According to TechPoint the Nigerian Startup Funding Report publication on the funding activities within the local internet startup space, 37 startups have raised a whooping sum of $35,552,585 in the Q3 of year 2018 mostly from foreign investors. There are seven startups in the energy sector that got funding. Now, the question is how does these tech startup companies spend their raised funds?
Seriously, I use think whenever these guys raise funds, they are already big boys and girls. And besides, these are tech companies that does not need much money to run. Well, my thought about this was wrong. These are some of the things they spend their raised funds on:
To scale a tech services that is already commanding customers trust is not easy at all. A robust and not failing server, web services, systems etc are all needed and these are not small beans. CEO of Paystack talked here that the whole website is sitting on Amazon Web Services (AWS) which commands thousands of dollars annually.
SCALE THE TEAM
As customers grow, the system becomes complicated and hard to maintain hence the need for more technical hands. Senior Engineers that know their tools don’t earn little. The fact that these guys are hard to get, there are lot of competition to get them, so to get one, startup companies have to spend extra. Scaling the team may involve training of inhouse engineers or developers or staff to give optimal result in their daily activities.
There will be no startup without the customers. Tech startup spend lot of money building their community. They go extra mile to hack their community with their products and teach them how it is being used.
When a company is growing both in strength and profit, the need for expansion is inevitable. It may be getting a classy and nice office or expanding to another territory or Nation. Also, expansion may means investing in other sector of the economy or expanding the scope of the present business model.
It is mandatory that companies organise social responsibility and startup companies spend alot on this. Some go a long way building projects in their respective locations, organise training, bootcamp etc.
SETTLEMENT OF DEBT
Well, this may not always happen but it is definitely part of it. Raising a company to the stage of raising fund successfully would have run the founder or team to debt. So, the raised fund may redeem some of the debt.