After a very long break, the first installment for the enspire #BizClinic for the month of March successfully held; the first this year. This edition was quite peculiar with respect to number and category of participants. Could it have been the topic of discuss or the long break? we leave that for you to decide. Bottom-line veni vidi vici.
This months edition featured sessions on Financing for startups with the Tag Line “Splitting the Pie: Startup Funding 101” and was handled by Adeola Bojuwoye; CEO of Round-stone Consulting.
His discussion commenced with educating participants on the various stages of startup, highlighting the characteristics, expectations and challenges as a startup grows from ideation to a full blown company. With emphasis on the growth, he critically buttressed the point that funding though instrumental in growth, can actually kill a startup. This he expatiated on stating that additional funds in a startup can derail priorities and focus leading the startup growth in a direction that differs from what it initially stood for. An advice on this therefore was to withhold getting funding as a startup as much as possible till the business form has been fully defined and implemented.
Moving further, he gave scenarios of startups getting funded and losing their business. To explain the prelude of this, he educated participants that investors literally overhaul the system when they bring in funds as they can to a large extent (depending on the quantity of funds they bring in) influence/alter the team, operations and values of the business. The aim of the investors is to get good value for his money and he tends to set the startup on over-drive, turning eery facet of the startup into a business, thus destroying the values it initially stood for. A word of note here
“The more investment you get, the less control you have over your business”
Our anchor also took time out to enlighten the participants on best practices in addressing/signing MOU’s. He recommend apt study of terms of agreements till advance understanding is attain. Building on this, he recommended several opportunities for financing startups rather than investor funding; admonishing startups to seek opportunities that would build their business in the process rather than just injecting funds. An example being the case of getting hold of a service request on their product upon completion of which would take their business through alot of experience and revenue generatiion ultimately. In the end, they would be more resilient and would have generated more funds in the process.
In response to questions he largely advised against loans from banks. This would mean you working for the banks rather than your business as every cent generated would be use to finance your loan. Also the interest rates being offered plus the inflation rate could be detrimental to your business. Therefore it is wise to stay clear off loans till you’ve crossed the 5 year mark and have a regular cashflow.