@kenyanlyrics, a very good and noble idea and actually some of the most successful silicon valley companies came up due to angel investors. The only setback in Kenya is a pool where you can find these guys, you'll realise that in developed economies there are forums where entrepreneurs can relay their ideas. I think the best option in Kenya are business incubators which will greatly reduce the number of start-ups that fail during their first year of business.

I believe Wazua has inadvertently set up such a pool. Watu hapa ni wadosi, in case you haven't noticed. And setting up a section for pitching products is just a few clicks away...

@Erifloss the process you have described is very similar to stock analysis where you look at the company's fundamentals, sustainability etc. That's why I believe Wazua is an excellent place to get some angels, because it involves basically what you do when buying stocks but on a much smaller scale

I think an important question here concerns the level of control desired by both parties.
Some business owners want to take their business to the next level but are short on funds. Getting an angel investor means that you cede some level of control over your business. Which gets tricky if the relationship is not clearly spelt out. Having started and grown your business, you understand its ins and outs. You do not want a situation where your angel is vetoing things left right and center because they’re “protecting there investment”.

If the relationship on the other hand is structured such that the angel is totally uninvolved, it sounds like a loan. More information on how this is usually worked out practically to cater for the interests of both?

LOL, KenyanLyrics, buddy, I'm not saying that I would charge interest (a vig) on the investment. I'm just saying that I want my end back. Please understand, if I was going to risk putting my time, money, and sweat equity in- which is a risk- then I want my initial investment back. In addition, if I was just going to stand back and offer no time or sweat- just tossed the money over the fence and demanded returns, remember: most angels and VCs want 80 to 90 percent of the equity, and VCs want to install their own management team, at least here in the West. I think THAT is unfair. With me splitting it down the middle 50/50, I think that it's not unreasonable for me to get the cash that I put into the venture first... maybe even use it to buy more than 50% equity. Getting a manager like myself isn't cheap at all, and one gets my operational capabilities and corporate communications work for free.

This isn't like stocks. Investing directly in a small business is much riskier and unregulated. There's no vetted management team, board of directors, access to capital etc. and the risk is all on one or two people, meaning that the stock won't dip, the company will just CRASH (or CRUSH if you like sheng) if things go wrong.

It's just like the record industry... an artist signs, and the money spent on the project is recouped first, because the label put up the money, time, and sweat to make the album, in addition, the label gets about 95%... I only want 50. A loan shark is someone that sets you up in a situation where the (variable) interest rate is so predatory that you can't ever possibly pay off the principal, and where defaults equal broken legs. I think i'm a loan sweetheart, not a loan shark. ;)

Hill

It's possible If I thought that my partner was bringing a truly equal amount of experience, effort, work, capability, and value, sure. It's all negotiable. I could do an Ertegun/Abramson set up, like Atlantic Records back in the day.

For instance, if I partnered with a Nairobi-based promoter that maintained a blog, individual artist websites, handled the local radio stations and made sure songs got played, recruited talent, threw promotional events, typed up press releases, managed artists and repertoire, made sure I got lyric sheets, arrangements, and ensured that artists showed up on time, I'd cover the costs of the album production, mastering, pressing, and distribution while they covered the promotional costs. 50/50 split. But the promoter would really have to beat up the street and have local connections.

As an example, all theoretically, if the right partner came along for that type of venture, of course. Same with film.

And lets be honest, if someone comes to me and they are THE GUY or THE LADY that has the inside connection that can get the wheels turning on a lucrative contract, and I can't get "in" any other way, what else am I gonna do, but meet them squarely in the middle?

Hill

There are obviously those who spoil the name of entrepreneurs by engaging in such criminal activity, but I believe that a good relationship between investor and entrepreneur can lead to drastic growth of a company. Add to that the fact that with angel investing, you only need a couple of big hits to get your return, and you have a reduced risk on that basis

I agree that the risks are there, but that doesn't mean that you should keep off completely. The favourite industries of wazuans(stocks and real estate) are littered with HUGE risks but that hasn't prevented you guys from throwing most of your savings there. Savvy businessmen know that high risk = high return and the best thing about investing in business is that you only need one huge success to make it big.

The way you build trust in a business community is by strategic partnerships. Most entrepreneurs in the West that receive any serious amount of funding do so by who they know, and who will vouch for them. Such deals are made on a golf course, not from a loan application.

What I would recommend is the formation of strategic partnerships- guilds- where Kenyan entrepreneurs can pool resources and share ideas. Don't be afraid to share. For instance, if you have thirty C# developers reading this board, then, before one dollar, sorry, I mean shilling, is made, they should form a group- a registered company, and elect a board of directors. Then, each person uses all their contacts to get a small tender or even donate a project. Then, each person donates an hour or two a week of programming skill to the effort. The point is to build a company... a black African company... that is experienced, well staffed, respected and that can perform at a global level. Money is not the primary motivator just yet, and at two hours a week, we all can afford it. Guilds can barter with other guilds... The Server Hardware guild can repair servers for the programmers... the programmers can write code for the mobile phone guild... the phone guild can unlock phones for the media artists, who can write music for the web designers...etc. And with a two hour commitment, one can participate even if working or going to school full time, and most of this can be done online. These guilds can even train each other!

By the way, this is PRECISELY the root of how India became such a force in IT. I've been working Fortune 500 since I was a teenager, and I'll tell you: Indians can start a low-level IT job knowing almost nothing, and within 6 months, be able to carry a more senior position. How? Because once all the blacks go home at 5pm, the whites leave at 6pm, and the orientals leave at 7pm, there are the Indians, still in the office. But they aren't working on "work", they are cross-training each other in their respective guilds. Bringing the "new guy" up to speed, or helping someone else finish their days work. Because they know... If one succeeds, ALL succeed. That, and they are firmly connected with their folks in the diaspora. An Indian guy could get a programming job here in the states making $60/hour, keep half, send half home to programmers sitting in India to do ALL the work, while he just collects money. Maybe the guy doesn't even know how to code whatsoever. No matter, he talked his way into it, and his code looks good... of course it does... 10 people are doing it for him back home. He's created ten jobs from his one.

Best,

Hill

I have read all the posts with a lot of zeal and expectation, and yes, it was worth it. The "angels to be have spoken", but where are the beneficiaries? None have spoken.

In the whole conversation, i ask myself where i stand. I am not an angel yet, i haven't met my big break, so i can baptise myself, an angellee.

And that puts me in a position to ask myself a second time, am i ready to be an angelee? What is my goal, my path, my business plan? How ready am i as a young person to take up the challenge? We young people keep saying that opportunities are hard to come by, that if only i had the degree, the mentor, the capital and so on.....i can only say.....thanks for challenging me.