FREE Capital / Seed Funding

I bet I will get a lot of hits the moment I have 'money' or 'capital' or any terms that may be construed as such is posted as a title. I know because many entrepreneurs seem to think that you need money to make money; money makes the world go round; etc, etc

Let me share with you a story about this; some of you may have heard it but many would not.

While doing my research on new ideas and concepts on entrepreneurship for my upcoming entrepreneurship seminar, I came across a presentation given by Tina Seelig of Stanford Technology Ventures Program. In the presentation, she narrated one of the experiments she carried out with her student.

The experiment was simple. Each group of students were given an envelope containing seed capital - money, amounting to five dollars. Yes, only five dollars. They were given four days to plan and once they are ready, they may open the envelope and get to the seed capital. But, the moment they opened the envelope, they had only two hours to make as much money with the seed capital that they have.

How did the students fare? How much did they make out of that seed capital? Well, take a moment to think about it. I give you some spaces so that you can mull over it.



[Thinking, thinking, thinking.....]


The best team made over USD600 and the second place made about USD300 within two hours! How did they do it? How was it possible?

Well the first and common thing they did was to realise that the USD5 seed funding is a LIMITATION.  They realised also that their assets and resources are well beyond that five dollars. In fact, they didn't even use the USD5 seed funding. They used their imagination and effort. They deployed creativity. The winning team made their money by selling their presentation time of 3 minutes to a company who wanted access the students and recruit them. [I elaborate this in more details at our seminars]

The point is that for most of us, we think of the need to have money to make money - to pay staff, to set-up office, etc. Without money you cannot be an entrepreneur. And when you have money, we have a 'realistic' expectation of return: 30%, 70% or even 100%. These are limits that we built into ourselves - due to a host of factors (fear, problems, education system etc.) We have to break free from this confinement, this coffin of creativity.

Relating back to Islam and entrepreneurship, the religion of Islam advocates trade and prohibits riba/interest. And if you think about it carefully, the limitation and obsession over seed capital - money begets money as well as the expected return - were the result, a by product, of interest-bearing lending.  In this realm of debt, you may only receive money (interest) if you have money to lend. Your return on your Fixed Deposit is therefore limited by the amount of capital you put in. You can read my thoughts on riba, islamic financing and the core concept of time-value of money here. The point is, riba and instruments derived from the concept of time-value of money, in some ways has contributed to  limiting your entrepreneurship imagination and creativity.

Trade is allowed and promoted in Islam. And trade, in the purest form (barter), has proved to be immensely successful in creating wealth. Just ask Kyle MacDonald who has successfully traded one red paperclip with a HOUSE! You can check it for yourself here.

Therefore, be enterprising and use your imagination, your creativity more!