I am a big fan of the startup business, primarily because I have interest in investing in a few businesses. I have also followed startup stories for quite a long time and I barely see or hear about companies that get funded without any evidence that shows insights into why it got funded. However, most companies (or founders) I know that got funded have some sort of domain expertise within the field of Tech, so even if their startups isn’t profitable yet, an investor would gladly put their money down.
I understand this isn’t my business to discuss but since conversation is ongoing, I might as well share my thoughts. To be frank, just like everyone, I was quite perplexed when I heard OgaVenue got funded without any numbers. At least, when Mark got funded by Spark, he said something along the line…hotels.ng generated about $250k thereabout. That alone can be used as the basis of data analysis. Actually, I don’t think this announcement should be the bone of contention. It should be considered a good thing when a company gets funded, at least, it has created a mix vibe within the community. However, having read the story line…I’ve few comments for Andrew (and I hope he gets to see this):
“I currently send our monthly metrics to a few investors and I would need your permission…” – Andrew, this isn’t right. Are you trying to build a business for investors? Well, it is a little bit too late now but for future reference your vision and mission should lead you. Some KPI’s are better kept secret. A better approach could have been a bi-annual report or perhaps a sponsored post through Tech Blogs.
“I received the email from Andrew 9th July. I met him 13th July. We had a deal negotiated 14th July. “
In 6 days, you negotiated (and perhaps agree to sign?) an agreement worth $45k for X number of percentage share in a crazy profitable company? I don’t know what percentage you gave up but I hope you know how these stuffs really work? I believe you are very smart and I sincerely hope that you haven’t given your life away? I don’t mean to belittle your ability, you are a very young man and you need to be informed: Entrepreneurship is also a full time position that might take a chunk of the good time. Your share within the company can become so small that you will start questioning if the business is worth your effort. Creating a venue booking platform isn’t rocket science. There is no proprietary, license or USP for this type of business. In addition, I hope you understand that the demand for Event Venues is perfectly elastic. I don’t think first movers advantage will pay off much so while expanding…B’aware of the wolfs.
- “He was crazy profitable”
Seriously? I had to go on the website and I did a few calculations for potential revenue. Venue with the highest price available for rent was about ~ N1, 000,000. A 5% booking charge should be about 50K. Conservatively, two bookings at least every week, four weekends per month…400K. Other venues (800K, 400K, 200K, 80K venues) can easily generate 10 to 20 bookings a month with an average revenue of about 20K each. Not bad, about 1M a month maybe more (excluding the cost of operation and management of course) is actually crazy for a new startup.
My question is, if you send these numbers to a number of investors on a monthly basis, why didn’t they call you up? In addition, why didn’t you see the business opportunity with hotels.ng the other way round? You have an edge because you book a venue for a large number of audiences. What stops you from creating a low key secondary monetization for hotel bookings and referrals for guests of the event instead of going directly to your potential competitor?
In summary, I don’t mean to challenge your competencies, my points emphasized on the need for good advisor (lawyer, mentor…), better business philosophy and ultimately a strategic business developer. I believe you have these stuffs…?
Ultimately, I wish you the best.