At the U-Law Black Friday 7.0, the panellists, including Tosin Dabiri, Investment Manager at Chapel Hill Denham; Elo Adhekupoli, Senior Associate at UUBO; and Chukwudi Enyi, Co-founder of BFREE, spoke broadly on insights and advice to overcome the challenges faced by startups in these domains.

With a focus on credit management, the significance of having robust processes in place before extending credit to customers was the first touchpoint. Chukwudi Enyi, Co-founder of BFREE, emphasized the importance of establishing the right processes and a professional approach, especially for startups offering non-collateralized loans. He highlighted the need for a proper credit score, customer notification systems, and a strategic team encompassing product, risk, and market expertise.

Tosin Dabiri, Investment Manager at Chapel Hill Denham, added insights from an investor’s perspective, underlining the necessity for startups, particularly fintech lenders, to have a well-rounded team, including risk professionals. She noted the need for expertise in risk assessment, offline resources for debt recovery, and the significance of maintaining profitability and liquidity.

The conversation seamlessly transitioned into debt restructuring, with a spotlight on the indicators that signal the need for such measures. The panellists emphasized that companies should proactively approach restructuring when facing challenges in meeting financial obligations, sustaining profitability, and adhering to conditions and covenants set by lenders. Negative equity, a decline in market share, and breaching agreed-upon conditions were identified as key indicators.

Elo Adhekupoli, Senior Associate at UUBO, elaborated on the negotiation aspects of debt restructuring. He highlighted the need for startups, especially in the fintech lending space, to have experienced risk professionals. Elo emphasized the importance of technology, such as KYC (Know Your Customer) processes, and cautioned against heavy reliance on debt without considering equity options for capitalization.

Chukwudi Enyi delved into the specifics of debt recovery strategies employed by BFREE. He outlined a unique and ethical approach that focuses on understanding customers’ perspectives and vulnerabilities. By using psychological triggers and empathetic communication, the startup aims to create a sustainable relationship with customers who have defaulted on loans. Chukwudi stressed the significance of qualifying customers based on their ability and willingness to pay, using this information to tailor payment plans that align with customers’ financial capacities.

The discussion concluded with advice on striking a balance between extending credit to customers and ensuring the financial stability of startups. Tosin Dabiri cautioned against using equity for lending purposes, urging startups to preserve equity for essential business functions. She stressed the need for startups to focus on reducing costs, exploring new revenue streams, and seeking debt as a viable option for sustaining lending operations.

In essence, the panellists at U-Law Black Friday 7.0 highlighted the complicated relationship between credit management, debt restructuring, and recovery, offering valuable insights for startups having difficulties with these challenges in business.

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Titled “Why Are Startups Failing: Building a Strong Compliance Culture,” the session aimed to analyze the challenges faced by startups and the importance of facilitating a competitive compliance culture for their success.

Throughout the session, various panellists shared their perspectives on key challenges faced by startups. Four critical areas of support for startups: product, talent, distribution, and funding, were reiterated. Pointing to the changing dynamics of funding, startups were encouraged to think differently about profitability and growth. The expansion of investor interest beyond the tech space was noted, with a shift towards verticals like education.

The discussion extended to challenges in talent acquisition, where human error and high costs were identified. Startups were urged to focus on collaborations for regional expansion and user growth as well as the need for a deep understanding of business economics and differentiation in the market, was stressed.

Challenges faced by companies that might be trending toward failure were also discussed. The importance of solving real-world problems and adapting to changing circumstances was highlighted. The conversation acknowledged that, while some companies might cease to exist, the overall ecosystem presents abundant opportunities for new solutions.

The dialogue then shifted towards the regulatory space in Nigeria, addressing compliance challenges. The lack of clarity around regulations, bureaucratic hurdles in dealing with government regulatory services, and the high cost of compliance were discussed. The need for startups to prioritize compliance and due process was also emphasized.

In a legal perspective, lessons learned from startups that faced compliance issues was a major pointer. Examples were given, including the revocation of licenses by the Central Bank of Nigeria (CBN) affecting fintechs. The importance of caution, diversification, and ethical considerations in navigating regulatory challenges.

A legal expert provided insights into setting up a strong compliance culture. The importance of engagement with regulators, having tailored policies and procedures, and gradually scaling compliance efforts were emphasized. The role of compliance in building trust with customers, preventing fines, and gaining investor confidence was highlighted.

Investors often view a startup’s compliance practices as an important factor when considering investments. 

Here are some key points from an investor’s perspective:

1. Risk Mitigation: Investors seek startups with strong compliance structures as it minimizes legal and regulatory risks. A well-managed compliance framework demonstrates a commitment to ethical business practices and adherence to laws, reducing the chances of legal issues that could impact the investment.
2. Long-Term Viability: Compliance is seen as integral to a startup’s long-term success. Investors are more likely to invest in companies that show a commitment to sustainable and ethical business operations. This is significant for building trust not only with regulators but also with customers and other stakeholders.
3. Market Expansion: Startups that are compliant with relevant regulations are better positioned for market expansion. Investors are interested in companies that can drive regulatory space effectively, especially when planning to scale operations or enter new markets.
4. Financial Integrity: Compliance practices often reflect a startup’s financial integrity. Investors look for transparent financial reporting, adherence to accounting standards, and a clear understanding of the financial implications of compliance. This contributes to building trust in the startup’s financial management.
5. Due Diligence: During the due diligence process, investors assess a startup’s compliance history. Any past legal or regulatory issues may raise concerns and potentially affect the investment decision. Therefore, startups with a clean compliance record are generally more attractive to investors.
6. Adaptability to Change: Regulations can evolve, and investors value startups that show adaptability to changing compliance requirements. This includes having mechanisms in place to stay informed about regulatory changes and adjusting business practices accordingly.
7. Ethical Considerations: Ethical business conduct is becoming increasingly important for investors. They are more likely to invest in startups that not only meet legal requirements but also align with ethical standards and social responsibility. Compliance with environmental, social, and governance (ESG) criteria is gaining prominence.

In summary, startups that prioritize and effectively manage compliance are viewed more favourably by investors. This not only mitigates risks but also contributes to building a foundation for sustainable growth and long-term success.

The panellists and speakers at the U-Law Black Friday 7.0 event provided a comprehensive overview of the challenges startups face, the significance of compliance, and strategies to build a resilient business structure. The insights shared aimed to guide startups in striving through the complex terrain of regulations and enabling a culture that promotes long-term success.

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Themed “The African Business Journey: Stories of Resilience,” U-Law Black Friday 7.0 included legal experts, entrepreneurs, and industry leaders who focused on how startups and MSMEs can scale through to success despite challenges.

In a fireside chat, Chinedu Azodoh, Co-founder of Max NG spoke on his personal journey, providing invaluable insights into the challenges and triumphs he faced in the African business sector.

Reflecting on his experiences, Azodoh recalled, “In 2005, I was fortunate to finish my college education. In 2006, my father retired from the army, and for six months we kept looking at each other in.the house because we were on strike. He said I needed to leave the house and go anywhere and shortly after, I got a scholarship in the US. I set off and later on embarked on a project, after which I fell in love with the dynamics of the market.”

Azodoh touched on his university years, where he aimed to improve the quality of life. “Out of college, my focus shifted to service. I wanted to build systems that helped individuals achieve financial peace and contribute to economic prosperity,” he shared.

The discussion shifted to the inception of Max NG, a company that has significantly impacted the transportation sector in Africa. Azodoh provided insights into the challenges faced in the Nigerian market, noting the importance of addressing issues related to motorcycle transportation regulation.

He further highlighted the stress of dealing with regulations: “In Nigeria, there’s no regulation around motorcycle transportation. We were at the mercy of states to determine our fate.” He elaborated on the challenges faced during meetings with government officials and the need to navigate a complex regulatory ecosystem.

“One of the most challenging things for the business was the lack of regulation around motorcycle transportation in Nigeria.” The struggle extended beyond economic considerations to safety concerns. He detailed meetings with government officials and the need for industry-specific regulations.

“The challenge also reflected broader issues in Nigeria, where politics often overshadowed economics. Privatizing politics over economics became a recurring theme.”

A key aspect of Max NG’s success was its strategic use of technology. Azodoh shed light on how technology was leveraged to enforce safety measures and improve operational efficiency. “We published traffic data, implemented smart traffic lights, and built a filing system to hold riders accountable,” he explained.

Azodoh emphasized the importance of technology in overcoming challenges, stating, “We figured out how to leverage technology for safety, selection, and validation. We even paid the Lagos state government to prove our commitment to safety.”

As the regulatory landscape evolved, Max NG underwent transformations. Azodoh discussed the shift to electric vehicles, stating, “We changed our entire business model to focus on electric vehicles. It wasn’t easy, but every three to four years, businesses need to adapt.”

He highlighted the importance of focusing on long-term outcomes: “Entrepreneurs are essential to recovery. Your mindset is critical to your performance. You need to manage yourself and focus on long-term satisfaction.”

Azodoh shared invaluable insights into the art of fundraising, emphasizing the significance of relationships. “Fundraising is literally about relationships. Build relationships through stories and industry knowledge,” he advised.

The discussion shifted to investor relations, with Azodoh providing candid advice to startups seeking funds. “Ask investors if they lead rounds and identify deal breakers. Investors aren’t doing you a favor, but don’t be arrogant about it,” he emphasized.

Azodoh concluded: “People who do not have money to give you are the most curious people in the world. Fundraising is about relationships, and relationships will fundraise. Your time is very important”

The U-Law Black Friday 7.0, Chinedu Azodoh’s fireside chat dissected the complexities of the African business sector, reflecting on the resilience required to scale through the regulatory space and transform challenges into opportunities.

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