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I know a few ppl raising money for their respective companies and I'm incensed by the stories they tell me. Investors who want double their money if additional funds are raised sooner (sooner!) than the target, investors who don't want funds to be used to replay director loans...
... Investors who claim there's not enough impact, or the impact is the "wrong kind" of impact, or the "potential" for scale is too low, investors who say "you're raising too much for your scale," investors who say "you're raising too little to be worth our time..."
Honestly, I'm tired. On behalf of all my entrepreneur friends, I'm f-ing exhausted. You'd think that since there's supposedly so much hot 🇺🇸 VC and 🇪🇺 DFI/PE money chasing so few deals, it would make for more favorable terms. But somehow, at least in my circle, it's the opposite.
I probably cried once a week when I was raising the Series A equity for TJ. Once a week, for 12 months. It's tiring to be that frustrated & sad & to feel like you've got your back up against the wall, while at the same time trying to keep paying salaries & running operations.
Investors told me "we like to be the first money in, we do really risky stuff" but bowed out because we don't yet have $1M in annual revenues and aren't EBITDA positive. Or because they didn't feel their money could be "catalytic" enough for us (ie we were raising too much).
Even after I finally raised the money, the pressure to perform and deliver feels huge. I've got folks who are surprised to hear that 7 months after the funds hit the account, the factory is not yet up and running. Let's talk about everything that goes into a factory, shall we?
In January, there was a pile of dirt on a corner of the TJ farm. We said, let's make a factory there.

1) Civil works. We had to DESIGN a factory. I'm not in Lagos and I can just rent out a warehouse and throw my equipment inside. Nope. We're building it from scratch, baby.
So we design design design, and come up with something that works for us, works for the equipment manufacturer, and works for our environment (based on available building materials etc.). Then we have to get someone to build the darn thing. That means reviewing tons of proposals.
Finally we have a contractor, they fall through, we have backups. We sign, the work begins. It looks like nothing but believe me it has taken MONTHS of work and planning to get to the point where someone is actually building something on that pile of dirt.
2) Equipment. We spent 9 months designing the factory equipment with our OEM. When we finally got funds, we started paying them to build the machinery. This isn't like going to Walmart to buy a drill press. Every piece of equipment is custom-made for us. Nothing is off the shelf
They started work in February. The equipment is finally ready to ship out NOW. It took 6 months for them to build and assemble our order. It'll take another month to ship from Italy to Nigeria, and another (hopefully?) 4-6 weeks to clear through customs.
3) Power. We spent MONTHS working @DemmyA and his team @rensourceenergy to try and make solar work at our factory. Given the constant demand for power 24/7 when we're in season, and the complete LACK of demand for power when we're out of season, we just couldn't make it work.
Tomato processors in CA use solar, but they are hooked up to a national grid and can feed their excess power into the main system when they're not using it. They get paid for what they provide and this offsets their electricity costs. In Nigeria, this isn't possible.
4) Water. We had to drill a well. We had to design a treatment system for the water going IN to the factory and for the water coming OUT of the factory. Again, the upfront work happens on paper so it can LOOK like nothing is happening. But we're working hard.
The list goes on and on. For us at least, it's a "measure twice cut once" kind of thing. You plan and plan and plan and PLAN the heck out of everything, so that when you finally bite the bullet and execute (remember, most of the execution is being done by third parties) it works.
Anyway. I'm working hard. My friends who run their own companies are also working hard. Trust me, we all have way too much skin in the game. If we tell you we need liquidity, whether in the form of paying ourselves a living wage or repaying directors loans, believe us.
The last thing an investor wants is an entrepreneur who's so desperate for cash that they have to stop focusing on their business to make some consulting money on the side. Investors love to say say "we're investing in the person, not the business." Well... the person has needs!
I'm scared that despite the money I've raised for, I won't have enough to get the factory up and running. There's the Nigeria factor, and now also the COVID factor. So many things can go wrong.
I didn't pay myself a salary from March through July. But I didn't cut staff salaries, even though I know many other companies have done this, because I need my team to be focused. This year, we're making our biggest push for growth ever in the history of the company.
In the same way that I want my team to be focused, investors should want their entrepreneurs to be focused.
Anyway, I don't have some big conclusion to draw, I'm just mad that my friends work so hard and yet they're being asked to accept terms that don't align the interests of all parties. This is happening to FOUR of my friends right now, in 4 different African countries.

~The End~
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