May the odds be in your favour, financially
Fans of the Hunger Games series will be familiar with the phrase, “May the odds be ever in your favour”. While most people may understand odds to mean luck, in truth, odds have nothing to do with luck. And not only can they be applied to a game of war, they can also be applied to real life. You see in mathematics, odds = probability and what is life but a sequence of numbers. Everything that exists is literally a number. From statistics which study behavioral patterns, population, litres, volume, distance, percentages, angles, probabilities, averages, binaries used in coding and so on. In the grand scheme of things, we’re all numbers, 1 in 5 million, 1 in 7 billion (you get the gist) and finance is the ultimate game of numbers. I’m neither a scientist or billionaire, but it’s pretty evident that those who acquire financial success aren’t necessarily the most cunning. They’re not the most brilliant or hardworking people on the planet either. Rather, they’re those who realized early the math of financial success and tilted the odds in their favor. So briefly, let us look at the basic advantages of the world’s richest: Born with great socioeconomic bearing Better looking or smarter than the average Attended good schools Charted their career according to the predicted needs Remained consistent Number 1 already rules out 90% of the world’s population. You see, according to UNICEF, only 10% of the world’s population fall into the category of being above average socioeconomically. Number 2 cancels out 75% of the world population. Only roughly about 25% or less of the world’s population are deemed to be above average intellectually and physically. Number 3 is more within your control. But it is linked to your socioeconomic bearing, intellectual abilities, and decisions made by your parents and guardians. That leaves number 4 & 5 which are actually 96% within your control. So forget what you think you’re good at (technology proves that the world is constantly changing) and what everyone is doing. Instead, look into what the future looks like. Think, what are the strongest sectors that will stand the test of time? What are the most financially sustainable sectors? And similar questions. Once you have figured what this is to you, factor in the skills that you possess. At this point, you’re probably saying “Wait! You said forget what you think you’re good at!” Yes, I meant like knowing how to make good hair or being great at drawing. Innate skills such as creativity, musical talent, numbers, patience, social skills and others are inherent and not easily learned. They are your talents. Now, with these points in mind, chart a future for yourself with timelines and remain consistent. Let’s face it, without the advantages above, the odds of you cashing out big time before 30 are a lot slimmer. So ladies, let’s manage our expectations and never give up!
The Empretec program is in Kenya. Here’s what you need to know
By now, it is no secret that the prestigious program, Empretec is now in Kenya. This came about after an intense week of the United Nations Conference on Trade and Development (UNCTAD) in Nairobi last month. After the formalities, it was announced that the Kenyan National Chamber of Commerce and Industry would be partnering with UNCTAD on this program. Mary Muthoni is the chairperson of the Women In Business committee at the Kenya National Chamber of Commerce. Empretec will mean a lot to Kenyan women as they get to benefit from the perks that come with being a part of the program. Some of these benefits are already being enjoyed by women in other African countries, like Zimbabwe. This will bring many benefits too Kenyan Motherland Moguls and we share some of them below. Capacity building Empretec offers a rich training program with a pool of 64 international trainers and 160 trained local trainers. These trainers are all about impacting personal development and business skills to participants who include women from the formal, informal and the employment sectors. Their curriculum is also tailored to international standards. Creating of life bonds amongst Empretec trainees Once a part of Empretec, you’re in it for life. The program follows up on its participants even after training as part of a lifelong relationship. Empretec sponsors follow up to see how the lessons learnt impacts the businesses of participants. It gets even better because you can always find a shoulder to lean on in the Empretec family. Networking and mentorship Ladies love conversations and it’s never a dull moment you can open up and create bonds. Empretec takes in women of all ages and orientation. So hanging out with other women in the program will always mean something new will be learnt. Also, Empretec has trained a large pool of women over the years since its establishment in 1988. Empretec’s presence in 37 countries means that when you join this community, you get to build a network with women from not only your home country. You’re part of a network of women from the rest of the thirty-six countries including Ethiopia, Ghana, Jordan, Botswana, Argentina, and Algeria. Smart girls know that their network is their net worth. Here you’ll need to be ready to establish contact with people from all walks of life. Be it the Motherland Moguls who have already established their businesses and are looking to offer seed funding for great business ideas or intelligent young women with brilliant ideas and that are looking for persons with expertise to partner with. Empretec is a well that keeps giving but never runs dry. Here, you get everything you need and all that’s required of you is to make it work. You’ll get to see that women from various developing countries face the same difficulties as you. And that the only way to emancipation is in finding long-term solutions for entrepreneurs. Locally certified trainers The availability of local trainers certified by the UN body means that members have access to the very best. With Empretec, you can have access to trainers with the know-how to get you through business challenges. This will help you confidently experiment with new ways of doing business . Obviously, the business field can be tricky, filled with uncertainties and other stress. You will need to have your hand held by the right people to navigate through these scenes and come out successful. Identifies and enhances personal opportunities Empretec’s training is personalized and depends on what stage you’re at in the business world. There will be people looking to venture into business for the first time and those with great business ideas needing guidance on breaking even. In addition, there are others already in the business scene and seeking to expand their visibility. Empretec will be a great space for Kenyan women to get answers and to learn how they can use their talent to make money . Eradication of poverty and social problems. Empretec encourages women to be social entrepreneurs. This means establishing businesses that seek to solve social, cultural and environmental problems. The purpose of these businesses is not just to make money but to also leave a positive mark on the society. Empretec encourages entrepreneurs to work towards achieving sustainable development goals even as they make their money. Awards and recognition Empretec honors her alumni at the Women in Business Awards. A Vietnamese lady, Tran Thi Viet won gold at this year’s awards for her company, Viet Trang Handicraft. Her company makes basket-woven goods from banana leaves, water hyacinth, corn leaves and bamboo. The company had a humble beginning but now exports goods worth $1000 million to the European Union. Viet Trang Handicraft went on to create employment for 250 weavers. This is the spirit of Empretec, to solve societal problems in our countries and at the same time make money for the entrepreneur. In summary, Empretec is the place to be for any woman seeking to make it in the business arena. The opportunities here are immense and ladies up for first dibs will definitely have more than enough to carry home. With all this said, it’s time for Motherland Moguls in Kenya to grab this opportunity!
Negotiating your way to financial success: 4 essential steps to effective negotiation
Women often shy away from negotiations for fear of being perceived as aggressive or of losing the offer. However, we tend to forget that the people we negotiate with are, sometimes, merely doing what they are hired to do – secure a deal at the best price possible! Indeed, at other times, the negotiator may be just be sticking to a strict budget or testing the waters. For example, I spoke to a Ventures Capitalist who stated that he could not trust an entrepreneur who never attempts negotiating an offer because such a person would most likely attract a lot of “lemons”, i.e. deals that no one wants. As such, when a potential business partner or employer offers a seemingly ridiculous price, do not take it to heart. Instead, Pause. Breathe. Negotiate! The goal of every negotiation process should be to negotiate effectively. Effective negotiation involves these key elements: Research Before commencing on negotiating a price, it is imperative that you conduct a thorough research. For example, if you have been offered a new job, you should embark on a prevailing salary research on the said job role. This information would come in handy and serve as a backdrop during your salary negotiations. On the other hand, if you are negotiating with a potential business partner, your pre-negotiation research might focus on determining your potential business partner’s interest and positions in relation to yours. This would greatly help create value during negotiation. Understanding your best alternative to any negotiation This is a great tool for preventing an undesirable outcome to a negotiation and guaranteeing financial success. For example, have you ever had those moments when just moments after agreeing to something, you blurt out, “why did I agree to that?” or “what was I thinking?” While this may be okay when negotiating with your siblings about who should do the dishes, this (hopefully) should never be the case when negotiating with a new employer for that dream job or with that new business partner. To this end, it is critical that before any negotiation, you determine your options (i.e. substitutes to your ideal negotiation outcome). To begin the process, first, determine your minimum threshold for the object of negotiation. For instance, if you are preparing to negotiate a new job offer and you are not willing to accept a salary below the current one, then your current salary is your minimum threshold. Secondly, on identifying your minimum threshold, determine your alternatives in the event you are unable to negotiate this with the new employer. Write these alternatives down in an order of preference. Your best option on the list should be one you’ll be happy with. Active listening It is also critical that you show some flexibility during negotiation by making a sincere effort to understand the other party’s points. This is can be achieved through an active listening habit. Active Listening ≠Hearing. John M. Grohol states that, “active listening is all about building rapport, understanding, and trust.” Active listening requires that you understand and make a genuine effort to understand the other party’s point of views. It requires: (a) Rephrasing what you believe you heard from the other party: This involves using phrases such as “to make sure I understand, you would like…”, “I understand you feel…” and “to make sure I capture your concern…” (b) Seeking clarity: During negotiations, it is also imperative that you seek clarity on fuzzy points. For example, if the other party has drawn a conclusion and you are unable to determine the logical steps to such a conclusion, seek to understand the underlying assumption. Examples of helpful phrases include: “You concluded XYZ, please can you explain the rationale?”, “what factors did you take into consideration in reaching that decision? etc. (c) Acknowledge the other party’s effort: It is good practice to acknowledge the other party’s sentiments during negotiations. This can be captured by using phrases such as “I understand you feel…”, “it appears that you are…” By implementing the different elements of active listening, you will capture the other party’s attention and help break down resistance (if any). Growing the pie (a.k.a. problem solving or value creation) Indeed, despite showing off superb active listening abilities, negotiations could still end up in stalemates. Even with a lot of patience, this is usually the time where people throw in the towel. But wait, not so fast! Do not give up yet, not without injecting a good dose of creativity into the process. So what exactly does injecting a good dose of creativity mean? This means looking for creative ways to make an unattractive deal attractive. The key here is to determine other factors outside your negotiation points like factors that the other party may be willing to consider (and vice versa). For example, assuming you own a sports drink company and currently seeking investors. On evaluation, your financial statements reveal the need to raise $60,000 and based on valuations, $60,000 equates to a 5% equity stake. Of course, you’d be confident to offer a lower equity stake for $60,000 as the minimum threshold for that percentage of the equity stake. If during negotiations, your preferred potential investor, who owns a sports club, offers $60,000 for an 8% equity stake. This counteroffer falls below what you’d expect but you would really love to have this investor onboard. Rather than end negotiations immediately, you could consider asking if she may also be willing to make your sports drink one of the choice drinks at the sport clubs or introduce you to other sports club owners who might be interested in serving your drink in their sports clubs. This could create publicity and boost sales for your sports drink. Some good phrases for these starting conversations may include “what if…”, “suppose we were to…” The agreement Once you have successfully completed negotiations, it is imperative that you put your agreement in writing. Writing an agreement is an essential step in ensuring that all parties are on the same page (indeed,
How to make money as an artist in Nigeria
You must be familiar with the image of the starving artist in Nigeria who doesn’t get recognition until she dies. Were you discouraged from studying the arts because it was believed to be an unlucrative industry? Or maybe because you were a girl? Well, what if I told you they were wrong? You don’t agree? Here’s my argument – if you’re artistically inclined, why settle for broke when this image below could just be you? In many countries across the world, artists make their living from selling art. However in Nigeria, it is often difficult for artists to break into commercial success. If you are still not sure how this article can help, stay with me. I’ll show you how to start making that money while holding on to your creativity. Create a unique brand Your brand needs to have a selling factor that is personal to you as an artist, be it your style, your market, your subject. Check out Francis Sule for example, who uses a highly illustrative style in his work. Have a day job A lot of artists hole themselves up in their studios expecting their ‘dope’ work to speak for itself. You see girl, your work isn’t going to speak without you doing some talking. A day job that lets you meet people and maintain a flexible schedule is a good idea. I work as a graphics designer in a sports entertainment company and that helps me meet a lot of people. Another case in point is Stacey Okparevvo who works as a yoga instructor. Hire a talent manager/art agent. Most artists are not really business savvy, they’re just not very good at marketing their own work! Think about it, if they were to be left on their own, galleries would probably be making far less money. We hear of veteran artists with agents and managers taking care of business, but most new artists don’t care for such ‘luxuries’. The truth is it is not so difficult getting people do to do these things for you. David Oamen is one of the few people who does something along those lines in Nigeria. Sell affordable art There is actually nothing wrong with selling affordable art. A number of artists are creating and selling affordable stuff. For example, Art of ajet, Mode, and lawyartist are examples of artists who sell art, phone cases and so on, online. You can do phone cases, T-shirts, logos, mugs, book covers, snap backs, the possibilities are endless. Network network network Ah, yes, artists network. Are you serious about making commercial hits? Then you surely have to go out and meet people. Ayoola has a huge network across the world and is a friendly chap. AAF and ArtContemporary also artists who organise networking events for other artists. Collaborate outside your field Again this may feel a little too tasking, but you need to go outside your comfort zone to sell your art. Collaborating with fashion designers and musicians is a great way to make collaboration work for you and bring in constant work. Set up a store at Jakande Yes, I said Jakande! What were you expecting though? A lot of foreigners and Nigerians visit Jakande with the intention to buy art. And if your art is affordable and your brand amazing, you’re sure to find great customers there. If I were you, I’d get someone to handle sales, and may even sell my work myself. Contact galleries across the world Galleries worldwide are usually looking for new artists. Don’t rest on your oars girl, contact them, be at the top of your game. Art21, Omenka, and Rele are some of the galleries in Lagos. Finally, the arts business might be a tricky one. I’m not sure what the defining factors of a ‘good’ art piece are but I do know that for every work you create, you’ll need to be authentic and true to who you are. Strive to create pieces that you actually love. And make lots of money along the way.
What do stakeholders look for in an investment?
“If you invest nothing, the reward is worth little.” – Richelle E. Goodrich Presenting your idea to stakeholders and asking them to make an investment in your business is not an easy task. Good news is, the answer to this is being prepared. The first step to preparation is trying to see things from your stakeholders’ perspective. There’s more and we’ve got you covered. Here are the five most important things that any stakeholder wants to know before making the decision to invest in your idea. Is your idea profitable? Stakeholders’ main concern will be whether or not they can get back their investment with a profit. You need to approach investors with a sound financial plan that proves that your idea has excellent financial prospects. What are your potential sources of revenue? What other investors have shown interest in your idea? Do you have the numbers to back you up when you say that your business can generate the kind of returns you are proposing? If you can convince stakeholders that you have done your homework and present an airtight financial plan, they will be more willing to invest in your idea. Do you have the right background and experience? Personally, I would feel much more comfortable entrusting my money to someone who has shown me their expertise. Stakeholders think the same. You should be able to prove to stakeholders that your odds of success are high because you have the right background and necessary experience. Have you overcome many obstacles and challenges to get to where you are today? Has overcoming those challenges made you a better leader and entrepreneur? These are the kind of stories you need to be prepared to share with potential investors. When pitching your idea, your passion and commitment should be evident. This inspires confidence that you have what it takes to breathe life into your ideas and stay on track even when things get tough. Is your idea unique? You’re part of a stream of people trying to convince stakeholders to buy into your ideas and invest in your business. Every one of these entrepreneurs believes that their idea is worth the investment. To really capture the attention of stakeholders you must come to them with an idea that they have not encountered before. Even if the idea itself isn’t unique, your approach to it must be. Think about Uber and Airbnb. Their ideas aren’t so unique, people have always needed taxi and hotel services, but they turned the market upside down by coming up with innovative strategies. By being unique, you can prove to your stakeholders that your idea or business strategy will make their investment worthwhile. Do you have a sound business model? Your business will start to display its strategic value as soon as it begins to generate profit. When engaging with your stakeholders you must be able to present an innovative business model. This is what will guide you towards making your business profitable. To design a sound business model, think about what it is that you bring to the market and how you can do it in a way that is unique and will set you apart from the competition. Think about what kind of model you should employ to ensure that your business remains sustainable. It is important to note that different stakeholders will be drawn to different attributes of your business plan. So, do your homework first. Study your stakeholders and then customise your business plan to show how you plan to address the issues that are most important to them. Is there a sizeable market for your idea? At the end of the day, whatever your idea is, you must be able to prove to your stakeholders that there are people on the other end that are willing to pay for it. Your market research should show your stakeholders that the customer base for your business is not only significant but will remain stable or grow, over time. Stability and potential for growth are two key characteristics that stakeholders look for when deciding on what ideas to invest in. Show your investors that you know who your customers are, and that you know how to engage with them consistently and effectively. We really hope that with this information helps you prepare a successful pitch for potential investors. Are there any other tips you would like to share with your fellow Motherland Moguls? We would be happy to receive and share your feedback and comments on this article.
Need capital to grow your business? UnoEth’s crowdfunding story
Hey there budding entrepreneur, are you finding yourself looking for ways to grow your business?Are you telling yourself, “If I just had more inventory or more capital, my business could…?” Me too! The search for ways to fund your business can be overwhelming and intimidating. There is a wide selection of grants and loans that can leave a business owner confused and unsure of which path to take. Yet, the number of grants that your business qualifies for may be limited and applying for a traditional small business loan may have you jumping through more hoops than you can qualify for. Pitching my business to an investor was another thought, I considered. But was I really willing to give up part of my business so early in the game? No. As a co-owner of a year-and-a-half old leather goods business, UnoEth, I found myself at a crossroads, weighing out our options for funding our young business. Scrolling through the Oakland Small Business Assistance Center’s website one day, I stumbled upon information about a non-profit organization called Kiva. Kiva is the first and largest micro-lending service in the world that has distributed $709 million over 10 years, in 85 different countries (almost 30 countries in Africa), among 1.5 million small businesses. I was delighted to find that many philanthropic foundations, Fortune 500 CEOs, small business owners like myself, and giving individuals contribute to many loans on Kiva. I was also inspired by the giving community on Kiva where lenders and entrepreneurs support one another to reach their goals. After reviewing the terms and qualifications, I thought, “Hey, I think this may be the right path for my business.” I applied immediately. Several days later, I received a call informing me that we had been approved and our private funding round started immediately! In the private funding round, each entrepreneur needs to have a certain amount of lenders contribute to their loan in 15 days in order to qualify to the next round. After reaching out to close friends and family, we reached our goal before the deadline. We are currently in the public round of our crowdfund and are over 20% funded—woo hoo! Reaching out personally in our network and social media has helped us gain momentum in raising funds. In addition, contributions from the Kiva network has greatly helped as well. With less than 3 weeks left, we are confident in reaching our goal so that we can support our artisans and vendors in Ethiopia, increase our inventory, and market our business. Click here to contribute to our Kiva loan! Should you wish to follow our example and start your own crowdfund, take some time to research. There are crowdfunds that can help take your business to the next level such as Kiva, Indiegogo or Fundable. Find out which is the best fit for your business and go with it. Don’t underestimate the power of word of mouth, social media, and the giving personalities of those who may be moved by your business’ mission as well. If you don’t take the risk, you’ll never know what amazing opportunities the adventure may lead!
Making sense of cents: Quick tips to improve your financial literacy
In an increasingly consumerist society it is very easy to get swept up in the barrage of not-so-gentle persuasions on how to spend your money. It ranges from the seemingly harmless dine-out options you yearn for all month long, the glitzy red bottom heels, to a new gadget that you just have to have. Financial literacy is muscle, the more you engage it the stronger and better skilled it becomes. It is important to practice intense amounts of self discipline. It sounds daunting, doesn’t it? Growing up, having a job, earning your own money and then be told be disciplined with how you spend it. Very few people are raised to understand finances beyond what they spend. It is much like not ever teaching children how to read then expecting them to be able to fully engage with a highly literate world as adults. No fair, right? Don’t worry though, help is at hand. We are going to learn this financial alphabet together. Here are a few tools that are easy to understand and implement, provided you’ve got that discipline we spoke of. Draw up a budget It isn’t as scary as it sounds. First, you write down a list of what you need to spend money on for the month. Then, you take out the cost of those items from the amount of your income. When you see just how you want to spend money you may reconsider what you thought was a necessity. Put together a list of your short and long term goals Whatever your goals, they need to be financed to become a reality. Arrange them in order of importance and find space for them in your monthly budget. While having to say, pay for a course module vs. a really expensive night out with the girls may hurt, in the long run it works out. Once you’ve graduated, you will be able to afford many girls’ nights out. Review previous month’s expenditure Once you’ve given your brave new budget a whirl, go over your expenses. Have a hard look at where you spent money wisely and where you did not. Look closely at where you spent most, check whether you spent money on things that tie into your short and/or long term goals. Then review your habits so that moving forward, you make decisions that give you long lasting value for your money. Save 10% of income It is important to save. Life happens, a family member could pass away, a car could be involved in an accident or a job may be lost. There are plethora of unforeseen circumstances that could hurtle themselves into one’s life. It is always wiser to be on the right side of caution. As your spending and saving habits grow, you could even increase that amount from 10%. It is key to note that knowing you can change your habits makes you the boss of your finances. Join a free online financial literacy class The internet is your friend. There are a many resources available to you, should you want to exercise that financial muscle we mentioned above. Ultimately, financial literacy is about attaining freedom, autonomy and peace of mind. There is a life that exists without ponzi schemes and loan sharks. It can be accessed the moment positive, informed decisions are made. In South Africa at least, there are 95 men for every 100 women, that means we ladies have more… um… manpower. The power to change the trajectory of African women is ours.
Ready to crowdfund using social media? Read this first
Crowdfunding is no longer the buzzword it was in 2006. Social media has undeniably taken over and changed the way we interact and connect online. Gone are the days when discussion forums were the go to tool for getting numerous opinions. Crowdfunding by definition is, “the practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.” This is basically asking strangers around the world to help you get your project or campaign off the ground by financing it as a collective. Not only does this mean you’ll have the necessary capital to get going, but you will also have peace of mind. Through the indirect market research crowdfunding provides, you’ll know that a community of backers believe in your service or product. The average person has 5 social media accounts, this means you have a few options on how to get your message across. Sometimes, all you need is a quick update on any platform and you will be flooded with an array of responses from your followers, catapulting your crowdfunding plans into the stratosphere. The next step is knowing how to harness the power of those platforms to bolster your crowd funding efforts. However, there are dos and don’ts when it comes to crowdfunding. You’ll need to ensure that people don’t view your suspiciously while ensuring long term success beyond the initial campaign. Build a good foundation before the launch 30% of your donations will come from people you know. With this in mind, you need a solid network of people you have already been connecting and engaging with online before launching your campaign. This could take months so make sure you are ready to put in the work. There is no shortcut to a strong social following of engaged users. Even more important is to ensure that you have the ‘right’ kind of followers. Through a great social media strategy, you can discover people who have shared interests. These are those will be more likely to support your cause. Don’t rely on one platform It’s very easily to rely on one platform. You may think your Facebook friends know you well and will support you but avoid putting all your eggs in one basket. Pick the right platform based on where your audience is, where you receive the most engagement and where you will be able to monitor things easily. Rather than using your personal profile (which could get spam-like towards your friends and family), start a separate page for your campaign and get people to like and follow it for updates. You can also have a separate page for yourself. This way people can see the woman behind the campaign, you never know, it will probably be one of many projects you undertake. Content is king You need consistent and engaging content in order to stay current and pull in the crowds. Your copy should be punchy, to the point and shareable in order for the word to spread. Use rich imagery where you can, as well as other content types such as infographics, videos, podcasts etc. Share updates and milestones in order to keep the excitement going among your backers. Keeping content consistent and frequently updating will ensure you stay on top of people’s minds. Don’t jump the gun Asking for money right away makes you seem greedy and desperate. These two words can taint your campaign. How you frame your requests also matters, no one wants to feel like you are begging them to send money your way. Refrain from, “Please give 30 dollars to my campaign.” Instead go for subtle ways of encouraging support such as, “Could you be my next backer?” Listing the amount of money you require in your update might seem daunting to someone who only has a little to give. Rather, post a link to your landing page where people can decide for themselves how much to give. At the end of the day, even if you don’t reach your required amount through crowdfunding, you will still have a great community of people who believe in your ideas. Don’t ditch them. Instead, thank everyone for their efforts and keep doing what hooked them in the first place (consistency, remember?). You never know when your next bright idea might come and you need them again. Have you run a successful crowd funding campaign? Let us know in the comments section below.
To disclose, or not to disclose: Striking the right balance when making a case for your business
As promised in Navigating The Catch-22: Successfully Fundraising For Your Business, this segment discusses, in detail, the nuts and bolts of confidentiality agreements. Also referred to as Non-disclosure Agreement (NDA), the NDA keeps certain aspects of what an entrepreneur will discuss or disclose with a potential investor a secret. While an NDA is an important document that helps protect your new venture’s confidential information, entrepreneurs should endeavour to strike the right balance between protecting their business secrets and sharing relevant information with potential investors to attract capital or other resources. 1. Timing is everything: Relationships come first Indeed, the know-hows of your new venture might necessitate the execution of a NDA. However, this does not mean that you should walk into a potential investor’s office for the first time offering a NDA as a substitute for a handshake. This singular act may, in fact, be counterproductive as it may scare away savvy investors! The use of the words “scare away” is intentional. Indeed, this choice of words begs the question, “Why would a potential investor be reluctant to sign an NDA, if they do not intend to breach the agreement?” A few answers are listed below: Most potential investors sit on numerous pitch competition boards. They encounter numerous entrepreneurs in their professional lives and are often asked to sign NDAs. Consequently, your NDA may be number 500 on the request list. As such, a potential investor’s reluctance to sign your NDA may not be because they intend to disclose your trade secrets, rather, it may be due to the practicality of keeping track of thousands of NDAs that they receive. From a practical standpoint, it gets really challenging to track thousands of NDAs especially where entrepreneurs submit pitch decks with similar ideas. Investors are not only attracted to an idea but to other factors such as your team, track record, probability of success etc. Given that NDAs are important legal documents, investors will often want their lawyers to review these documents before they sign. This costs time and money—two things that have huge opportunity costs for an investor. Notwithstanding, if you are concerned about a potential investor’s ability to protect your confidential information, you should vet them. This can be easily done by utilizing your networks to find out more about a potential investor. If you are not satisfied with the results of your due diligence, then consider safeguarding your proprietary information. You have to strike the right balance between keeping your business know-hows a secret and attracting investors. The free flow of ideas is an important factor in further developing your product and raising capital. However, you do not need to disclose every minute detail of your business to an investor if you do not feel comfortable doing so. 2. Practical consideration when reviewing an NDA When you get to the NDA stage, it is imperative that you carefully review the NDA, negotiate the terms, and participate in the drafting process. If there are provisions you do not understand in the NDA, don’t feel embarrassed asking about the intent of that provision. Below are a few items you should consider when negotiating your NDA: Ensure that the party that signs the NDA has the authority to do so. Check to make sure that individual is an authorized officer of the company. Ensure that the NDA details what the word “confidentiality” means. If the definition is too broad and contains everything under the sun, you might get a lot of push back from your potential investors. So, be practical about the scope of the definition! In the same light, your NDA should clearly explain what doesn’t constitute confidential information. Remember, exceptions are equally as important as inclusions. The NDA should also detail the manner of the disclosure that will be kept confidential. For example, will both parties treat oral disclosures as confidential information? It is also important that you carefully think through your negotiation strategy during the NDA drafting phase and that you negotiate from a practical perspective. Spending too little negotiating a NDA might create an impression that you are not a savvy businesswoman. This perception may hurt your negotiating power with your potential business partner in the long run. On the other hand, overly negotiating a NDA might make you appear as one who might be difficult to work with. It is essential that you find the right middle ground. As a general rule of thumb, entrepreneurs should not negotiate past three drafts. More drafts may be required for an extremely complex project. Treat the NDA negotiations as a pre-investment negotiation interview. During this stage, your potential investors are just getting to know you. This is your opportunity to show them that you are savvy businesswomen with excellent negotiation skills. During the drafting phase, be cognizant of who will have access to the confidential information. Will all employees have access to the information? What third parties will have access to the information? All these considerations are important as they let you know the individuals that will be privileged to the information you have provided. Your NDA should also list each party’s responsibilities or burdens. Ensure that the NDA contains remedies that are reasonable. Most importantly, research your potential investors or business partners to ensure that the individual or firm is a reputable and fair player in the market. To summarize, it is imperative that you carefully consider the timing of requesting an NDA. When it becomes necessary to execute a NDA, carefully negotiate your NDA and ensure that you understand every word on the agreement before you sign on those dotted lines. In the next segment, we will discuss the art of successful negotiation. If you would like insights on a particular topic, write to us! We are listening.
Navigating the catch-22: Successfully fundraising for your business
Once you have successfully registered your new venture and executed your partnership agreements, the next phase is getting your new venture up and running. For some, this might not be an issue as you probably have sufficient savings and contributions from family and friends to commence this new venture. For others, the fundraising process begins! Fundraising is not a task for the faint hearted, as it requires a high dose of patience, perseverance, tolerance, and politeness. However, while the fundraising process might require a heightened tolerance for frustration, it is imperative that you think beyond the fundraising process. For example, you should not accept a potential investor’s offer simply because that investor has agreed to give you all the funds you need to scale your new venture without thinking through the possible impact that potential investor may have on your new venture or ownership structure. This segment details some important points that you should consider during your fundraising process. 1. Don’t let the cat out of the bag prematurely During the fundraising process potential investors will ask you to share information about your new venture so that they can make an informed decision on whether or not they can provide you with the funds you require. Indeed, you have to furnish them with some of the information they seek. Nonetheless, it is important you strike the right balance between your fundraising needs and safeguarding your new venture’s confidential information. You have worked hard to develop your new venture and create a niche for yourself, as such, while you may be in desperate need to fundraise, you should also think beyond the fundraising phase by safeguarding your new confidential information. Moreover, of what use will the funds raised be if at the end of the fundraising process your new venture’s secrets has been disclosed to potential competitors who are now offering the same exact product you wanted to offer? You owe it to yourself and your new venture to protect your new ventures’ confidential information such as the “know-hows” of your new venture, the trade secrets, and all other information that makes your new venture unique. Thus, before you commence deep discussions about your new venture with a prospective investor, it is imperative that you sign a non-disclosure agreement (even if that prospective investor is a friend!). Your non-disclosure agreement should: (i) be executed by all parties that you want to be bound by the agreement, (ii) identify the right legal entities and/or individuals that are intended to be bound while also indicating that representatives and affiliates will be bound, (iii) provide remedy in the event of breach, (iv) include a definition of what constitutes confidential information, (v) address the term of the non-disclosure agreement and what happens at the end of the term, i.e. whether the investor has to return the confidential information to you or destroy it. Indeed, executing a robust non-disclosure agreement with an investor does not prevent such investor from breaching the agreement. As such, protect your new venture by taking the extra step of researching each potential investor to ensure that such investor is a respected and professional player in the market. 2. Think carefully, pick selectively You must carefully select an investor. Yes, the order of the previous sentence is intentional! In a world where financing is not infinite, entrepreneurs often feel very lucky to find an investor who is willing to invest in their business. While the feeling of immerse gratitude is not misplaced, it is imperative that entrepreneurs also carefully select their investor. Do your due diligence on your potential investors! Remember, an investor’s investment is never “free”! It often comes with numerous strings attached. Oftentimes, these strings are good strings in that they bring value to the new venture. For example, the investor may require you to adopt environmental, social, and governance policies, or anti-money laundering policies. Such requirements are valuable additions as such changes could translate to higher returns for your new venture. As such, before signing those dotted lines, entrepreneurs should consider the investor’s track record and reputation in the industry, the investor’s proposed economic rights and governance rights and whether such economic rights are proportional to the investor’s proposed investment, the factors the investor considered in arriving at its valuation. Think of your investors as long-time business partners—you may be married to them for a long time. So, think carefully and pick selectively! 3. Don’t jump to the finish line So you are extremely excited that you have selected the right potential investor and strongly believe that the potential investor will invest in your new venture within a few months. Indeed, you trust your intuition on this because your intuition always leads you to the right path. As such, you believe that the next logical step is to email all your new venture agreements (shareholders’ agreements, share purchase agreements etc.) to the potential investor while they conduct their final review process so as to streamline the process. Please Don’t! Wait until you hear from your potential investor that they have decided to strike out “potential” from the words “potential investors.” There is no point jumping to the finish line and investing resources by drafting agreements that may not be eventually utilized. Moreover, your investors might have a preference for providing the definitive agreements. To summarize, the fundraising process is not a task for the faint-hearted. While you may have an urgent need for working capital, you should also ensure that you safeguard your new venture throughout the process. The success of your new venture also rests on your ability to protect your new venture’s confidential information. In the next segment, we will discuss the non-disclosure agreement in detail. If you would like insights on a particular topic, write to us! We are listening.