“First, I only enter a business that I can fully understand. I never enter a business that is not clear to me” – Aliko Dangote
And I asked Richard Dean Parsons, former chairman Citigroup and former chairman and CEO of Time Warner (parent of CNN) and he responded: “Nd, when I asked Warren Buffett to invest in Time Warner. he said NO, because according to him, he did not understand the business…”
I have bought into these business constructs even as we grow Tekedia Capital: we do not write cheques to businesses we do not understand. That is why we do not touch some domains.
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I speak with the richest among us and I can conclude one thing: the best among them do not put money in what they do not understand. Indeed, for them, realism, over hope and blind optimism, drives investments.
Photo: Ndubuisi with Richard “Dick” Parsons, one of America’s most powerful businessmen of his generation.
Comment on Feed
Comment 1: It means that we may need to open a school where we teach moneymen how to understand more businesses, so that the money can go round. If we leave them to continue investing in only the businesses they currently understand, some other critical businesses suffering from investors lack of knowledge will eternally suffer.
This thing is rigged, we need to do more, in the spirit of subsidiarity and solidarity…
Comment 1R: Investing in a business that is not well understood can be a risky venture, and it’s important for the founder to simplify their solutions and make them easily understandable to potential investors. This can help build trust and increase the likelihood of a successful investment.
It’s not enough to simply pitch a business well; the founder must also be able to clearly articulate their solutions in a way that is simple and easy to understand. Investors want to know exactly what they are investing in, and a founder who can effectively communicate the value and potential of their business is more likely to secure funding.
Investment is not just about giving away money; it’s about understanding the potential of a business and making informed decisions. So, it’s crucial for founders to simplify their solutions and communicate their vision in a way that potential investors can understand not the other way around. Ndubuisi Ekekwe
Comment 1F: not many founders can do what you are asking for, and that does not mean that their ideas have lesser value or impact, this is because being a founder does not make you excellent communicator or a great storyteller. That is why I suggested a ‘school’, many great ideas are lost, simply because the inventors lack excellent communication skills. When we bring people who know how to explain things and tell compelling stories, those who claim not to understand the business will begin to understand.
My Response: “not many founders can do what you are asking for, and that does not mean that their ideas have lesser value or impact, this is because being a founder does not make you excellent communicator or a great storyteller. ” – they should hire someone that can communicate that vision. That the founders cannot help you understand and yet you’re investing means you’re gambling. Muhammed point is clear: you need to understand the business to evaluate the risk associated with it.
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