By Abigirl Phiri
STARTING a new venture especially in a turbulent environment like Zimbabwe is not a walk in the park. As an entrepreneur you need to carefully play your deck of cards right and weigh your options with regards to how you will finance this new venture. Indeed, financing your own business needs careful planning that is choosing the best option that will fit the business model.
Given that there are a plethora of venture financing methods one can take up, l am going to zero in a few that are pertinent to budding entrepreneurs. Furthermore, people commonly talk that without the starting capital you are good as being a ship without a radar. However, harboring these thoughts is clearly a lack of judgment because there are so many options an entrepreneur can choose from if only, they have the right kind of information at that particular point in time.
With the right kind of information on the tips of Zimbabwean entrepreneurs’ fingers, they can do so much in breaking new grounds. That is following religiously the creative destruction doctrine that is popular in entrepreneurial talk.
First and foremost l will dwell on business angels as a source of venture financing that a 21st century Zimbabwean entrepreneur can opt for. This is a term that was formed because the “angel” is a certain individual or company that will come in the life of the entrepreneur as a God sent gift.
Furthermore, they can accordingly be called angel investors, angel funder, private or seed investor. In the same vein, business angels can go an extra mile in investing in new startups using their own hard worked money unlike venture capitalists.
Many a times they do not just avail their finances for the mere need for profit but for fun as well. Interestingly, most of these business angels do get their hands on the deck in the early stages of the venture because of the passion they have of seeing novel business plans take the people by storm whilst forming shape wonderfully on the market. Personally, l believe it is exhilarating to be part of such a business that will be solving the general populace’s everyday social problems effectively. Lucidly it is good to be associated with the brains of such initiatives.
Many if not most of these business angels, it reminds them of their youth and how creativity and innovation will never face a natural death on the face of earth. Thus, these angels do immerse themselves in such ventures for the love of it and from the goodness of their very souls.
A good example is that of Professor Frederick Terman who helped out in the birth of the Silicon Valley. In addition, he was instrumental in helping his PhD student researchers that is William Hewlett and David Packard of the HP brand. As a result, he got several awards for the pivotal role he played no wonder why he was christined the Godfather of the Silicon Valley.
He was a dedicated business angel who was very much interested in ensuring that high tech ventures do grow and become forces to be reckoned with in the world. In other words he was a visionary which is a character trait that business angels need to have, hoping against hope that the ventures they are lending a hand in will eventually become success stories that will go down in history.
Up to date, we have other business angels such as Jeff Bezos who is the founder and president of Amazon.com. Having said that, Zimbabwe and her African sister countries are sourly lacking in business angles who are risk takers to the extent of financing new entrepreneurial ventures for the love of the doctrine and seeing problems being solved for the betterment of humanity whilst propelling the nation’s economic development to greater heights.
Following closely business angels are venture capitalists. With regards to these individuals or companies they are solely interested in the profit that they will get in return.
This is why they are known as private equity investors who provide companies with high growth potential in exchange for an equity stake. Quite frankly this is why usually they are attached to a venture for a limited period of time that suits them and follows religiously the signed contractual agreement.
Accordingly, venture capitalists mean business and expect good profit returns. In most cases, they do not just immerse themselves in any startups but they weigh how much they will get before pooling in their money usually in the growth stages of a high-tech business venture such as those in ICT or biotechnology.
As an entrepreneur, one can contemplate working with venture capitalists because one thing you are guaranteed is the level of their seriousness in ensuring the funds are in place. This is why in developed countries like America and China who are at another level of development when it comes to technopreneurship these venture capitalists are quite popular and their businesses are booming unlike here in Africa which all this is relatively new serve for a few enlightened individuals.
Nevertheless, in Zimbabwe strides are being made to conscientize the masses by venture capitalist companies such as the Vakayi SME fund which is focused in investing in outstanding entrepreneurs who are essential service providers. For all intents and purposes, the emergence of such kind of companies means entrepreneurially we are headed in a good direction. It is no secret that not having enough capital can give a headache to either an entrepreneur or even any business person for funds makes everything go smooth sailing.
Also, bootstrapping can be another way to finance a new venture for an entrepreneur. This is one of the easiest way to finance one’s venture without much hassle for you can get the money from your own friends and relatives or better yet from yourself. The bottom line is that there are not that many external parties involved in your start up.
Consequently, with boot strapping you can get soft loans from your close circle of friends and family. Again, the beauty of this method is in that when the new venture does grow to be a company that would have hit the market with a storm then as the entrepreneur you will enjoy the fruits of your labor alone in full knowledge that you will not share your profits with either business angels or venture capitalists.
Thus, in other words you will owe your success to yourself and the countless sleepless nights you put in the hard work that is your sweat, blood and tears although not necessarily in that order. A good example of an entrepreneurs who bootstrapped his own company quite successfully is that of Steve Jobs the founder of the Apple brand inter alia.
Apart from the aforementioned methods of financing a new venture for an entrepreneur, one can also get it from government subsidies especially through incubation hubs. This is a popular venture financing method for new startups that are spear headed by tertiary students not only in Zimbabwe but the world at large.
Truth be told, it makes everything easy for the technopreneurs for not only does it avail them mentorship opportunities but it also settles away their outstanding financial obligations. Coherently, there are various ways to kill a cat but the crux of this article is on the first two venture financing methods.
If more is done in ensuring that we have these in abundance in Zimbabwe then the entrepreneurs are headed for the well needed success and greatness in whatever line of business they are entailed in. They will see more opportunities for that is the every day to day life of an entrepreneur, always being on the lookout for the next big thing.
Adding to that, you do not give up on the first try for failure is a stepping stone to success. At the end of the day, a true entrepreneur must have a sixth sense of maneuvering in the jungle where dog eat dog through trying other means to get financing. Thus treasured entrepreneurs, always keep your ears to the ground in search of venture financing opportunities so that you do not miss anything. To this effect, be proactive in all faculties of your life especially were venture financing is mostly concerned.