Finance & Funding - MeetUps with Samuel Paulus
"Never invest in a business you cannot understand." - Warren Buffett.
We were unable to invite one of the world’s best investors, Warren Buffett, to inspire budding entrepreneurs on why some projects get funded and others don’t. However, the event was no less interesting. On August 13th, Samuel Paulus, a financial analyst and manager at Microlux, a microfinance institution, spoke at Business Meetups about how his organisation decides which projects to finance. These reasons could be summed up in the quote cited above.
Let’s take a moment to talk about MeetUps. It’s a near-monthly get together by Touchpoints ASBL to inform and inspire budding entrepreneurs and newcomers. This two-hour discussion event usually features a guest speaker and entrepreneur to share practical experience about doing business in Luxembourg. From the leaders of multi-million euro companies like Andy Bowyer (CEO co-founder, Kleos Space) to sole-proprietors like Admed Dublat (CEO, We-Go), the event invites a broad array of guests. Common to all is their passion for finding solutions. This is why they inspire others.
A meetup event is incomplete without food. Good food! The event is often held in restaurants. Otherwise, it is held at an event centre in which case the food is prepared by a SleevesUp Workshop graduate, usually someone with a restaurant or hospitality project.
To organise the MeetUp on August 13th, there was a week of frantic calls and emails to partners and participants owing to COVID-19 preventive measures. The event was finally held at the FNEL Scout & Guide centre with ten participants. Traditional Syrian cuisine was prepared by Tahsin Rifae, a budding entrepreneur. The event’s topic was simple - Finance and Funding: why some projects get funded and others don’t. Paulus’ words were unsurprising but striking. “There is no way of knowing if a business will succeed since no one knows the future,” he said but added that there are ways to know which business is more likely to fail. He generously detailed some of his organisation’s strategies for determining this.
Here are some statistics he shared. Only about 20% of those who visit Microlux proceed to ask for credit. Of this 20%, about 75% receive funding and there are over 100 running loans at the moment. While MicroLux is not a bank, it nonetheless analyses the inherent risks involved in every project presented to it. “Some people come with a business plan, and the majority don’t”, Samuel said. He added that most people insist that their idea will be successful though they may have nothing to support this conviction. Some have limited knowledge of the business they desire to start.
MicroLux like the few other alternative financial institutions in Luxembourg put into context the social-economic disadvantage of being a newcomer or immigrant in Luxembourg. They demand no real collateral or security for their loans and offer their services dedicatedly to financially disadvantaged groups.
Whether it be from a bank, an investor, a friend or a family, some ways of to attracting funding for a project are: Know the business well,; make a sound presentation (brief business plan),; know your figures (costs, income and their mid-long term projections),; be realistic, and; demonstrate show working (evidence of relevant experience).