Financial institutions such as banks do not fund startup businesses because the assumptions that are used to make cash flow projections often do not equal the actual performance.
Dishonest money dwindles away. But whoever gathers money little by little makes it grow. Proverbs 13:11.
I was reminded of the bible verse when I met an investment scheme sales woman. The scheme involved 25 startup companies. According to the sales pitch, if one bought shares in a company and paid for a product they would be assured of fixed income returns for the rest of their lives.
Managing one start up business until the point it turns up positive cash flow and profits is a big enough headache. But when you are dealing with 25 startup companies and collecting capital from Uganda for activities in far flung places such as the United Kingdom, you must be a business superman or superwoman.
Financial institutions such as banks do not fund startup businesses because the assumptions that are used to make cash flow projections often do not equal the actual performance. I am, however, surprised that many Ugandans have already thrown good money into such startup companies.
The other surprising fact is that people set up collective investment schemes and go on to collect money from the public while the regulatory body simply looks on.
Unfortunately, Ugandans are easy prey to investment scams, in the pursuit of quick money and passive income.
James Abola is a business and finance consultant. Email: [email protected]