By MTHULISI SIBANDA in Johannesburg

Adam Molai is a top African industrialist and entrepreneur.

INDUSTRIALIST Adam Molai has bemoaned lack of due diligence friendliness as an impediment holding back African entrepreneurs.

Due diligence is defined as an investigation, audit, or review performed to confirm facts or details of a matter under consideration.

Molai, founder of TRT Investments, said this was a significantly understated stumbling block for many African entrepreneurs.

He said his venture capital fund, Jua Fund, has seen due diligence processes take longer than expected, regardless of entrepreneurial fervour and enthusiasm.

Molai added that Jua Fund was not the exception but the rule as entrepreneurs do not plan for due diligence processes adequately, whereas they should always be ready for it when raising capital.

“I’ve spoken to a lot of Venture Capital Funds and a lot of money is not disbursed,” he said.

The Jua Fund put up $2 million, but is at disbursement stage for approximately 60 percent of that, four months in, the industrialist said.

“To think funds might not be drawn down because there are due diligence aspects that fail is disheartening,” Molai said.

Molai created the Jua Fund last September to support entrepreneurs in growing their businesses. The first recipients were announced in March this year.

Common issues the Jua Fund has reportedly stumbled across include statutory documentation not being readily available and confusion between jurisdiction of incorporation versus those of operation.

Not having a standard data room investors can access is also a key cause of delay.

“Finally, whilst we saw less of it in our fund, misrepresentations in order to secure investment will also always waste everyone’s time as these tend to come out in the wash, at best or lead to legal liability, at worst. A truthful pitch averts a painful due diligence,” Molai added.

Molai, who has businesses interests in South Africa, Nigeria, Zimbabwe, Botswana and Malawi among others, said he had however noted a correlation between the entrepreneurs who had the steepest growth curve and their process readiness.

“The most organised entrepreneurs also seem to be the outperformers, so we clearly can get it right,” he said. – CAJ News