Hello everyone!
Over the weekend, I watched the Ultima Lions' Den program and as you already know I like to leave a review of the show when I do.
One of the reasons why I love the Lions Den show is because it absolutely validates all that I have been saying on this space about Startups and the legal aspects of business.
It clearly shows that the message i have been preaching about Startup legal is nothing but the undiluted truth😃.
So back to my review of the show over the weekend. The Lions out rightly told a "founder" that her business was not investable! Ouch!
That really hurts badly, imagine pitching to a panel of investors hoping to get funding for your small business, especially because you believe so much in your product and you are very passionate about it, only to be told that they could not invest in your business?
Painful right? I know!
But why was this particular business declared UNINVESTABLE?
The major reason was on ground of regulatory compliance.
What exactly does that mean.
The founder had not complied with all the legal requirements for starting and operating a company in Nigeria.
Specifically, Here is what went wrong with her funding request.
- Her business was not registered with the Corporate Affairs Commission, not even as a business name.
- Being a food product ( Processed Soya bean) Her product was not Nafdac approved.
- Founder has not trademarked her brand which is a necessary step for Nafdac Approval.
- The business model was also faulted and founder revealed she only started it because she was out of a job, it was a means of survival for her.
- Her funding request was ridiculous and showed a lack of understanding of how equity funding works.
After listening to her pitch the Lions clearly stated that an Unincorporated business is not investable.
Let me also add that, a business merely registered as a business name ( Enterprise) is not Investable.
Founder lost the opportunity to access funding because she had not done the first thing she was supposed to do.
Luckily for her though she got support and has been enrolled into a woman's network where she could go learn about entrepreneurship and how to build a business.
So I ask you,
Is your business Investable? Have you registered your Company? Have you secured your Intellectual Property (IP)? Patent, Trademark e.t.c?
Do you have the license snd permits you need for your industry, e.g Nafdac Approval?
Do you have the right legal Structure to access funding funding opportunities? These are like the basics, there are other legal and non legal things investors are looking for before they invest in any business.
Don't end the year without putting the legal aspect of your business in order because no matter how useful your product is or how brilliant your idea is, without all these things it will not be Investable.