Editor’s Note: Nicholas Haralambous was the co-founder of mobile social network builder Motribe, which was recently acquired by Mxit for an undisclosed sum. The company was started two years ago with Vincent Maher and was invested in by local venture capital company 4Di Capital. He also recently started an environmentally friendly online sock shop.
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This is the second post in the series: “things I learned building a mobile startup in Africa”.
There are few things that you should focus on when building a company. Things like customer growth, product development and revenue growth. Early on in the life of a business, raising funding should not be one of the focal points for a founder.
This might seem counter-intuitive to some but in truth, raising funding is an unwanted distraction. I’m beginning to believe that funding should be used for growth and only seldom is it worthwhile raising funding for early stage startups. Research and development is one fantastic justification for early stage startup funding. Even then, however, it’s rare to find a company or people who are genuinely researching a game-changing technology that justifies millions of dollars of funding.
Most businesses need a solid business model with a trajectory towards not only revenue but profit. Without this, there are very few things that can help you and more often than not money is not one of them.
In the exceptionally rare cases like a Twitter or Facebook, funding can be raised off the back of the theory that when there are enough users the revenue model will emerge.
In truth the only thing that searching for funding did for me was take my eye off the business ball. I neglected to pay attention to staff when they needed my input the most, I handed over key clients relationships too early or too late and went after the big raise. What I should have done was hunker down and gun for more business, more sales, more clients and work through our revenue model more efficiently.
My ego also took a battering while on the funding hunt. For every potential “maybe”, possible follow up email, response or kind word I received ten of the opposite. When it comes to opinions, everyone has one and most of them are uninformed but sadly if that opinion is coming from someone who you want to take money from, you have to listen. So I sat and listened.
I listened to people tell me why my business was too big, too small, too far into Africa, not in Africa enough, too mobile, not mobile enough, too social, not social enough. There were no consistent responses and no constructive criticism.
Ultimately the decision to halt the hunt for funding was the smartest move we made. It allowed me to settle into my role in the company, focus on nurturing the right environment for my team and clients and gain ground in the key performance indexes of the business.
Let me end off this post by saying that funding is not success but more often than not the beginning of failure for many startups.
