[kictanet] Finance Policy - Tech Startups

[Ashok Hariharan]

On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <pkariuki at gmail.com> wrote:
> 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?
>

what you need is ultra-short term debt funds (some people call them
liquid funds ) these invest in commercial paper , money market
instruments, t-bills , certificate of deposits etc .. either on a
overnight basis, weekly, 10 days or 30 days ....etc. you also need a
regime where when you liquidise these funds the settlement happens in
a reasonable amount of time (e.g. a bank fixed deposit can be
liquidised in the same day ...such a fund should also be liquised in
the same amount of time ) ... i dont think these kind of funds exist
in kenya ?