Partnership Gone Wrong

(Eric Halsey) #1

Louis-Antoine Muhire, is a Rwandan who made a new life in Canada as a Police Intelligence Officer. However, in spite of his success there, he decided to return to Rwanda to build a better remittance system, inspired by his own frustration sending money back home.

After three years of work, his company, Mergims, has now raised 4 rounds of funding and is valued at 5 million US dollars. Along the way, however, he experienced what can happen when you bring the wrong partner into your company.

Sometimes you bring in some partners and now you’re stuck with them. You don’t know how to get rid of them. Because legally, they’re in, but they’re not delivering. So you expect one day to buy them out. Because if you force them out it becomes a legal battle and nobody will invest in a company with a legal battle.

The guy, he promised to invest money so we can merge our technology. And we met in a very cushy, a little bit political conference where everybody’s trying to show. So I pitched, he loved the idea, he said “I’m gonna put money” So I said sure.

Then for 6 months, once we had signed a few papers of shared agreement, we included him on our registration and things because that was his requirement. Then, he disappeared, for 6 months we couldn’t get in touch with him. We wrote emails, we got him on whatsapp and he blocked us, he has a very significant share of the equity of the company and his technology is not available. And we learned even after that, his technology company we wanted to bring on our system failed. It went bankrupt

So now we’re stuck with him because he owns some equity in our company but he’s not providing what he’s promised. So probably it’s going to be a legal battle and we’re going to get rid of him easily because he didn’t bring his share on the plate. But still, it was a very stressful moment. How do you explain to other investors who come in “woah, this guys not really here, it’s just an empty chair but you can take it. It’s taken by someone who’s not there”

So we managed to, for example, to have him explaining the situation clearly so whenever anyone else comes in we take him off, show what’s happened exactly, and show that he has no decision making in our system. He’s just a matter of time once we’ve sorted all the papers, he’s out.

We had agreed to push and it wasn’t a pleasant thing. So now whenever you bring a partner, find a way of, if things are not going the way you agreed, automatically you separate It’s called a prenup, something like that. Otherwise you’re stuck with someone comes, has nothing, he gets back, he has half of your house, it’s not fair right? So that’s the case of the partner.