Glossary: Investment Terms

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Insight for the Nigerian context :smile:

  1. Traction over everything : Beg, borrow, steal, until you have traction. The magic of raising money in this environment is that there are so few good deals everyone wants in on the good ones. If you show solid traction and your business has good scalable economics, EVERYONE will want to invest which means you get to set the terms.

  2. Find a lead, preferably foreign : Nigerian investors are amazing in their own ways but I believe foreign leads can help set context for a deal since they have probably seen your growth story before. It is easier for even well intentioned local angels/investors to follow their leads than to blaze a trail. It also gives you an opportunity to shorten the time period for raising.

  3. It is never a deal until the money is in the bank. Don’t act like it is. Investors in this part of the world particularly have a penchant for promising and failing.

  4. This is not scientific but for every 3 days you don’t close the deal (with money in the bank) your chances of closing the deal reduce by 10%. After 30 days, write off anyone who has signed docs but hasn’t sent you a wire. They will not close.

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Awon goons mi da?
My next move!

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Vested Shares How does it work?

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Essentially, vested shares/vesting are a pre-nupt agreement between founders in the event that one of them decides to leave the marriage. As opposed to an arrangement where all the shares are granted at one, the shares are earned over a period of time.

Let’s assume Jide and Joboy found a company together. Jide has 40% of the company vested over 4 years with a one year cliff.

If Jide walks away in the first year, he will get 0
At the end of his first year, he will get 25% of his stake of 40% (basically 10% of the company)
Every month he will get 1/36 of the remaining 30% of the company. If at any point over the next 3 years he leaves the company, his vested shares up to that point will be given to him and the balance will return to treasury automatically with no compensation due to him.

This is very important to do so you no go dey work while baboon dey chop.

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Something on vesting - http://techcabal.com/2015/02/17/startup-vesting-no-one-jumps-off-cliff-without-chute/

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Something like this?http://www.businessinsider.com/blackrock-300-million-loan-to-jawbone-2015-5?utm_content=bufferd3db0&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer