Adekunle Adebiyi is the Vice President of MBO Capital Management Limited with over 15 years in investment banking, consulting, telecommunications, operations management and private equity. On Tuesday 9th of June, he joined us for ‘The Soaring Series’ on Ingressive Capitals’ Instagram Live chat in conjunction with The Spark NG.
This session with Adekunle was very insightful and we had so many notes from it. Some highlights from the chats were;
WHAT INVESTORS LOOK OUT FOR WHEN LOOKING TO INVEST IN A BUSINESS?
First is the passion, commitment and professionalism of the entrepreneur; when people talk about investing especially at the startup or SME level they invest more in the people than the business. They are giving founders money to say I understand your passion. and I am willing to support you. At this point, it is the duty of the entrepreneur to maintain an open dialogue with investors to keep their mind at ease and maintain trust.
Next is the market size; how big is the opportunity? You might have certain skills that are suitable for the market but if the market size isn’t big enough to yield outstanding returns, it would not interest investors.
When you go for meetings with investors, don’t go there with just an idea, it has to be something you have been running for quite a while. They would want to see you have a proper account, corporate governance, CAC documents, these are things that convey to investors that you are serious and it isn’t just a hobby.
WHEN IS THE RIGHT TIME TO RAISE CAPITAL?
To start a business, you need capital. So the next question should be, when next should you raise capital? Your first capital should be enough to establish proof of concept. Proof of concept means that there is a market out there for whatever goods or services you are selling. You want to raise enough capital to get to a point where complete strangers give you cash in exchange for the value you offer and to get the building blocks of your business in place. At some point, if you are doing this well you will need to raise more capital.
WHO TO RAISE CAPITAL FROM? In the beginning, it is usually friends and family, people who know you, your skills, have watched you horn those skills over time and are able to support your dream. When investors see some commitment from people that know you, it gives them confidence on what you are trying to do. There are a lot of companies like Ingressive Capital that can help at those seeding stages and incubators.
HOW MUCH SHOULD YOU RAISE? Capital is scarce and expensive. If you have more cash than you need and it is just sitting down in an account, that is a huge cost. Even if you place it in a fixed deposit, the return is not enough to cover the cost. Raise enough money to improve the stickiness of your business.
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