By Rashidatu IBRAHIM
Among other factors essential to enable small businesses access venture capital funds, are having good business models, and being honest in disclosing information about the business, Percival Ofori Ampomah, General Manager of the Venture Capital Trust Fund (VCTF) has noted.
He disclosed that startups often miss out on accessing available innovative funding due to them not having good business models, as well as not being entirely truthful with investors.
“The challenge we have always had is with entrepreneurs accessing the funds and whether or not they are ready for venture capital investing. We have had some successes, we have had some lessons to be learned, and one key message is that, if you want to raise financing in a venture capital way or any innovative financing, the first thing is to be honest and trust-worthy.
“You need to show your potential investors that you are serious and that you are willing to discloses all the information that is necessary for them to make their decision, and even after the investments, you are singing the same song of trust and honesty along the investment line.
Venture capitalists smell a dishonest person when they see one and the moment they see that you are not honest and that you are not being clean; and you do not have a proper business model, you will not get funding,” he maintained.
He shared these concerns during a panel discussion when Impact Investing Ghana, in collaboration with the Venture Capital Trust Fund, hosted a panel discussion titled: ‘Unlocking Innovation Finance: Filling the finance gap from idea to scale’ as part of the 2024 Ghana Digital and Innovation Week in Accra.
The discussants delved explored the role of innovative financing in driving entrepreneurship and business growth in Ghana, with the VCTF targeting persons or businesses that seek to raise funding, as well as potential fund manages who want to raise money from the Fund to support to start-ups.
Mr. Ofori Ampomah further encourage startups to position themselves and take advantage of the available funding that has been tailored specifically for the sector. This, he said will go a long way to reduce the pressure and setbacks that startups are grappling with in the business space.
“In the past, the money simply was not there for startups. Banks do not look at startups and the only money that was available in the past was just bank funding, maybe if you are lucky, you get some micro loans or something.
“But microloans really and truly because of the interest component, it will be very difficult for you to focus on that. So, in in in the past, it was very difficult to find institutions that are focusing purely on start-ups.
“Luckily, we brought the venture capital model in and through that work over the years, we have supported fund managers to look at start-ups, invested in startups, and are growing start-ups. I hope that releases some of the pressure for startups.”
Environmental Impact a Tool to Access Funding
Another enabler of startups access to innovative financing, Mr. Ampomah submitted, is how impactful the businesses are on the environment and the community.
He explained that, beyond the primary expected outcomes of their operations which include job creation, government revenue mobilisation, and import substitution, the Fund highly prioritizes environmental impact.
“Impact for us is not a compromise on returns. We look at the environmental impact- whether or not your business has some damaging effects on the environment, and if it is, we will not even come anywhere near you.
When we are emphasizing impact, it is a value addition because if you are not being useful to your environment as an entrepreneur and as an investor, then the environment itself will kick you out- the people will see that you are not a meaningful citizen in the environment and the community and they will kick you out.”
He added that some funds are specifically aligned to SDG goals for instance, with some of their companies investing in area like clean technology, climate related technology, clean energy, among others.
