How I Messed Up A $100,000 Investment!
As a former professional boxer, I believe that you need to manage your money the same way that you manage your fitness.?
When I used to compete I’d track every calorie burned and consumed.
I had adopted a similar mentality with how we managed our business finances.
We’d track: Money Out and Money In!
Money Out (Calories Burned)
Simply put! Expenses.?
We know every subscription we have, every coffee meeting, fine, salary and bonus. Because we know that overspending is the fastest way to kill your startup.?
Money In (Calories Consumed)
The three things that can increase your bank balance. Sales, Invoices and Investment.?
However, not all Money In is created equal.?
That’s where I made mistakes.?
My Mistakes!?
Lesson 1 - Pay peanuts, get monkeys!
Lesson 2 - If you don’t track them properly, you can’t report them properly.
Lesson 3 - If you don’t share your sales numbers with your accountant, he can’t report on them.?
So here I am reporting our Revenue based on the Annual Contract Values (ACV) of our Sales, and our accountants were none-the-wiser. They just saw “Settlements on Accounts Receivable” whenever payment hit our accounts.
Now when you work in Enterprise sales, invoices are due usually after 30-90 days after the service is delivered.?
That’s often 6 months or more after making the sale.
So while I continued to report on our Sales (Calories Consumed), I hadn’t connected that information to our accountants, who were tasked with managing our Money Out (Calories Burned).
Because of that mistake, we fell down in the financial due diligence.?
The investor was looking through our reports and our Revenues were missing.
What they were actually seeing was the “Settlements of accounts receivable.”?
So what happened next?
Well fortunately, our business wasn’t reliant on that money.
We moved on!
We kept our focus on selling…
But we now make sure that we inform our accountant when we do make sales.
So yes it’s annoying to lose out on VC money, especially in Africa where it’s harder to come by.??
But I’ve chalked it up to experience, and keep steaming ahead!
Unlocking Human Potential Through the Neuroscience of Therapeutic Storytelling | StoryQuest? Creator | Speaker & Author
4 个月What an honest and powerful lesson! Building a billion-dollar business is as much about learning from setbacks as it is about celebrating wins. Losing a $100k investment must have been a tough pill to swallow, but your reflection on the experience shows incredible growth and resilience. It’s so easy to focus on the immediate drivers of success—sales, payments, and cost management—especially in the early stages. But as you’ve highlighted, scaling often requires stepping into a more structured framework. Management accounts, income statements, and balance sheets might not feel like game-changers in the day-to-day, but they’re critical. What’s inspiring is how you’ve taken this as a learning moment and continued to push forward. It’s these lessons that pave the way to success. Thanks for sharing such a valuable insight—this will resonate with so many entrepreneurs!
Passionate about improving rural healthcare
4 个月Thank you for sharing. You aren't the only one to have made his mistake. I found the Stanford Seed course valuable and it helped me learn more about finance. Or just ask for help from the Health Tech Hub network
CEO & Co-Founder Do Me a Solid
4 个月Thanks for sharing your lessons, David! Very helpful. Indeed at the early stage, we try to go cheap on anything we deem non-essential. How would you recommend pre-seed and pre-revenue startups handle accounting? Any products/services you can recommend that ensure you are effectively covered without breaking the bank?