What is the average cost of setting up a tech startup in an African country? What is the costliest component?? I see a lot of people who do fundraising without having any clue about how to run businesses and can't balance a budget. A friend said he was very jittery about that.

When we started in the 90s and up until about 10 years ago, the costilest component on starting was space. It then moved to payment for cloud infrastructure as SaaS gained foothold. Now, the costliest component is undoubtedly people. Good investors factor in that cost assumption.

The first question I normally ask people who are raising additional funding is the length of current runway. I almost always hear linear calculations and assumptions. Finance and financial management is a desperately needed skill with most new ventures.

In the early days when people were seeking for a controlling interest in the ventures, it was largely due to concerns about mismanagement of funds. It irks me when people who have probably never worked in their life laugh at people who give them money and are concerned.

Responsibility is typically earned and not assumed. This is one of the reasons I decided not to back first-time founders anymore. They are typically learning to make mistakes with other people’s money. Failure typically grounds most of them and they become more prudent next time.

Going back to my original question on cost of setup, I think we are doing a disservice to the entire business of tech if we keep getting fixated on fundraises and high valuations without looking at how to reduce aggregate costs of setup and operation. This is a road to nowhere.

We keep talking about exits but we are building white elephant startups that will probably be cut down to true size of valuation by any serious acquirer. Value comes when you are producing much more than your cost of operations. ”Potential” is different from kinetic.