chief executive officer of Peleza International Limited a firm that specialises in background screening and carrying out due diligence.

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Ms Mutemi admits to being driven by passion and desire for local sourcing in Africa, but it was not easy to leave her lucrative job for a venture that had zero revenue.

Bagging her first client

Mutemi says that having been in procurement handling professional services her services became handy at General Electric when she launched Peleza International in 2016. Her immediate inclination was the relationships she had built with human resource firms, and as she was transitioning from employment, she was transparent about it with her employer.

“The first people I reached out to were the HR sourcing firms I had worked with while at GE and they gave me an opportunity based on the trust,” recalls Mutemi.

“That’s how I got my first client even though it was not an easy journey because I had to convince clients,” she states.

Marita was rebuffed by one of the multinationals and she decided not to solely focus on multinationals as he shifted focus to small and medium enterprises (SMEs) after she had pitched.

“We started selling our services to SMEs and began gaining traction. It was not easy because this is a service that was not very well known and most human resource sourcing firms were only doing reference checks and not background checks,” recalls Mutemi.

“We were trying to convince a market that doesn’t exist so we had to do lots of educating during the early days but things picked up in 2018.”

Organic growth and business model

Having begun with 12 clients in 2016, Peleza doubled the numbers but 2017 being an election year proved tough as most companies do not recruit. It was a year of testing for their company.

“We now serve 269 clients in Kenya and Nigeria and support seven other countries in Africa with our staffing level growing from four in 2016 when we began to 33 presently,” Mutemi clarifies.

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Mutemi says that Peleza is now a market leader as they benchmarked against international HR agencies companies adding that they have also just incorporated in Uganda and the idea is to be in the whole of Africa even though they have not been aggressively doing marketing, something they plan to start doing.

The 36-year-old entrepreneur explains that their services are Pay As You Go (PAYG) model rather than subscription-based where one pays per search and so far, they have self-funded the business through revenues and grants for women-owned businesses.

However, she’s not ruling out fundraising to finance expansion.

Overcoming hurdles

According to the Strathmore University-trained accounting and finance entrepreneur, most business people would say capital is their main hurdle but for her, it was convincing companies to trust a company which is 100 per cent Kenyan-owned.

“We tend to have an inclination towards foreign firms but excellence had been instilled in me which worked in my favour,” she says.

Secondly, being in a space where they specialise in information verification, Mutemi says there is a time lag as they are not the primary data source holder. That turnaround time can cost someone an opportunity, which might lead to a client not getting the best candidate as different institutions take different durations to avail that information.

Co-founder dynamics and learnings

Mutemi founded Peleza with a business partner but the dynamics did not work and they went their separate ways. She then ran the company alone for a number of years before later bringing in the board of directors.

“Your values have to be aligned and know the motivation behind starting the company. I was looking at building a legacy, a company that can outlive me, and create jobs. You have to find someone who thinks at the same wavelength,” she affirms.

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She adds that having a board helps you bounce ideas because when running a business as a founder, you don’t get a sounding board.  One has to either get a mentor to be a sounding board, or a properly constituted board for clear direction. “It also requires discipline because you report to someone and that keeps you on your toes.”

For Peleza, it is about thinking broadly, big being visionary and having a strategy with the team at the beginning of every year and monitoring it monthly and quarterly.

Avoiding startup failure

Over the past few months, the country has witnessed a number of startups folding up even after raising significant funding and according to Mutemi, part of the problem is poor product market fit.

“Some entrepreneurs come to market with their own pre-conceived notions that whatever has worked elsewhere can work locally, far from it,” she points out.

She advises that as a founder, you must always remember why you started the organisation and that if you are not thinking about sustainability, you will miss it.

“In the startup ecosystem, growth versus profits has been hyped which is not sustainable in the long-term. You must create value,” adds Mutemi.

“You may have money in your account and feel the need to channel it somewhere and prove to investors that you are growing but it doesn’t work that way.”

Mutemi points out that some startups are building businesses not for the vision they initially had but for the investors to a point where the investor dictates the direction the company is going to take which was not the initial plan or vision.

“We realised that the subscription model cannot work in our market,” she concludes.