Three years after Kola Oyeneyin warned African founders, startups are still dying from the same wound: founders paying themselves from investor funds before the business has earned the right. Investors wrote those cheques, and they share the blame.
Two months apart, my friend Kola Oyeneyin heard of two founders paying themselves from investor funds. One drew $15,000 a month. The other drew $50,000. Both companies packed up.
Kola, who backs and builds companies across Africa, was horrified. He wrote about it on 10 October 2023 and called for an honest conversation about what it really takes to build a successful company. Three years on, that conversation has barely started. The names change, the amounts change, and the ending stays the same.
I believe the warning was aimed at only half the room. Founders drew those salaries. Investors approved the budgets, signed the term sheets, or never asked. If we want fewer funerals in African
tech, both sides must change how they think about money.
Cash is Blood
Kola’s central image is one every founder should pin above their desk: cash flow in a business is like blood in the body. Lose a little, and the body recovers. Open a serious wound and death becomes close to inevitable.
A founder’s salary is one of the easiest wounds to open. Unlike a failed launch or a delayed contract, it bleeds every month, on schedule, whether or not customers pay. A $50,000 monthly draw is $600,000 a year leaving the company before a single naira or dollar of revenue has been earned. For an early-stage business, that is not compensation. It is a countdown clock.
Whenever a founder, director or owner does not practice delayed gratification, the death of whatever they are building is around the corner. Delayedgratification is not a motivational slogan. It is a financial control.
Entrepreneurship as a Service, EaaS
Kola’s sharpest observation is also his most uncomfortable. Only a few founders in Africa, he argues, set out to solve real problems and build thriving businesses. Many are offering what he calls
“entrepreneurship as a service”: the startup becomes a vehicle for solving the founder’s own problem, poverty, with other people’s money.
It is a hard thing to say on a continent where talented people have too few options, so I want to be careful. Wanting to earn well is not a sin. The sin is the sequence. A founder who pays himself before the business has earned the right to pay anyone is not building a company. He is drawing a salary from other people’s hope. Real problem-solvers behave differently. They
obsess over the customer, the unit economics and the months of runway left. Their personal comfort follows the company’s strength, not the other way round.
The Vanity Trap
We celebrate the wrong things. A big raise earns a headline, a high valuation earns applause and a launch party earns a photo. Almost nobody posts the balance sheet, and almost nobody asks how much runway remains.
Kola has never liked paper valuation. He prefers three things: a strong balance sheet, healthy cash flow and frugality, which he defines as keeping cost down at all costs. He is brutal with cost and refuses to run a company like Santa, spending as if there were no tomorrow.
The logic is simple. A valuation is an opinion, and cash is a fact. Opinions can be inflated by a hot funding cycle, a persuasive deck or a fear of missing out. Facts show up in the bank account. Founders who chase the opinion tend to spend as though it were real.
Here is the uncomfortable part for people like me. A founder can only draw a $50,000 monthly salary if someone allowed it. Someone approved the use of funds, signed the term sheet, or simply did not ask. If you back founders who out-earn their senior managers while the business is still finding its feet, you are complicit. If you never ask about burn, founder compensation and runway before the cheque clears, you are not an investor. You are a sponsor.
Part of the problem is how we measure ourselves. Angel networks, funds and ecosystem builders are all tempted to announce the size of the round, the headline valuation and the number of deals. Those numbers feel like achievement, but they are inputs. The output that matters to those who put up the capital is whether the company is still standing, still growing and still paying its people.
Kola’s own record shows what discipline does for returns. Because the cost of running his funds is low, he is able to return higher ROI to his investors than many celebrated hedge fund managers. Low-cost compounds in the investor’s favour, and that principle starts at the portfolio company.
What Eating Last Looks Like
Kola does not preach what he has not practiced. He founded his first company in 2011. It broke even and turned profitable within 15 months, and by the end of its second year it was remarkably liquid. The founder was not. He had no office and no constant monthly salary, and his two senior managers earned more than he did.
That remains his approach across his companies today. He pays executive hires more than he pays himself, and if he draws anything at all, it comes after the business is secure. The company is made strong first, and the founder is paid from strength. I call this eating last. It is not martyrdom, and it is not a rule that every founder must go unpaid. It is a statement about order: customers, team and balance sheet first, founder second. Fintech or farmland, Kola says, the principles behind starting, growing and scaling a company are the same. Break them, and they will hunt you down.
Three Questions Before the Cheque Clears
What should change? For investors, the fix begins with three questions asked before the money moves, and again at every board meeting afterwards.
First, what is the monthly burn? If a founder cannot answer instantly and precisely, the company is not ready for outside capital.
Second, what does the founder earn? Compensation should be visible, set against the stage of the business and approved by the board or leadinvestors. It should rise with milestones such as
revenue and profitability, not with the size of the round.
Third, how many months of runway are left? A shrinking runway should trigger a conversation, not a surprise.
Founders should treat these questions as a gift. A founder who volunteers a lean pay structure and a clear runway tells investors something no pitch deck can: that the person holding the cheque book can be trusted with it.
Reward Follows Results
None of this is anti-founder. Africa needs more founders, and they should be well rewarded when they build something durable. But reward is the result of a company working, not a precondition for building one. The casualties keep mounting, and the damage goes beyond money. Every collapse makes the next honest founder harder to fund and the next investor more cautious. Trust is the real currency of any ecosystem, and it is spent faster than cash. The Midlo Research Institute will soon publish its report on the Top 20 African Tech Failures. When you read it, ask how many of those companies would still be alive if someone had asked three simple, direct questions on day one, before the money moved.
Salami is the Founder and Executive Director of the Midlothian Angel Network (Midlo Angels), which connects investors in Dallas and Lagos, and leads the Midlo Research Institute. He is a DBA candidate at the University of Texas at Dallas. This article draws on a 2023 piece by Kola Oyeneyin.
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