Why start-up owners should be ready to share information

The purpose of every business should be to create value and deliver a return on the risk taken on capital and human resource.

As I plunge into the task of preparing Africa’s largest technology showcase where startups and upstarts from across Africa have in the past successfully launched to the world, the biggest gap that still exists is that of articulating the art and detail of the deal, inclined toward technology businesses that are often service based.

Owner’s capital that extracted value from traditional sectors such as real estate, agriculture, and manufacturing are yet to make the big leap into technology. This can almost be solely attributed to the lack of visibility on the inner workings of the investment pipeline.

Those that have set up shop and put seed or growth capital into technology-centred businesses often build a moat around their investments with a strict veto on the sharing of information.

Granted, these are private companies and their internal workings and operations can be shielded from the outside world, but hoarding information that would otherwise enrich many entrepreneurs does more harm than good.

As a result, speculation and misinformation take root as many times business journalists will simply be content with the press release that highlights the numbers of the sale and percentage of shareholding that has changed hands, with an appropriately captioned photo to boot.

This calls for two things. The first is a brand of investigative business journalism in light of the lack of readily available data on private company performance and structure of deal making, as companies mature and take on growth capital. It is a most difficult task that would take months to stitch together, hence perhaps why the suitors are few.

The second would be a change in company culture that celebrates transparency and openness, with the benefit of consumers gaining a deeper appreciation of what goes into making products or services that they consume.

A quick poll within my entrepreneur network, however, reveals that the latter is easier said than done. Everyone wants the details, only if they are not the ones to give them from within the companies that they run.

A bit of a stalemate it would seem; investors wanting to shield their investments from prying eyes and a possible spawning of copycats, entrepreneurs keen on preserving “mystery” and an ecosystem guessing and angling for that little bit of understanding so that it can improve itself.

Equity formulas, financial dashboards, team dynamics, company culture and founder experiences are but some of the details that would add tremendous value to the present Plain Jane numerical reportage.

Mr Njihia is CEO of Symbiotic | www.mbuguanjihia.com | @mbuguanjihia