One open secret about wazua is that we have very affluent persons on here. However, you guys have a fixation on investing in the largest businesses by way of stocks, which is understandable. However, have you ever thought of investing in early-stage businesses as angel investors? Yes, the risk is higher, but of course the return is higher as well. And you could use the same tactics used in stocks of spreading risk over many emerging industries. There is also the satisfaction of not only creating wealth, but of helping a young citizen further the economy by creating business and employment. What do you guys think of this idea of becoming angel investors?

http://en.wikipedia.org/wiki/Angel_investor

Hello KenyanLyrics,

It's certainly a good idea. In the the US angel investors want 80 to 90% equity. I think the title "angel" can be a bit misleading.

The question for me would be would I want to be an angel investor, giving someone start-up money, with a fairly hands-off approach, or open a venture capital firm where I would court investors, do roadshows, and pool investors money to invest in promising enterprises, and then take the 80 to 90% while installing my own management team, or whether I would just want to be a micro-lender.

For me personally, I'd rather just partner with a business or an entrepreneur, or join a management team at the C-level that I truly believe in, and can work with day-to-day.

If a guy or gal came to me and said, for example "look, I know I can get this tender to install smoke detectors in the new Airtel building, but I just don't have the money to buy the smoke detectors, ladders, wire, tools, and to hire a few people to put them in" then I would look into it, check all the paperwork, come to an understanding- 50/50 no slacking. We're married now. And I'm no walk in the park. And one would have to understand what that really entails. And then I'd do the research, shop around, order the equipment and even manage the installation- we do all this TOGETHER. And we get paid TOGETHER, while enabling the small business to be able to finance the next project from company money. And yes, I'd want my initial loan to the company paid back once it is on its feet while remaining a partner. That's what I'm looking for.

The thing that has to be remembered through any of these options is that capital is tight in EA, from what I can see, so there is no room for scams, mistakes, failure. Those things shall not be tolerated.

Best,

Hill

@Jasonhill, agreeing with you on this and actually the business or idea should check out, be able to if financed generate good profits & stable cashflows and most important should be proprietory. Simply the entrepreneur should have done enough research and groundwork.

And @jasonhill when you specify that you want your money paid back within a certain amount of time, you get out of angel territory and into loan shark territory. We already have loan sharks in Kenya, too many of them in fact. Angel investing is about putting your money in, and sinking or swimming with the company, just like stocks. You can pull out if things go haywire, just like stocks, but putting a requirement that your money must be paid back in full regardless is where the line must be drawn

@For Sport this has always been a tricky issue, especially considering the risk. However, I think there is one simple rule that can be followed to answer your question: If at the point of asking for funds, the business owner has established a profitable model and is merely looking to expand, then I believe it is safe for an investor to leave control in the hands of the business owner. But, if you have a situation where the business owner is looking for seed capital to just start running the business, or if a profitable model has not been found yet as of the time they meet with the investor, then control ought to be ceded to the investor