How the Re-branded YouWiN! Connect Funding is Structured.

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I have received lots of inquiries from applicants especially since the successful ones were shortlisted. Participants keep asking, ‘will YouWiN give money?’ ‘How much is YouWiN going to give us?’ ‘…I cannot see anywhere they have mentioned how much they are giving in this YouWiN.’ And a whole lot of similar questions.

These are real concerns and they appear to be true. All the communication from YouWiN so far has not mentioned any monetary benefit, and that is deliberate from them. YouWiN was established to encourage the springing up of new businesses. Under the previous administration, YouWiN provided business training and skills development for 6000 semifinalists, after which they are required to submit business plans and submit other some specified documents like land titles. About 1200 selected from all the geopolitical zones are then shortlisted as finalist and winners and given between N1million to N10 million depending on their business needs.

However, one of the biggest challenges of the previous YouWiN editions was that some beneficiaries squandered the funds without starting any businesses, while others presented non-existent businesses, with fake documents. So it was obvious the focus for applicants and beneficiaries then was “the money” and not starting or growing their businesses.

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So in my opinion, the YouWiN Connect is deliberately not saying much about the funding aspect of the YouWiN! Connect. It is so that they can attract more Nigerians who are sincerely interested in starting or growing their businesses. this is because any such persons would also be interested in every aspect of their business and not just funding. It is also an attempt to disabuse the minds of an average Nigerian SME that funding is not the most important factor in business growth. Capacity development, which is more of what YouWiN! Connect is doing through most of its programme, is even more important than funding.

Having said these, I want to assure you that YouWiN Connect has funding SMEs as part of its core objectives. However this time, they have not called it ‘Grant’ but ‘Series Fund’.
This is how YouWiN Connect defines its Series Fund;

Source: www.youwinconnect.org.ng.

What this implies is that the fund coming from YouWiN Connect this time is neither a grant nor a loan, but an equity investment. This is a unique form of business financing that makes the fund provides an investor/shareholder in the business they are financing/funding.
Let me help you understand these terminologies and their implications properly as regards business financing.


Grant Financing: these are money given to businesses to start or grow. You can call it free money because the business is not required to pay back the money and the person or organizations giving them the money are not asking for any share of the businesses they fund. Most time these people also monitor your business to see your progress. This was the case in the previous YouWiN 1, 2, and 3. 
The good side is that there’s no obligation to repay the money and money can be applied freely as an owner’s capital in the business. The bad side is that most times, especially when the owners of the business are not very dedicated, it makes the complacent especially since they see it as free money and there is little to no obligation to be accountable to the provider(s) of the fund. This was evident in the previous YouWiN where some people used the money to buy cars, marry more wives and distribute to friends. But we must recognize that there were those who applied their funds appropriately have grown their businesses to very enviable heights.

Loan/Debt financing: This is more popular because it is a business for most financial institutions. This is money given to or lent to businesses to start or grow, and are required to pay back the same amount over a specified period of time (in months of years). Loan financing may carry interest like as with most commercial banks or be interest-free like with the CBN interest-free loans. The good side of Loan financing is that it enables businesses to get exactly the amount of funds they need at the moment and keeps them on their toes. A business owner who uses debt financing is more likely to be accountable than the business owner who uses receives grants. The bad side is that just like the name goes it is a debt, and it does not take into consideration whether or not the business made profit or loss.

Equity financing: This is a kind of business funding where a group of investors called venture capitalists g provide funds to businesses in exchange for a specified share in your business for a specified period of time or until they decide to quit. It is just like you have a rich uncle who has been doing business over the years, and you have a business idea or a growing business that requires funds to grow. You approach your uncle to give you money to inject into your business, and he says fine, I will do that, but you will allow co-own the business with you. It is a win-win, you get the money you need and he becomes a shareholder in your business.
Venture capitalists or equity investors usually become involved in the key decision-making process of your business (not the day-to-day running of the business) as board members usually through their appointed fund managers. This is probably the best form of business financing for any truly sincere entrepreneur, because you have nothing to lose, except a 100% control of your business. Venture capital investors are usually very experienced in business and so coming into your business, they would bring their expertise and experiences and help your business to grow more than you would have done alone. Again, in the case that your business did not pick up as you both envisaged, or in the worst case scenario fail, they simply walk away and you would owe them nothing. The only bad side is that you lose some control over your business.

This is why the YouWiN Connect has chosen this Financing model because it affords them to control and minimizes your own risk.

I will be writing more articles on Equity financing especially on how to manage the powers/control you are giving away to investors in your business.

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