VENTURE FINANCING OPTIONS FOR ENTREPRENEURS
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 place your deck of cards and weigh your options with regard to how you will finance your new venture. Indeed, financing your own business needs careful planning. In fact, you don’t do things ‘just like that’, but you need to think carefully about which option will best fit your business model. Given that there are a plethora of venture financing methods one can take up, I am going to zero in on a few that are pertinent to budding entrepreneurs, because these have their best interests at heart. In the same vein, business angels can go the extra mile in investing in new startups using their own hard earned money, unlike venture capitalists. People say that without the starting capital you are as good as being a ship without a radar. However, harboring these thoughts is clearly a lack of judgment because there are so many options one can choose from, if only they have the right kind of information at that particular point in time. For that reason, this is why it was rightfully put that knowledge is power and they couldn’t have said it any better. With the right kind of information on the tips of Zimbabwean entrepreneurs they can do so much in breaking new ground. That is following religiously the constructive disruptive doctrine that is popular in entrepreneurial talk.
First and foremost, I will dwell on business angels as 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 be called angel investors, angel funders, private or seed investors depending on which term catches your interest. Many a time 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 for seeing novel business plans taking the people by storm, whilst forming wonderfully on the market. Personally I believe it is exhilarating to be part of such a business that will be solving the general populace’s everyday social problems effectively.
Clearly, 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 researches such as that of William Hewlett and David Packard of the HP brand. As a result, he got even awards for the pivotal role he played, not forgetting that he is deemed 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 other words, he was a visionary which is a character trait that business angels need to have with the utmost help and hope that the ventures they are lending a hand in will become success stories eventually that will go down in history.
Having said that Zimbabwe and her African sister countries are sorely lacking in business angels 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 business angels closely are venture capitalists. With regard 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 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 start up but they weigh how much they will get before pooling 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 them 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 an another level when it comes to technopreneurship these venture capitalists are quite popular and their businesses are booming unlike here in Africa where all this is relatively new.
Nevertheless, in Zimbabwe strides are being made to conscientize the masses by venture capitalists companies such as the Vakayi SME fund which is focused on investing in outstanding entrepreneurs who are essential service providers. For all intents and purposes, the emergence of such kinds 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 any business person, for funds make for 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.
With bootstrapping you can get soft loans from your close circle of friends and family. Again, the beauty of this method is that when the new venture does grow to be a company that hits the market like a storm, then as the entrepreneur you will enjoy the fruits of your labor alone in full knowledge that you won’t 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.
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 spearheaded by tertiary students in Zimbabwe and 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 deals away with facing financial burdens. 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. Without doubt, funds make the world go around for entrepreneurs because instead of seeing hurdles they will see more opportunities for that is the 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 eats dog through trying other means to get funding. Thus, treasured entrepreneurs, always keep your ears to the ground in search for venture financing opportunities so that you do not miss anything.
To this effect, be proactive in all faculties of your life especially were financing is concerned.
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