A green digital utility startup, WiSolar, has rejected a $1.5 million loan from the Industrial Development Corporation (IDC) of South Africa, citing unfavorable terms that could stifle growth and undermine the company's core values and mission.
The IDC loan facility is part of the corporation's energy resilience scheme and has a terminal drawing date of March 31, 2025, with a demand for monthly capital repayment of annuity installments from the draw date and a term of 10 years.
In an interview with Energy! Newsletter, WiSolar founder and CEO, Tonye Irims, explained the company's decision to reject the loan, highlighting the following reasons:
- Misaligned stakeholder interests: The loan terms were not aligned with WiSolar's mission and showed a blatant disregard for other stakeholders in the value ecosystem.
- Patronizing relationship between startup and funders: The IDC's approach was disrespectful to founders and executives.
- Exorbitant disclosure requests: The IDC demanded excessive disclosure of information, which would have compromised WiSolar's trade secrets and proprietary knowledge.
- Indifference to the needs of other stakeholders: The IDC showed no regard for the interests and time of WiSolar's other stakeholders.
- Lack of value-added contributions: The IDC would not have brought any value besides funding and unnecessary interference with WiSolar's business processes and direction.
Irims emphasized that WiSolar's experience with the IDC was disappointing, especially considering the country's high unemployment rate. He argued that the focus should be on social impact, non-legacy business growth, green energy job creation, and skills training, particularly for youth, women, and people with disabilities.
Irims further noted that excessive disclosure requests would have led to the unpacking of WiSolar's trade secrets and intellectual property, in addition to a complete disregard for the interests and time of other stakeholders. He said it would have been an embarrassment to the brand and caused significant damage, primarily due to time loss and the loss of valuable partners.
Irims also stressed that lack of funding remains the biggest reason for talent flight and unethical job creation in Africa. He urged entrepreneurs to seek funding avenues that are closely aligned with their current needs and objectives. He warned that any form of funding that attempts to bully or redirect the company's mission should be boldly rejected.
WiSolar's decision to reject the IDC loan is a courageous one, and it is likely to resonate with many entrepreneurs. The IDC's loan terms are indeed unfavorable and could stifle growth and compromise the core values and mission of a young and innovative company.
Entrepreneurs need to be cautious about the funding they accept. They should only accept funding from investors who align with their mission and values and who are willing to give them the freedom to execute their vision.
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