Too many accelerators – Too little accelerating

Editor’s note: This post was initially a comment in response to a TechCabal article

Fora just joined one of Canada’s top accelerators (Extreme Ventures) and they have done pretty well for us. We gave them a 6% stake and we are being pushed fucking hard.

I hardly have time for my usual bullshit (even this, but I thought it was important). I just have a few points of advice for fellow founders looking at accelerators

Don’t be a guinea pig.

If you can, WAIT and talk to the first group of founders that graduate from these accelerators. They will tell you the good, the bad and the ugly. These accelerators will invariably make mistakes with the first set of companies and the type of mistakes they make will tell you whether you want to risk your baby with them or not.

It isn’t wise to work with an accelerator that wishes to own 20% of your company

Leadpath, I’m looking at you. An accelerator is supposed to get you started. Your series A which should come immediately after the accelerator will take another 30%. So just when you are starting to hit your stride, 50% of your company is gone. Harsh. How will you stay motivated? (You won’t). Personally I think 10% is a lot set but given this is Africa, I think it makes sense to stick with accelerators that will take below 15%.

It is all about the demo day

An accelerator is supposed to be a high leverage moment in the life of your startup. You literally have 3 months to create the most value you can because you are in the spotlight and everyone is watching. Every move you make matters. But no matter how hard you work in an accelerator, it will not matter if the right people are not there at demo day. That is just the fact. “If a tree falls in a forest and no one is around to hear it, does it make a sound?”. Your accelerator needs to be able to get top investors (not prospectors) to come to your demo day otherwise your 3 months of handwork will just be a fucking waste.

Accelerator owners might not want to be straight with you about their investment connections but there are a few ways to find out if they have serious connections to growth money or not:

Ask who their LPs are

If their LPs are funds, they probably have good connections with them. I think Savannah can be trusted in this regard.

Find out who is in their mentor network for startups

If an accelerator owner thinks he can teach you everything about your business without reaching out to subject matter experts, he is a joker. Accelerator owners with good mentor networks will be able to connect you to money.

Are they operators?

Accelerator owners who are operators that have raised and successfully exited from a previous company are much better than a bunch of ex-bankers thinking an accelerator can make them a quick buck. The previous have the backing of investors they have made money for before and who trust their judgement. The latter are useless to you until you IPO (which is a long way away).

There are a lot more key things to note for those looking to join accelerators but this is all I have for now.

Key thing to remember is that whether you accelerate or not in an accelerator is largely in your hand. Remember that an accelerator is the highest leverage period of your startup’s history – it will make or mar your startup. You can take advantage of it and build a quantum of value in a short period or you can waste your time and go slow for the rest of your life.

Your decision.

Photo Credit: G@ttoGiallo via Compfight cc

89 Comments

  • Oh boy!! I have been laughing like a maniac!! You really love to jump in the deep end of controversy calling names and throwing punches 🙂 Lagos is not Warri oh!! Watch your back

  • E!

    Awesome post and critical feedback. I think the market will settle it.

    Leadpath i’m sure is an improvement on what we have had before. And anyone trying to get better deal flow than Leadpath will have to do better and the cycle continues.

    I do not think 20% for $100k would be a bad idea if it includes all the added support (not that the support will be monetized). For some businesses, that is all they will need and when there is need for additional finds, everyone can get diluted or else, everyone loses.

    It is also good that you are able to bring “global standards” perspective to such issues.

    Our tech bloggers should be doing these analysis. Who and what are the accelerators playing in Nigeria/Africa and how do they compare to each other?

    • @ositanwoye:disqus we will need to stop bashing tech bloggers on these issues. At least Techcabal has done an excellent job of providing alternative perspectives to a story and that is a good place to start.

      I am happy however that there is a lot more activity in the Nigerian startup scene. Accelerators and investors will compete with each other with time and things will find their level and as you mention the market will decide.

      I am however more worried about the talent and ideas available and if the other end of the equation does not match the growth on the investor side, we will have an even bigger problem

      • prodding != bashing.

        I did not call anyone by name. Blame or condemn any body. I know in private I do my best to help.

        I am very open to prodding and criticism. Especially that that gives suggestions.

        The fact is, there is a type of public feedback a fellow entrepreneur cannot really give another especially publicly. The 5th estate (the press) can do it without retribution.

        I know what some of my very toned down posts/tweets have caused me (not like I really care). If a “press man” does same, there will be no retribution because they are doing “their job”.

        Feedback must be given. Analysis must be done for us to grow. It is all a conversation.

        It is good the E wrote this. Better if the press covers stuff like this.

        • Prodding or bashing, lets just acknowledge that things are getting better. While I agree with you that “The Press” should be more analytical, I believe the platform TechCabal has provided also works very well as it allows people like Iyinoluwa to state their opinions and for us to talk about it. Better than people paying to post stories

    • Iyinoluwa Aboyeji says:

      100k/20% not bad. But from what was said in their description is sounded more like their band was 25k/20% and 100k/40%. At least that was how I read it. 25k/40% cruel and I’ll like to believe the people at lead path are kind founder friendly folk. Maybe they need to be clearer.

      • Donnie Ibiyemi says:

        Garbage!! absolute Garbage!!,There are no startups in Nigeria,There is no ecosystem in Nigeria,What we have is a bunch of confused , ignorant and unemployed people that don’t know what else to do with their lives than to parade themselves as “Techies”.Why is nobody seeing that??.Btw i think this issue of “Taiye & Kehinde” Accelerators sprouting up everywhere is quite laughable.Anywayz i really like Iyin’s perspective on things.

      • Olumide Soyombo says:

        Lovely one Iyinoluwa. But, LeadPath’s model is quite
        different. I will go ahead and address some points you raised first.

        1. We have raised funds locally. Most of it from HNI’s you know and you
        probably used a product from one of their companies today. I will leave it at
        that. Anyone who knows anything about local fund raising knows how difficult it
        is to raise funds especially for an unknown space to them. Interestingly they
        are willing to provide more which enables us continue investing past the
        seed stage. So 1.5m is just a start, we will keep raising as the need arises.

        2. Check out our advisory board and you will understand the mentor network and
        our access to international funds. You will find people who have taken startups
        to IPO levels and people that have exited at millions. We also have silicon
        valley funds waiting to see what we do with this.

        z3. The founders here have grown a tech business from zero to several millions
        of dollars in revenue. I gave the figure at the launch event. A visit to http://www.bluechiptech.biz gives a good idea.

        Our model is different in the sense that the accelerator is only an avenue to
        build an investible pipe for ourselves. The members of the cohort are not going to be hawked in front of investors after three months. We don’t do demo days. They will remain with us and we will continue investing in them and there are no anti-dilution clauses.

        As regards our stake in the business, this all depends on
        the agreed valuation of the business. If the valuation of your business is
        $100,000.00(Obviously brownfield startups will have a higher valuation than
        this) and we put in $25k doesn’t that amount to 25%? Are you suggesting we
        overvalue a business to enable us take a smaller stake with the amount put in?
        I think the ecosystem needs to move away from the whole “I want to own 80%
        percent of my business” line. 80% of zero is zero.However, X% of $1m is something to smile about. And since we want to compare
        with silicon valley , I am sure Mark Zuckerberg doesn’t own 80% of Facebook but he sure is motivated. It is all about valuation folks and valuations will always change with time.

        We hammered on support services such as Legal, Accounting,
        Office, Power being provided for all the portfolio companies during the launch
        event as the companies remain with Leadpath until they probably need to be on
        their own, otherwise they enjoy the gains of shared services

        So in essence we then have a group of CEOs running their businesses as being
        part of the Leadpath portfolio. So we are not just an accelerator sir and
        that is why we can invest more than accelerators would and participate in
        follow on series.

        My two cents.

        • The Taichou says:

          “Our model is different in the sense that the accelerator is only an avenue to build an investible pipe for ourselves. The members of the cohort are not going to be hawked in front of investors after three months. We don’t do demo days. They will remain with us and we will continue investing in them and there are no anti-dilution clauses.”

          This right here bothers me. If you are tacitly preventing them from being approached [and approaching] other investors, it opens up the process to a few conflicts of interest. The most glaring being that it is in your economical best interest to arrive at a low valuation for follow-on rounds. I am sure you have checks for this, no doubt.

          We’ve all heard how one man’s meat is another man’s meatpie. Wouldn’t it be better to expose the startups to an open audience of investors with different investing styles and focuses. I imagine a [hypothetical] case where a graduating startup fails to meet your follow-on round funding threshold criteria. Having you as the only game in [their]town could be detrimental. They are high and dry. They have given up some equity and their lead investor has passed on the next funding round. This sort of negative signalling can spell doom for a startup. How do you plan to ensure your graduating cohort get a fair shake?

        • Iyinoluwa Aboyeji says:

          I think its a good thing you are addressing a few of my own concerns with accelerators in general. Hopefully founders can see for themselves and judge if you are the right fit for them. However I want to particularly address the whole idea of “overvaluing” a business.

          I don’t believe there is any such thing.

          In product focused startups, success is binary. A startup is either a success (or on its way to being one) or a complete failure. There is no midpoint. If you can look into a startup you want to funds’ future for the next three months and see how far it could go (with you help and funding) do you seriously believe that startup will be worth just $100,000? Then why even bother with investing $25,000? Why not invest $10,000 or $15,000?

          I believe in fair value – especially for accelerators. At the early stages most of the value of the startup is in the future. Otherwise, you might just as well call the valuation what it is $0.

          I recommend standard terms for accelerators. Just give everyone the same damn deal. It is 15% for 15k or it is 10% for 10k or as I want to understand, it is 20% for 20k. Ofcourse, exceptions can be made as is always the case but they shouldn’t be exceptions that have you lowering the startups valuation.

          Otherwise what you are just doing is preying on young founders who may not have the same negotiating strength as you and will end up taking crappy deals.

          PS: I find it interesting you say startups are hawked in front of investors after 3 months. I happen to very much like that model.
          PPS: Mark Zuckerberg wasn’t the only Facebook founder so that’s a bad analogy. He did however still own majority of Facebook’s shares for a long time after their series A – till IPO. My argument was early stage companies need to be founder controlled to achieve their vision although that’s a separate conversation altogether.

          • Olumide Soyombo says:

            Time will tell if our terms work and end up producing legendary companies. Our terms are founder friendly and common place with firms that arent just Accelerators. I repeat we are not just Accelerators…

            Was nice getting some feedback from you all anyway. Good night!

          • Anon says:

            Thank you for writing the epic post.

    • Seyi Taylor says:

      Thanks @ositanwoye:disqus. There’s obviously a lot of work left on the table to be done in terms of analyzing these new funding situations. You’re 100% right in that department! Nigeria (and I think most of SSA) is obviously very far from global standards from what I can see but the situation is getting a bit better. The big [unanswered] question is, “what kind of companies are born out of these kinds of terms?” Time will tell.

      • The Taichou says:

        @seyitaylor:disqus, I think you sidestepped the truly “big question”. We should be asking “What is the alternative?” When the desirable is not available, . . .

        • Seyi Taylor says:

          I’m sorry, what did I side-step? I’m not sure I get?

          • The Taichou says:

            Sorry for the late reply, @seyitaylor:disqus. You say the big [unanswered] question is, “what kind of companies are born out of these kinds of terms?” but I think that question looks too far off into a future which may or may not materialise and it is a futile exercise in fortune-telling. Even if you were a seer who could look into the future to answer your “big question” and you realised that none of the accelerator-branded startups were going to amount to much, it doesn’t solve any real problem. Other than provide ammunition for more tirades like this one.

            I want to know “how should a startup founder go about building a company in today’s Lagos if she decides to spurn accelerators/incubators?” I see no viable alternatives existing today other than bootstrapping and even that isn’t a silver bullet, especially for non-technical founders. When we have alternative paths to gaining support for early enterprises then we can start to analyse which is better [or less detrimental].

            Nigerian investors are predatory primarily because it is a buyer’s market and they’re the only ones buying. I respect and admire the work TechCabal is doing to celebrate the startup scene. The ecosystem is in its infancy and I would like to see TechCabal play the role of an ecosystem builder rather than a mere public commentator.

          • Seyi Taylor says:

            I may be guilty of thinking too far into the future but I think it’s a fundamental question. If you give up 25% of your company for barely enough cash to run skeletal services for a year and you don’t break even at the end of the year, what kind of business is coming out of that?

            If the only way to break even is to limit expansion into the market, what kind of company have you created?

            If your company grabs a small part of a market that’s still in its infancy and ends up with majority of its stock with investors who aren’t really interested in growing the business, what kind of company has been created?

            I may be looking too far into the future but this entire industry is about the future. Konga and Jumia aren’t trying to beat each other, they’re trying to be the future of retail. Hotels and Jovago aren’t trying to beat each other, they’re trying to grab the billion naira hotel booking market. Iroko isn’t going against Ibaka, they’re going against DSTV.

            So what are your options? Every entrepreneur has to take it on a case by case basis – slower growth, faster growth, stunted growth, no growth, there are no easy choices.

            The ecosystem situation today is far better than it was when I started out here; when Oo started Gbedu, when Sheriff started WebTrends and his Traffic app – that’s encouraging. We all hope it continues to improve.

          • The Taichou says:

            @seyitaylor:disqus, you have touched on issues which may or may not have to do with accelerators/incubators. I also worry that you’re not seeing the forest for the trees. Do you think the first artiste who sold rights to Alaba traders got a fair deal? probably not. Now we hear of artistes like P-Square getting multimillion dollar distribution deals from those same Alaba traders.

            If we all sit at our computers wondering aloud what sort of companies the present situation will give rise to, how will we ever find out and how will we iterate to something better? Like you rightly pointed out, there has been marked improvement in the intervening years since you started watching the tech space. Negativity [even when thinly veiled as caution] serves only to stifle the pace of progress. Note that I am speaking of @iyinoluwa_aboyeji:disqus’s post and not your comment. For example, what good does it do anyone to ask who their LPs are or who their mentors are [even if we lived in a free-information utopia where such questions could even elicit answers]? One man’s schema does not constitute an irrefutable pattern. I am wary of attaching too much weight to track records in such a nascent industry as this.

            I still believe the question we need to ask is about alternatives. So long as there is an oversupply of founders and an undersupply of investors, cowboys will rule.

            Right now, I am even too worn out to plug my own service. This whole thread has been a shambles. Hurrah to the short-termist thinker who decided to elevate this rant to a blog post. I expect a few rejoinders/rebuttals next week as we continue to frolick in an orgy of pointless talking.

          • Iyinoluwa Aboyeji says:

            I don’t understand why angels aren’t a viable alternative. Like seriously. I raised from a few angels before I saw my first accelerator. 3 of them were Nigerian. I also know Oviosu raised from a lot of angels. Angels are like the word implies mostly a lot more reasonable about terms and there are a shit ton of them. Getting access to them requires some chutzpah but I am sure a determined founder can make it happen.

            Most importantly, angels – especially those with experience in your business can easily let you know whether you are on a wild goose chase or not. At the very least, they can ask questions that will put you on the right path.

            Think Angel – not accelerator.

  • @ositanwoye:disqus Took the words right out of my mouth. Lots of solid points in the note. But give the market a chance. Competition is good. Choices are increasing for Founders. Standardization comes when critical mass is reached and system is more developed. It will get there.

  • Samuel-Biyi 'laolu says:

    $100k/20% not bad really, as long as it’s not full-ratchet anti-dilution!

    • One day we will all learn these “buzz words”

      • Peter Akporume says:

        We have to learn the buzz words or fall into traps. I advise founders to stay away from these two.
        1. Non-dilutable equity/anti dilution
        2. Vested shares

        • Iyinoluwa Aboyeji says:

          Vested shares? I happen to think vested shares are really important. Why do you think that’s a problem for a founder?

          • Peter Akporume says:

            I admit I was wrong on vested shares. thanks for the enlightenment. I had a poor understanding of it.

          • Iyinoluwa Aboyeji says:

            no p! Happy to enlighten. Thinking of starting a blog to discuss this and share template documents. Just bought streetcapital.ng. I’ll let you know when it launches. (maybe in 3 months.?)

          • Peter Akporume says:

            How do you advice handling dilution? I have an idea but I don’t know how correct I am.

          • Iyinoluwa Aboyeji says:

            Keep everyone with common shares. No shares with different classes. And definitely no anti-dilution. Key thing to keep in mind is everyone will dilute so no big deal. What matters is the amount of value dilution will help you create.

          • amaam says:

            A single post about this will be better

        • Seyi Taylor says:

          I think vested shares are critical. Won’t found a corner store without vested equity.

      • Iyinoluwa Aboyeji says:

        We can start learning them now. I’m actually going to do something about this.

    • Paul says:

      Maybe you are talking of stakes that are immune to dilution in the event of further investment being taken on?

      • Samuel-Biyi 'laolu says:

        That’s correct, and it’s a no-no.

        • The Taichou says:

          Why, @samuelbiyilaolu:disqus ?

          • Samuel-Biyi 'laolu says:

            In the event of a down round, the founder gets screwed. I think this piece does justice to the concept. http://venturehacks.com/articles/terms-that-hurt

          • The Taichou says:

            Maybe we should step away from the Silicon Valley format for a just a sec. Negotiating from a position of weakness is all but futile.

            In Nivi’s world, the ecosystem is fully developed and firing on all cylinders. Even at that, he suggests that startups may need to relocate to well-known hubs of activity like the Bay Area or NY so it’s clear ecosystems are not created equal. I do believe we need to manage expectations and stay grounded in reality.

          • Peter Akporume says:

            I disagree with you @The Taichou:disqus . I was with one accelerator that took 15% equity and gave $0 in funding. Not a kobo!!! I spent a year with them but I realized my folly it was a horrible experience

          • The Taichou says:

            @peterakporume:disqus, that really sounds like a shitty deal. Care to share more details? What did they give you? Office space? Mentoring? Exposure via well-attended Demo Day? Stipend? Perhaps you should call out the cowboys so others don’t make the same mistake. Or are you suggesting this is commonplace with most accelerators in Lagos?

          • Peter Akporume says:

            They promised:

            1. Office space – (They delivered)

            2. Mentoring – (They Failed woefully)

            3. Meeting investors to pitch ( They Failed 95%)

            4. Funding (They Failed 1,000%)

            5. Provide technical support/assistance (They Failed 1,000%)

            They finally gave me a guy to invest $5,000 for another 5% non-dilutable equity (note that this was after spending 13 months with them without a job and just my aunt supporting me). It was then I realized that I would have given out 20% of my start-up for literally nothing and I just lost my mind and went ballistic I refused the deal and my product was still very much the same crap it was when I met them. I parted ways with them and it was far from amicable.

            As part of the deal I was to work for them for free and do third party projects for their friends at cut-throat prices. I ended up spending a lot of time executing other web and mobile projects (Remember I spent 13 months doing this) instead of focusing on what i came to do with them.

            My project (Mobi Manager) was a total failure and I am shutting it down this month. I already moved on to another project. But please beware of these people even the ones that give money.

            I’m not calling names because it’s all in the past and I hope that I’ve learnt enough for my new project to be a success .

          • The Taichou says:

            @peterakporume:disqus, this really sounds like a raw deal. I am glad you’re letting go of bitterness and taking this as a teachable moment in your struggle. Other than the side projects they had you working on for them and their friends, what would you say prevented you from iterating (or even pivoting) to a better product in 13 months? I am not trying to ridicule or criticise you in any way. I truly want to understand the mechanics of the relationship and the constraints you faced.

          • Peter Akporume says:

            Many factors stopped me from pivoting to a better product. Some were my mistakes and my fault some were theirs. But i expected an accelerator to at least put me on the right path when I was wrong but instead they looked like a bunch of confused blokes to me.
            I was and always have been interested in finding a product with a market fit and proven revenue model before seeking funding but obviously that is not easy and still requires money.

          • Peter Akporume says:

            As for the question of whether this is a common practice I can’t say for other accelerators but for these guys it is a common practice. I can’t elaborate enough on how much this irks me.
            They have start-ups collecting this same offers. They still operate in the tech space behind the scenes and under one new body besides their accelerator name, In fact you will never know it’s their organisation. They are very active behind the scenes.

          • Damola says:

            @peterakporume:disqus Your company Ovutek linked to http://www.wennovationhub.com/

          • Iyinoluwa Aboyeji says:

            I think you should actually name and shame my brother. That’s what I think.

          • Peter Akporume says:

            I know bro but it’s not my style. I just wanted to share and let others be careful and the system to be fair instead of taking advantage of the dire situation.

          • Iyinoluwa Aboyeji says:

            You can’t avoid what you don’t know. You are just making people fearful and not giving bad actors an incentive to change.

          • Peter Akporume says:

            @Damola Got it right

          • Samuel-Biyi 'laolu says:

            Fascinating..

          • Anon says:

            Omo thanks for sharing this mehn! Wennovation hub?

            Ohh sweet Mama J.

          • Exactly. If the terms are too onerous just say no. There is also value to bootstrapping ones operations and “suffering well”. Terms cannot be discussed in isolation either…lost of people are looking for money to fund ideas and theories. The more you have a well developed and revenue generating idea, the more leverage (and options) you have.

  • Nice article, I think many Nigerians underestimate the value of their product, they are willing to settle for any investor that comes their way. A little patience and analysis of the above points will go a long way.

  • Olumide Soyombo says:

    Lovely one Iyinoluwa. But, LeadPath’s model is quite
    different. I will go ahead and address some points you raised first.

    1. We have raised funds locally. Most of it from HNI’s you know and you
    probably used a product from one of their companies today. I will leave it at
    that. Anyone who knows anything about local fund raising knows how difficult it
    is to raise funds especially for an unknown space to them. Interestingly they
    are willing to provide more which enables us continue investing past the
    seed stage. So 1.5m is just a start, we will keep raising as the need arises.

    2. Check out our advisory board and you will understand the mentor network and
    our access to international funds. You will find people who have taken startups
    to IPO levels and people that have exited at millions. We also have silicon
    valley funds waiting to see what we do with this.

    z3. The founders here have grown a tech business from zero to several millions
    of dollars in revenue. I gave the figure at the launch event. A visit to http://www.bluechiptech.biz gives a good idea.

    Our model is different in the sense that the accelerator is only an avenue to
    build
    an investible pipe for ourselves. The members of the cohort are not
    going to be hawked in front of investors after three months. We don’t do
    demo days. They will remain with us and we will continue investing in
    them and there are no anti-dilution clauses.

    As regards our stake in the business, this all depends on
    the agreed valuation of the business. If the valuation of your business is
    $100,000.00(Obviously brownfield startups will have a higher valuation than
    this) and we put in $25k doesn’t that amount to 25%? Are you suggesting we
    overvalue a business to enable us take a smaller stake with the amount put in?
    I think the ecosystem needs to move away from the whole “I want to own 80%
    percent of my business” line. 80% of zero is zero.However, X% of $1m is something to smile about. And since we want to compare
    with
    silicon valley , I am sure Mark Zuckerberg doesn’t own 80% of Facebook
    but he sure is motivated. It is all about valuation folks and valuations
    will always change with time.

    We hammered on support services such as Legal, Accounting,
    Office, Power being provided for all the portfolio companies during the launch
    event as the companies remain with Leadpath until they probably need to be on
    their own, otherwise they enjoy the gains of shared services

    So in essence we then have a group of CEOs running their businesses as being
    part of the Leadpath portfolio. So we are not just an accelerator sir and
    that is why we can invest more than accelerators would and participate in
    follow on series.

    My two cents.

  • Jay says:

    What people (TC) will do for traffic.

    The issues have been clearly enumerate and diffused. The issues couldn’t have been made any more important by your brazen display of ignorance and lack of decorum.

    Using swear words and cursing out should be allowed on this scale. Bezos, Zuckerberg and outspoken Kim Dotcom have never been recorded swearing.

    Quote me, even the extremely rebellious ones like McAffee, Assange and Snowden are not known “cursers”.Show me any responsible blog where cursing out is allowed
    This is why the ecosystem not grow as quickly as it should, when we continue to celebrate mediocrity masked in brute intelligence.

    I know TC allowed this post because of the traffic it will generate. – Irresponsible Leadership

    • Jay,

      The word Fuck is used to convey an emotion. You may not like like it and that is understandable. But why censor what a man is trying to convey?

      Would you he rather said “effing”?

      It is different if this is your domain but please do not go to another man’s land and set the rules.

      Not need to attack those who differ in opinion from you.

      • Jay says:

        Oo,

        This is awfully satirical.

        Whose domain is this? I don’t remember the TC being named after you or the writer. This is a domain of public discourse where knowledge and information is shared and it should be done with civility.

        About the use of swear words. Are you saying the writer found it intellectually challenging in using a better word to express his emotions? Are you saying the writer was overwhelmed by his emotions such that he decided to waddle in a bed of profanity like the uncultured?

        I am not the arbiter in his case, it is a known fact that profanity in writing for public reading especially in non-fiction writing is not acceptable. Share a link of one respectable person in the tech community outside of Africa that has ever been quoted swearing especially in their own writing and I will “swear-on” with the two of you.

        I will respond to the alleged “attack on those who differ in opinion from” me by repeating that
        “This is why the ecosystem will not grow as quickly as it should, when we continue to celebrate mediocrity masked in brute intelligence.”

        TC has a huge following and it should not set this kind of standards for others to follow. I blame Jason for the writers brazen use of cuss words. We can do better and that is why we will demand better from ourselves.

    • Peter Akporume says:

      Steve Jobs used swear words in an open letter to iPhone 4 customers globally.

      I quote “It was a whole fu…ing day of agony”- Steve Jobs June 2010.

      We need to stop that line of thought where we think our business leaders can’t be vulgar. They are humans . Even bill gates was known to argue with anyone and shout in his early days.

      And Zuckeberg who you used in your comments was comparing picture of girls to farm animals.

      Back in Facebook’s early days, Mark Zuckerberg used to carry a business card that read, “I’m CEO…Bi..ch”

      In case you doubt me here are references and dude you don’t have a valid point.

      http://scoopertino.com/jobs-fumes-over-iphone-launch-fiasco-pens-thoughts-on-revenge/

      http://www.businessinsider.com/mark-zuckerbergs-brutal-prank-on-sequoia-2010-5

  • Stanley Ojadovwa says:

    Great conversation going on here. One of my major concern apart from the equity-funds relation ship is the controlling power that investors want to play in a startup. Sometimes I see this as hindrance to the long term vision of the founders.

    Looking at Kima term sheet http://www.kima15.com/media/KimaVenturesStandardTermSheetSeedSummitTemplate.pdf. One can assume that even though Kima has less percentage equity, they have more controlling power in the overall vision and direction of the startup.

    I’m yet to understand fully between ordinary shares and seed shares.

    • Iyinoluwa Aboyeji says:

      Do you mean common shares and preference shares?

      • Stanley Ojadovwa says:

        @iyinoluwa_aboyeji:disqus. I guess preference shares is the other name for seed shares.

        • Iyinoluwa Aboyeji says:

          So basically common shares are just normal shares. Everyone owns one and has equal power. They usually hold voting power in proportion to amount of shares held so the more shares you have the more control you have over the corporation. But it really depends on the kind of agreement you have in place.

          Preference shares (also depends on the agreement you have) are a separate class of shares with special rights. The most common right of this class are liquidation preferences. The way that works is this.

          Say you give an investor 1million preference shares for 1 million dollars (so $1/share) at a liquidation preference of 2x. That means if you sell for $3 million, the investor must make at least 2x his money ($2 per share) before you make $1. So in this case, he will take $2m and then the rest of you will share the $1 according to your ordinary shares.

          This is a super simple explanation. Let me know if you have questions.

          Personally, I think early stage companies need to be as simple as possible so I only do common shares. No classes. It makes the math too complicated for everyone. Also I think investors and founders need to be similarly aligned especially at the early stages so I stay away from creating different classes of shares. There will be plenty of time for that when we grow big and we can afford all the complexity.

  • Century Favour Ebere says:

    Quite an eyeopening piece… @Iyin.
    For me boostraping till a product becomes sucessful, is sometimes a better deal… Instead of joining an accelerator or taking investment… When one’s product is still in its infancy.

    Ask yourself do you really need that juicy space… free internet… mentorship, connection to investors and their $100k … Do you need them JUST YET.

    Build a great product with a very lean team and if possible zero VC or angel investment… You stand a better chance to negotiate the terms of the deal from an area of strenght.

    As per the Accelerators… irrespective of thier motive, modus operandi, the fact is that they are adding value to the ecosystem.

  • David Okwii says:

    Interesting how the Tech ecosystem is playing out in Nigeria…and it’s not any different from the E/A where i hail from except it’s abit toned down at this stage.

  • Mr Dramendra Abdosh says:

    Comment turned blogpost, blogpost turns controversial, controversy turned news of the day, read and read the comment, almost forgot what the topic was. Longest post ever since BusTicket wahala

  • Damola says:

    Man Pickin just dey hear $ left right center.. oh boy..no be small thing oh.. this year, man pickin must hammer $$$ o

  • disqus_lQclrQLxP6 says:

    Clicked through to the betakit website and did a double take…

  • opeawo says:

    @iyinoluwa_aboyeji:disqus I love this post. Very real and it’s good advice for every young entrepreneur out there.

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