Asher's Blog

In 2022, I found myself in a conversation with a group of founders about fundraising in Nigeria and outside Nigeria.

One founder after another began to describe their experiences with investors, especially African investors. They spoke about behaviour after the money had entered the company: unexpected pressure, interference in operating decisions, difficult board relationships, shifting expectations and terms that looked manageable during fundraising but felt very different when the business encountered a difficult period.

I remember saying, “Wow.” Until then, I had not raised from an African investor, and I was not actively looking to do so. Yet many of the experiences being shared confirmed concerns I had already carried. The problem was not that African capital was inherently bad; that would be both unfair and untrue. The lesson was that founders often speak about money as though every naira or dollar behaves in the same way once it enters a company.

It does not. Capital has a personality.

Money itself may be neutral, but it arrives with an owner, an objective, a time horizon, a risk appetite, a governance style and a definition of success. It carries expectations about growth, control, repayment, liquidity and communication. Those expectations eventually enter the company with it.

The source of capital can change how a company thinks, what it prioritises, how quickly it must grow and which decisions remain available to the founder. This is why raising money is not simply a financial transaction. It is the beginning of a relationship.

The cheque is only the visible part

When a founder is running out of money, the cheque naturally becomes the centre of attention. Salaries are approaching, product work is incomplete and competitors are moving. Under that pressure, capital can look like a commodity: if two investors are offering the same amount at the same valuation, their money appears identical.

But the cheque is only the visible part of the deal. One investor may be patient during a difficult quarter and helpful during a crisis. Another may become anxious at the first missed target. One may understand that African currencies can sharply distort dollar-denominated performance. Another may interpret every macroeconomic shock as a failure of management. One may open doors to customers and future investors. Another may demand access, reports and control without creating corresponding value.

Even two investors using the same legal instrument can behave very differently. The personality of capital appears in the questions the investor asks before investing, the terms they insist upon, the way they behave after investing and the pressures created by their own source of funds. An individual investing personal wealth may have different patience from a fund manager who must return capital within a fixed fund life. A corporate investor may care about strategic access as much as financial return. A development-finance institution may prioritise governance, jobs or social impact. A lender expects repayment according to a schedule whether or not the company’s valuation has increased.

The capital does not merely fund the strategy; it can gradually reshape it.

Understand who is behind the money

Founders spend months being examined by investors. Their market is questioned, their forecasts are challenged, references are taken and financial records are inspected. That diligence is reasonable because the investor is taking risk.

The founder should conduct diligence too. Before accepting money, ask what the investor has funded before. Speak with founders from companies that performed well, but also speak with those whose businesses struggled. Almost every investor is pleasant when a portfolio company is growing quickly. Character becomes visible when targets are missed, a bridge round is needed, a co-founder leaves or the company must change direction.

Useful questions include:

• How does the investor behave when the company misses its plan?
• Do they help founders think, or do they attempt to operate the company from the boardroom?
• How quickly do they respond when the founder needs a decision?
• Have they supported portfolio companies in later rounds?
• How do they handle conflict?
• Do they respect information shared in confidence?
• Have they ever blocked a reasonable financing, acquisition or strategic decision?
• What do they expect in reporting, governance and access?
• Would the founder take their money again?

Do not ask only the references the investor provides. Find other founders in the portfolio, including founders from companies that are no longer celebrated on the investor’s website. The purpose is not to find a perfect person. There is no perfect founder and no perfect investor. It is to understand which imperfections you can responsibly live with.

Everyone has different idiosyncrasies. A working style one founder tolerates may drain another. A highly involved investor may be valuable to a first-time founder who wants close guidance and frustrating to an experienced operator who needs room to execute. Compatibility matters.

Venture capital has a growth personality

Traditional venture capital is designed for companies capable of unusually rapid growth and very large outcomes. A venture fund usually expects that a small number of exceptional companies will produce much of the fund’s return. That economic model shapes its personality.

Venture capital is therefore rarely neutral about pace or scale. It tends to encourage expansion, market leadership and outcomes large enough to matter to the fund. This can be exactly what an ambitious technology company needs. It can also be the wrong money for a good business that should grow steadily, distribute profits and remain within a defined market.

The mismatch becomes dangerous when a founder raises venture capital for a business that cannot plausibly generate venture-scale returns. The company may then be pushed towards premature expansion, excessive hiring or risk it would not otherwise take. A sound business can be made unhealthy by capital whose expectations do not fit its economics.

The question is therefore not, Can I raise venture capital? It is, Should this company be built with venture capital?

An accelerator’s capital carries an ecosystem

Capital from a startup accelerator can have a different personality from an ordinary seed investment because the founder is not receiving money alone. The investment may include a peer network, structured advice, brand credibility, alumni access and an introduction to a broader fundraising market.

Y Combinator is a clear example. Its published standard deal currently invests $500,000 through two SAFEs: $125,000 for 7 per cent and $375,000 on an uncapped most-favoured-nation SAFE. But reducing YC to those financial terms misses much of what founders are buying and giving up. The programme’s network, signalling effect, accumulated startup knowledge and continuing participation rights are part of the capital’s personality.

That experience differs from taking the same amount from one investor who provides money but no ecosystem. It also differs from taking money from a venture studio that expects to help build the business, or from a corporate accelerator whose strategic interests may influence partnerships and product direction.

Founders should evaluate the complete package. Sometimes a lower valuation from a respected ecosystem produces more long-term value than a higher valuation from isolated capital. Sometimes the brand is less useful than founders imagine and the dilution is not justified. The answer depends on what the company needs and what the investor can genuinely deliver.

African capital is not one personality

It is easy to take a few painful founder stories and conclude that “African investors” behave in one particular way. That would repeat the same careless thinking that often causes international investors to treat an entire continent as one market.

African capital includes institutional venture funds, family offices, banks, angel investors, pension-linked capital, development institutions, corporate investors and wealthy individuals. They have different mandates, experience levels and standards of governance. Some are deeply founder-friendly and internationally sophisticated. Some understand local regulation, distribution and political risk better than any foreign fund could. Others may approach venture investments with the control expectations of a traditional private business, even though startup economics require a different relationship.

The correct response is not to reject capital because it is African. It is to understand the particular investor.

Local capital can bring important advantages. It may provide contextual intelligence, regulatory relationships, customer access and patience with problems that foreign investors misunderstand. It may also be denominated closer to the currency in which the company earns revenue, reducing some of the tension created when a company raises in dollars and earns in naira.

But proximity is not automatically alignment. Founders should still examine the investor’s track record, decision process, governance behaviour, time horizon and treatment of other founders. Judge the capital by its character, not merely its passport.

Debt has a clock

Equity waits for the company to create value. Debt waits for a date.

A lender does not ordinarily participate in the upside if the company becomes one hundred times more valuable, so the lender protects itself through interest, security, covenants and a repayment schedule. That gives debt a very different personality from equity.

Debt can be excellent capital when a company has predictable cash flow and is financing something with a measurable return. It may allow founders to grow without dilution. It can fund inventory, receivables, equipment or a temporary working-capital gap.

But debt does not become patient simply because the business is a startup. Interest continues to accumulate when product development is delayed. Repayment can become due when customers pay late. Security may be enforced when the founder most needs flexibility.

The question is not whether debt is cheaper than equity in a spreadsheet. It is whether the company’s cash-flow pattern can carry the clock attached to it.

Strategic capital has another agenda

A corporate investor may offer distribution, technology, licences, data, credibility or access to an important market. Those advantages can make strategic capital extraordinarily valuable.

But strategic capital is rarely interested only in financial return. The corporation may want commercial access, preferred terms, exclusivity, information rights, influence over partnerships or an eventual acquisition option. Its priorities can also change when leadership changes or the parent company alters strategy.

Founders should therefore ask what happens if the strategic relationship stops working. Can the startup still partner with the investor’s competitors? Does the investor receive rights that make future investors uncomfortable? Will sensitive information be visible to a company that may later compete? Is the startup becoming dependent on a distribution channel it does not control? The best strategic capital creates mutual advantage without narrowing the startup’s future.

Angel capital is often personal in the most literal sense

An angel investor is frequently investing their own money. The relationship can therefore carry more of the individual’s personality than institutional capital does.

A good angel can be one of the most helpful people on a founder’s journey. They may move quickly, make introductions and provide calm counsel without requiring formal control. Because the decision is personal, they can back unconventional founders before an institution is ready.

The same personal character can create difficulty. Expectations may be informal at the beginning and disputed later. The investor may expect frequent access, employment for a relative, influence beyond their ownership or repayment where the document clearly described equity.

Put the agreement in writing even when the investor is a friend, mentor or family member. Clarity protects the relationship. Friendship is not a substitute for governance.

Founder capital carries freedom—and concentration

Money invested by the founder has its own personality. It can give the company time to build without explaining every decision to an external investor. It can demonstrate conviction and help the founder negotiate from strength. When used thoughtfully, founder capital preserves optionality.

But it can also concentrate risk dangerously. A founder may put family security, personal savings and the company’s survival into the same uncertain asset. Because the money feels personal, the founder may continue funding a weak strategy long after an outside investor would demand evidence. Personal sacrifice can become an excuse to avoid an honest decision.

Founder capital offers freedom, but freedom still requires discipline. Define how much you can responsibly invest, what milestones the money must achieve and when the thesis will be reviewed. Do not confuse personal conviction with unlimited capital.

Revenue is the least intrusive capital, but it still has demands

Customer revenue is often the healthiest source of capital because it does not dilute ownership and does not ordinarily carry interest. It is also evidence that somebody values what the company has built.

However, revenue is not free money; it comes with an obligation to deliver. Annual subscriptions collected in advance create months of future service. Deposits for products create production and fulfilment responsibilities. Enterprise contracts may demand support, security and customisation that cost more than the initial cash suggests.

Customer-funded growth is powerful when the economics are sound. It becomes dangerous when founders spend advance payments as though the related obligations have already been completed.

Revenue’s personality is demanding but clarifying: create value, deliver what was promised and earn the next payment.

Customer float is not your capital

This distinction is especially important for financial technology companies. Money that customers deposit, save or entrust to a platform may appear as cash within the system, but it is not the company’s operating capital. It belongs economically to the customers and may be subject to safeguarding, segregation, liquidity and regulatory requirements.

Float therefore carries the strictest personality: stewardship. It should not be used to fund salaries, marketing, expansion or losses merely because it is temporarily available. The company must know how those funds are held, what risks they are exposed to, when customers can request them and how settlement will be honoured under stress.

Using customer money as though it were founder or investor capital is not financial creativity. It is a breach of trust and may be a regulatory violation.

A founder operating in payments, savings, lending or investment should build treasury, reconciliation and safeguarding discipline before volume makes weakness expensive.

Grants want evidence of impact

Grant capital does not usually require equity or repayment, which can make it appear to be the best money available. For research, public-interest infrastructure, climate solutions, inclusion and early experimentation, grants can unlock work commercial capital will not yet support.

But grants also have a personality. They may restrict how money is spent, require detailed reporting, prioritise impact measures and operate according to programme timelines rather than market urgency. A company can become skilled at winning grants without becoming skilled at winning customers.

Use grant capital to accelerate a mission that already belongs to the company. Do not redesign the company around whichever grant happens to be available.

The terms reveal the temperament

An investor’s personality does not appear only in meetings. It is written into the term sheet.

Board seats, veto rights, liquidation preferences, anti-dilution protection, information rights, founder vesting, redemption rights, pro-rata rights and restrictions on future financing all affect how the relationship will function. Two cheques of the same size can produce completely different companies because their terms distribute power differently.

Founders should not treat legal review as a ceremonial exercise after agreeing the “commercial” deal. The legal terms are part of the commercial deal. A friendly conversation cannot neutralise an unfriendly document.

Ask counsel to explain not only what each clause means today but how it behaves in a difficult scenario: a down round, a modest exit, a founder departure, a board disagreement or a financing the existing investor does not support.

Good investors also benefit from clear documents. Ambiguity creates conflict, and conflict destroys value.

Raise from leverage, not fear

Capital becomes most expensive when the company has no alternative. If one investor is the only person willing to fund the business and the bank account is almost empty, that investor does not need to offer the best terms. The founder may accept pressure, dilution or governance rights that would have been rejected six months earlier.

Leverage does not mean manipulating investors or manufacturing artificial scarcity. It means building enough value and starting early enough to preserve choice.

Revenue creates leverage. Strong retention creates leverage. A credible team, clean accounts, reliable reporting, intellectual property, licences, a respected lead investor and sufficient runway all create leverage. So does a competitive fundraising process in which several suitable investors understand the company at the same time.

Having multiple interested investors is not merely about valuation. It allows the founder to compare personalities.

If you have only one option, you are choosing between that capital and no capital. If you have several options, you can choose the partner whose expectations, temperament and resources fit the company.

Integrity remains essential. Do not invent competing offers, conceal material facts or create false urgency. The strongest leverage is a business that can truthfully demonstrate value and responsibly decline unsuitable money.

Diversification can help, but the cap table is not a crowd

There is value in having more than one investor. Different investors may provide different networks, perspectives and sources of follow-on support. Dependence on a single backer can expose the company if that investor changes strategy or loses the capacity to continue funding.

Yet more investors do not automatically mean less pressure. A crowded cap table can create communication overhead, conflicting expectations and difficulty obtaining approvals. Twenty small investors who all expect personal access can be more distracting than one well-governed institutional partner.

The objective is not to maximise the number of names on the cap table. It is to create a thoughtful group of owners who understand the journey, bring complementary value and can behave constructively together. Syndicate for resilience, not for decoration.

Design the capital stack around the work

The unfinished thought I was reaching for is not simply that founders and investors should “come together.” It is that the capital around a company should be deliberately assembled.

Different work deserves different money. Long-horizon research may require patient equity or grants. Predictable working capital may be suited to debt. A new market may benefit from a strategic partner. Early experimentation may be funded by founders, angels or an accelerator. Proven products should increasingly be supported by customers. Regulated customer balances must remain protected rather than being mistaken for financing.

For each source, ask:

1. What return does this capital expect?
2. When does it expect that return?
3. What control or rights accompany it?
4. What pressure will it create when the plan goes wrong?
5. What value does it bring beyond money?
6. Which future choices might it restrict?
7. Does its currency match the currency in which the business earns?
8. Does the investor’s behaviour match the founder and the company’s stage?

These questions turn fundraising from an act of desperation into capital strategy.

Choose the journey, not just the money

The day the funds arrive can feel like the end of a difficult process. In reality, it is the beginning of a longer one.

The investor may remain on the cap table for ten years. Their consent may be needed for important decisions. Their reputation may affect future rounds. Their conduct may influence the board, the management team and the founder’s peace of mind. You are not merely accepting money; you are choosing who will be present when the company is under pressure.

So investigate the investor with the same seriousness with which they investigate you. Understand the mandate behind the cheque. Read every term. Speak with founders they have backed. Examine what happened when those companies struggled. Decide whether their definition of success is compatible with yours.

Capital has a personality because capital always comes from somewhere and wants to go somewhere.

Choose money whose destination is compatible with the company you are trying to build. —

References and further reading

• Y Combinator, The Y Combinator Deal.
• Y Combinator, A Guide to Seed Fundraising.
• Brad Feld and Jason Mendelson, Venture Deals.
• Noam Wasserman, The Founder’s Dilemmas.
• William A. Sahlman, “How to Write a Great Business Plan,” Harvard Business Review.