He took a calculated risk, failed, but persisted, and so we backed him with capital. It’s that simple
Trained as an accountant, and having dabbled in software development as well over the years, Joe (not his real name) continues to consult for several clients across the spectrum, from Accra to Tamale. On one of such business trips to the Savannah region to execute a project, Joe recounts how he serendipitously met a smallholder farmer that produces a range of cereals for the local market. In their conversation, it became clear that some of the produce, in their bran form, is used for making poultry feed, and thus had a sizeable growing market in Ghana. Sensing an opportunity, he persuaded a wholesaler in Accra to try out a sample, after which he got a purchase order to supply significant quantities. Mind you, at this point, Joe had not even incorporated a business. When he approached YieldRock for financing, Joe had executed two of such LPO transactions, and made some rookie mistakes along the way, but had learned his lessons quickly and pivoted. Notwithstanding our concerns about supply chain risks, the decision to OKAY his request for a structured credit facility was not a difficult one. We only advised that he incorporates a business in order to formalize his dealings with clients, and to also mitigate his exposure to a single producer and the logistics provider that brought his goods to market. In Joe, we see all the right ingredients for success; drive, risk-taking, ability to execute, and readiness to learn.
Lesson: Before you approach a financier, be sure that, (a) you have skin in the game, (b) you have addressed the issue of market risk, and (c) you are willing to modify some aspect of your business model in response to sound risk management advice.