<html><head><style type="text/css"><!-- DIV {margin:0px;} --></style></head><body><div style="font-family:'times new roman', 'new york', times, serif;font-size:12pt"><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt; "></div><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt; ">Hi,</div><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt; "><br></div><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt; ">The last thing that a technology start-up needs to be doubling in is finance issues they must make sure that they have a seasoned finance person or organisation by their side to make those decisions for them while they concentrate on the core business.</div><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt;
"><br></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">Out sourcing is about more than just transcription, let them out source the finance function if they cannot bring it </font><font class="Apple-style-span" face="'times new roman', 'new york', times, serif">on-board</font><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3"> as an equity partner, director or mentor. The niche that the venture capital firms have filled with start-ups is the financial strategy and making sure that the organisation goes public or is sold off when the pre-agreed milestones are reached.</font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif"><br></font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif">In addition I would recommend that you make it clear to them that if an
opportunity arises such as a buy out that they had not factored into their business plan that they should take it, products or innovations are not offspring. <br></font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3"><br></font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">Back to the question, they should re-invest the money into the businesses growth either internally or by acquisition as a means of fattening then buy the big cars, plots, government bonds with the money they will get after listing just like Thakaar of Scangroup, the Somen Brothers of AccessKenya did and Transcentury is about to do. Which is called eating your cake and having it.</font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3"><br></font></div><div><font class="Apple-style-span" face="'times new roman',
'new york', times, serif" size="3">Regards</font></div><div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3"> </font></div><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">Robert Yawe</font><br><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">KAY System Technologies Ltd</font><br><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">Phoenix House, 6th Floor</font><br><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">P O Box 55806 Nairobi, 00200</font><br><font class="Apple-style-span" face="'times new roman', 'new york', times, serif" size="3">Kenya</font><br><br><div style="color: black; font-family: 'times new roman', 'new york', times, serif; font-size: 12pt; ">Tel: +254722511225, +254202010696<div><br></div><div style="font-family:times new
roman, new york, times, serif;font-size:12pt"><br><div style="font-family:times new roman, new york, times, serif;font-size:12pt"><font size="2" face="Tahoma"><hr size="1"><b><span style="font-weight: bold;">From:</span></b> Phares Kariuki <pkariuki@gmail.com><br><b><span style="font-weight: bold;">To:</span></b> robertyawe@yahoo.co.uk<br><b><span style="font-weight: bold;">Cc:</span></b> KICTAnet ICT Policy Discussions <kictanet@lists.kictanet.or.ke><br><b><span style="font-weight: bold;">Sent:</span></b> Thu, 7 July, 2011 18:45:06<br><b><span style="font-weight: bold;">Subject:</span></b> Re: [kictanet] Finance Policy - Tech Startups<br></font><br><div><font class="Apple-style-span" color="#330099" face="arial, helvetica, sans-serif">Firstly, thank you all for your feedback. </font></div><div><font class="Apple-style-span" color="#330099" face="arial, helvetica, sans-serif"><br>
</font></div><div><font color="#330099" face="arial, helvetica, sans-serif">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 </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif">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? </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br>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... </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif">@Suhayl Sadly I'm not in that situation :-(, but I do get your point on R&D. </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif">@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. </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif">@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. </font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><font color="#330099" face="arial, helvetica, sans-serif">@Liko Sounds like real estate is more lucrative? :-)</font></div>
<div><font color="#330099" face="arial, helvetica, sans-serif"><br></font></div><div><div class="gmail_quote">On Thu, Jul 7, 2011 at 6:18 PM, Suhayl Esmailjee <span dir="ltr"><<a rel="nofollow" ymailto="mailto:suhayl@esmailjee.com" target="_blank" href="mailto:suhayl@esmailjee.com">suhayl@esmailjee.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex;"><div>Hi Phares,</div>
<div> </div>
<div>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? ...."<span>I have not failed. I've just found 10,000 ways that won't work.</span></div>
<div> </div>
<div>Statistic for you: 46% of Huawei employees are in R&D</div>
<div> </div>
<div>Best</div>
<div> </div>
<div>SE<br><br></div>
<div class="gmail_quote"><div><div></div><div>On Thu, Jul 7, 2011 at 12:15 PM, Phares Kariuki <span dir="ltr"><<a rel="nofollow" ymailto="mailto:pkariuki@gmail.com" target="_blank" href="mailto:pkariuki@gmail.com">pkariuki@gmail.com</a>></span> wrote:<br>
</div></div><blockquote class="gmail_quote" style="padding-left:1ex;margin:0px 0px 0px 0.8ex;border-left:#ccc 1px solid;"><div><div></div><div><font color="#330099"><font size="2"><font face="arial,helvetica,sans-serif">Hi,<br clear="all">
</font></font></font>
<div><font face="arial, helvetica, sans-serif" color="#330099"><br></font></div>
<div><font face="arial, helvetica, sans-serif" color="#330099">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? </font></div>
<div><font face="arial, helvetica, sans-serif" color="#330099"><br></font></div><font color="#888888">
<div><br></div>
<div>-- <br><font style="color:rgb(51,0,153);font-family:arial, helvetica, sans-serif;" face="tahoma, sans-serif" color="#000066">With Regards,<br><br>Phares Kariuki<br><br>| T: <a rel="nofollow">+254 720 406 093</a> | E: <a rel="nofollow" ymailto="mailto:pkariuki@gmail.com" target="_blank" href="mailto:pkariuki@gmail.com">pkariuki@gmail.com</a> | Twitter: kaboro | Skype: kariukiphares | B: <a rel="nofollow" target="_blank" href="http://www.kaboro.com/">http://www.kaboro.com/</a> |</font><br>
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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.<br>
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</blockquote></div><br><br clear="all"><br>-- <br><font style="font-family:arial, helvetica, sans-serif;color:rgb(51, 0, 153);" color="#000066" face="tahoma, sans-serif">With Regards,<br><br>Phares Kariuki<br><br>| T: <a rel="nofollow">+254 720 406 093</a> | E: <a rel="nofollow" ymailto="mailto:pkariuki@gmail.com" target="_blank" href="mailto:pkariuki@gmail.com">pkariuki@gmail.com</a> | Twitter: kaboro | Skype: kariukiphares | B: <a rel="nofollow" target="_blank" href="http://www.kaboro.com/">http://www.kaboro.com/</a> |</font><br>
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