[kictanet] Finance Policy - Tech Startups

[Phares Kariuki]

Firstly, thank you all for your feedback.

Let me expound on why I was asking this question, I'm still developing the
curriculum that's being used for startups during the mentorship program. One
of the things my (very) unscientific research brought out was the fact that
Kenyan Tech startups operated on a 'feast/famine' model, i.e. You have a
huge deal one day, buy a series of company cars, brand them, go on a hiring
spree, one year later, company is laying off people and selling the now

Question is, if our tech firms had a solid asset base (including patents),
wouldn't it be easier for them to list in the stock exchange?

I realize that in the earlier years, you need to do R&D and expand, but,
shouldn't you cushion yourself against fluctuations that *will* happen?
Nokia did not plan for the iPhone, they needed to have enough money to
survive and have a response to it. Otherwise, they might have ended up like
Palm...


@Suhayl Sadly I'm not in that situation :-(, but I do get your point on
R&D.

@Andrea That's actually what I was thinking, some can be in say 90 day
T-Bills, some bank, and some in longer term securities.

@Dorcas Hence my asking. We are yet to get a tech company listed (that is
not in the telecommunication space), so I still have no idea what happens in
the background.

@Liko Sounds like real estate is more lucrative? :-)

On Thu, Jul 7, 2011 at 6:18 PM, Suhayl Esmailjee <suhayl at esmailjee.com>wrote:

> Hi Phares,
>
> You are in a luxury position that won't last long. Invest into the next
> "big" product/service/solution now. What's that Thomas Edision said? ...."I
> have not failed. I've just found 10,000 ways that won't work.
>
> Statistic for you: 46% of Huawei employees are in R&D
>
> Best
>
> SE
>
> On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki at gmail.com>wrote:
>
>> Hi,
>>
>> Question, for those who have run tech startups, how do you deal with
>> excessive revenue? Given that tech firms many times operate on high margins,
>> let's, for the sake of example, say you have a product that, with an expense
>> book of roughly 1M (Rent + Salaries), and your monthly revenue is 8 M KES.
>> What do you do with the remaining 7M? Some say invest in product development
>> but even then, you will still have quite an amount of change. What happens
>> to that change? Invested in a bank? Or in some form of Fixed Income
>> Securities (Bonds, T-Bills etc). What's the general practice in .ke?
>>
>>
>> --
>> With Regards,
>>
>> Phares Kariuki
>>
>> | T: +254 720 406 093 | E: pkariuki at gmail.com | Twitter: kaboro | Skype:
>> kariukiphares | B: http://www.kaboro.com/ |
>>
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> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform for
> people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
>



-- 
With Regards,

Phares Kariuki

| T: +254 720 406 093 | E: pkariuki at gmail.com | Twitter: kaboro | Skype:
kariukiphares | B: http://www.kaboro.com/ |
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