Adebayo Adewolu, the Managing Director of Trium, a venture builder with a focus on Africa, recently emphasized the necessity for startup owners to be open to exploring alternative funding sources to enhance their businesses.
He conveyed this perspective during the Nairametrics webinar centred around the Startup Act, which took place on Saturday, August 26.
Adewolu pointed out that the pursuit of alternative funding avenues becomes increasingly prevalent when there exists an objective to attract individuals who possess a risk appetite and can optimize their tax liabilities through investments in startups.
Additionally, he highlighted that the Startup Act does not differentiate between local and foreign investors, albeit some mention of foreign partnerships is present.
He stressed the considerable impact of fiscal incentives and underscored the importance of operationalizing them effectively.
He asserted that this factor can significantly influence the influx of investments, particularly as individuals begin to fulfil their tax obligations and recognize the associated benefits.
Alternative funding sources
Adewolu outlined a range of alternative funding avenues accessible to startups as follows:
- Bootstrapping: Adewolu highlighted that in this scenario, startup owners assume greater control over outcomes and risks. They possess the opportunity to substantiate their commitment through tangible evidence of progress.
- Family and Friends Funding: Adewolu acknowledged that while this source can be easily tapped into for raising funds, it necessitates a structured approach to prevent familial conflicts from arising. He cautioned startup owners against permitting this source to evolve into a potential family feud.
- Incubators and Accelerators: Adewolu expressed enthusiasm about the substantial capital potential available through these channels—essentially cash-like support. He noted that these sources not only provide financial aid but also extend opportunities for consultations and potential mentorship. Moreover, they serve as a gateway for startups to establish connections with industry leaders.
- Corporate Partnerships: According to Adewolu, within this funding domain, there exist prospects to collaborate with industry leaders who are willing to compensate startup founders for the utilization of their innovative ideas.
Adewolu emphasized that, more often than not, these funding sources seek individuals with ingenious concepts. Their primary interest lies not in acquiring equity but in fostering an environment for learning and growth.
In addition, he identified Grants as yet another funding option that entrepreneurs can pursue. Adewolu also sheds light on the presence of Venture Capitalists who actively seek opportunities to invest in new and unexplored ventures, indicating a willingness to take calculated risks.
He said:
- “These are options that are available, and, in my view, nobody will take you seriously except you show that you have got skin in the game and convince anybody that you can do great things in your sector.”
What you should know: While addressing the strategies for overcoming regulatory hurdles, Adewolu emphasized that the Startup Act emerges as a potent supplementary framework.
He underlined the significance of effectively putting the Startup Act into action, which necessitates a degree of political influence.
He also highlighted the transformative nature of the Ease of Doing Business Act. Considering this, he suggested a collaborative approach between the secretariat of the Startup Act council and the Ease of Doing Business secretariat.
This collaboration, according to Adewolu, holds the potential to usher in a sector-wide transformation.
watch the full video here:
