Philanthropy: In Search of Angels

Oct-Dec 2016 edition of Masterpiece Magazine @ Masterpiece-ng.com

Leisurely reading the Sunday newspapers, I was captivated by a seemingly innocuous article captioned Nigerians: We must all get our hands dirty. Refreshing, I thought amongst the timeworn focus on asset declaration, which by the way has become a vexed distraction. Asset declaration is the least expectation of Nigerians from the president because he rode into office on the groundswell and goodwill of his anti-corruption ideals. I imagined that the exercise would hold significance if we institutionalized processes requiring asset declaration post- presidency, to enable comparison before and after office, and insist on similar treatment for all principal officers at federal, state, and local government levels. Anyway, back to the issue at hand. The article regaled the many achievements of ordinary Nigerians, who rather than complain and fold their hands, have decided to do something to influence their environment, believing that angels are unlikely to descend from heaven to help if we fail to engage in self and community development. The article made a strong impression and resonated well with me.

Literally, angels can be created here on earth to help our communities grow; create enterprise, jobs and all round development. Business angels have been catalytic to entrepreneurial support and nurture in the developed world. They are specialized local financing vehicles that fund typically untested ideas and innovations. Business Angels represent a network of retired and or working professionals and businesspersons, bound by a common purpose, and with deep financial capacity, formed to advance the growth of an industry they passionately hold on to by providing equity finance and other support base for nascent entrepreneurs. Operationally, Business Angels actively engage in mentoring and coaching as a support role, to anchor sustainable root for the fledging enterprise aside their equity financial commitment in the business. Business Angels assumes significance in a developing country where the difficulties of lending to the informal SME sectors (Small and Medium Enterprises) are especially huge. Bank lending traditionally seats on antecedents bordering on cash flow analysis, collateral, and character, and never really engineered to fund uncharted paths and ideas. A typical nascent and aspiring entrepreneur is short on many of these dimensions of bank lending criteria.

 In context, statistics indicate that the US, UK, and South Africa have over 2600, 60, and 15 Angels respectively. There are just a few, far and apart resemblance to the concept in Nigeria. It is also not sufficient to assume that the few angels that operate from diaspora could fulfil this role because of the inescapable local content imperative for angels. The efficacy of angel financing windows rests on its proximity construct because in addition to equity funding of nascent businesses, it provides critical support roles such as mentorship, handholding, learned experience sharing, networking opportunities, marketing support, and managerial support. These activities and roles situate essentially in the local business communities, assume local culture context, and are key ingredients to the investment and success of the enterprise. Moreover, angels, as a source of early business financing, spurn a new round of financing entrepreneurial interests for Venture capital (VC). The successful candidates of angel funding typically become feedstock for VC (Venture Capitalist) and bank financing and thus enlarging the scope and frontiers of business. 

Undoubtedly, entrepreneurial initiatives abound with our teaming youths today and what Schumpeter described as the process of “creative destruction” has started to ignite this young and daring class to innovate, find new ways of doing things and create new ideas in their profit seeking endeavours. We now have a youth population that is challenging the status quo and therein lies entrepreneurial opportunities that begs exploitation. Our schooling may also accentuate these developments by enriching our curriculum with entrepreneurial content to prepare the next generation for sustainable development as economic growth is empowered more by the multitude of SMES spurning out of entrepreneurial zeal of the youth than the organic growth of the big corporates.

The collective dreams that the readership of this magazine must be dreaming about is how to channel their philanthropic endeavours to form networks of angels to commence this incubation process of financing for new and fledging businesses, typically inhibited by finance, entrepreneurial expertise and management skills. The question we must ask ourselves is how can we as a generation help the next generation grow. After all, as the great British General, Robert Baden-Powell said, “we should leave this world a little better than we found it” which in a manner amplifies the truism that the true worth of a man is not measured by what he does for himself but what he does to help others grow. 

An interesting aspect of the angel concept is that it is not just philanthropy in the strict sense but captures in one sense both philanthropy and business. By forming a network of angels, the signal to want to give is clear. The angels give their time, energy, entrepreneurial experience and other intangible and valuable assets to the enterprise. On the other hand, they bring in equity funding to the business that generates massive and unbounded economic and social externalities and not just providing hand-out to a defined boundary of vulnerable individuals.  On a lighter note and for the retirees and aspiring retirees, angel-financing mechanism provides an avenue for constructive engagements that keep the soul active while on retirement. Business Angel Network is a win-win project deserving of our collective thoughts and actions.