Four emerging market considerations for raising funds

Backing your case for investment often rests on making a strong case for why you will make money and beat others to opportunities. But managing your company also requires an understanding of ways to comply with legislation easily and grasp shifts in the world economy.

At this point in the ongoing conversation on raising venture capital, Memeburn recommends four tips for emerging market entrepreneurs.

1. Demonstrate understanding of the law
In emerging markets, studies like the World Bank’s Ease of Doing Business report demonstrates inflexibility in many counties. Hiring and firing is a rigorous process and being stuck with a destructive employee on the team can be devastating.

In heavily regulated labour markets, compose your team based on consultant contracts, not on employees. This will help you avoid the legal costs of managing employee tax issues as consultants are responsible for their own tax payments, not you.

It also serves to ensure your fall outside compliance with onerous labour legislation. A member of the team that is formally employed can be difficult to formally fire – and any company worth its salt knows the burden of not being able to remove a destructive employee. Contracts not only take away the tax compliance time and costs, they also allow for contracts to be routinely renewed or declined without contravening labour law requirements around warnings, mediations and costly legal processes.

2. Demonstrate an understanding of failure
It’s an old adage in the Silicon Valley startup space that failure is often a prerequisite for success later in life. For any investor, it’s understandable they don’t want your failure to take place with their money. Recognise that the primary concern of the investor is not that you are impressive all of the time, but that you will make money. A less than impressive record that demonstrates an understanding of where you went wrong and what you did differently shows the capacity to deal with the inevitable types of crisis a business is likely to endure. And that makes for a safer investment, even if it means you need to eat some humble pie. So don’t be afraid of failure and engage in a conversational style.

3. Demonstrate your work’s place within your lifestyle
The startup space is not 9 till 5pm. Passion is a key driver. Tie in a discussion of what you want to achieve as a startup entrepreneur in light of your wider goals in life. The entrepreneur is tied deeply to the company he or she is approaching and that means your own life mission and that of the company is pretty much intertwined. If you were designing devices at the age of 9 or playing around with software you in turn tried to sell, you clearly have something of an entrepreneurial nature. Without resorting to psychological over-analysis, take simple stock of where your passions came from and what you enjoy doing. Make a note of these and convey them where appropriate. Make sure your own values and those of the company align in your own mind.

This is the only “fuzzy-duzzy” recommendation you will read on memeburn.com from me, but while you are at it, take a look at the world of John D. Demartini on aligning values and your work objectives. It will make for a clearer vision and mission in your own life, allowing you to communicate that in your networking and relationship. It’s not surprising the world-renown philosophe and author seems most passionate about emerging markets, where he spends much of his time. Now back to the money:

4. Demonstrate your understanding of the new global reality
Of course we all know emerging markets performed well in the midst of the 2008 recession which saw developed markets take a dive. That doesn’t make emerging markets perfect. Don’t romanticise — it that will hardly go down well amongst funders who know the challenges. While consumer power has grown massively and the potential to gain millions of new clients is very much there, emerging markets have their own sets of problems: infrastructure, the rule of law and the ease of doing business are some them. Browse the Wall Street Journal’s Index of Economic Freedom if you want to get a closer grasp on the bigger picture factors that need to be considered.

If you are targeting emerging economies, especially customers in let’s say the cloud-computing realm, you have a compelling business case. Don’t however fail to factor in the externalities you have no control over. The delays at ports, the time it takes to get a business licence or the simple cultural differences in working habits need to be accounted for. Be realistic about those and have them as factors in any plan. If you are not moving physical items at any point in your business watch the obvious like bandwidth costs, reliability, internet access levels and yes, indeed even censorship. Don’t advertise on a social network site in a country that regulates and blocks entire websites it doesn’t like.