Experts in the tech space have tasked start-ups to comply with legal frameworks, collaborate with investors and pay taxes in order to attract funding to grow their businesses.
The industry experts disclosed this at the ‘Getting funded and legal compliance for Web 3 startups’ event organised by Convexity and Legalpreneur Consulting, a tech and full service law firm, explaining that no investor will put resources into startups that do not meet up with legal and tax requirements.
Olaleye Oladimeji, managing Partner at Legalpreneur Consulting explained that for startups to be viable and attract funding internationally and locally, they must comply with applicable laws guiding the operations of such ventures in a given country.
According to him, blockchain start-ups should get operating licences from regulators, structure their internal compliance framework, review appropriate financing structure and adhere to the provisions of laws such as the Company and Allied Matters Act (CAMA) , even before looking out for funding.
“Companies need to raise funding from the Capital market at the right time and with the right objective. We are trying to encourage start-ups to be compliant as much as possible from the early stages of incorporation”.
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He also disclosed the need for the startups to get the right investors that can impact their business to make it thrive.
William Phelps, investment manager at ADAVERSE, explained there was more to the fundraising process than simply cash, adding the need for collaboration and partnership between founders and investors to enrich ventures while identifying future opportunities.
He said: “The statement I leave with you is ‘ask for money and you will receive advice, ask for advice and you will receive money’. The real solution blockchain brings to real problems in Africa presents great opportunities for tangible engagement between investors and founders alike. Most importantly, founders need to know what they’re building and why they’re building it. Identifying pain points and the solution you can bring to the table goes a long way towards launching a successful product and presenting tangible use cases.”
Phelps explained that beyond funding start-ups, Adaverse wider Web3 ecosystem is open to partners to use and grow their product
“We are bringing our guys to connect with founders at our Founders Hangout in Lagos on the 15th of August, 2022. We have a couple of guys in America and Africa that will be travelling into Lagos for the event. The event details will be disclosed on our social media channels. We are hoping to be holding some more of our events in Abuja and other cities as well.”
Chioma Onyekelu, a blockchain Specialist from A&D Forensics spoke on the need for start-ups and founders to build with compliance in mind.
According to her, compliance also refers to the attempts to ensure that firms follow both industry and government rules.
Similarly, she outlined the various checklists for founders to have in mind while building their compliance unit which includes having a compliance policy, conducting proper identity verification, screening wallets, among others.
She introduced the Compliance as a Service solution (Caas) by A&D Forensics which is designed to assemble all the requirements needed for start-ups to have a simple-to-use, effective, affordable Compliance Program.
Meanwhile, Ayo Akinduyite, associate director at PWC while speaking about tax and regulatory issues explained that Start-ups still need to take their tax and regulatory issues very importantly as it can create reputation issues in the future which can make them lose valuable resources.
“There are two broad areas of taxation, the Profit taxes and the transaction taxes. The Profit taxes are taxes paid on the profit realized or arising from business operations. For most startups that may not be an immediate challenge as there is the possibility that they will incur losses at the beginning but the good thing is these losses can be carried forward and offset against future profits”.
The director disclosed funding is important to startups and must be done at the right time, and the objective behind the money should be a first consideration.
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