Should parents fund a child’s startup company?

Failure to start a life after parents paying your school fees means you cannot afford your own startup capital. Therefore, you become a disgrace to the family.

Whereas there are different ways through which an entrepreneur can raise funds for a new business such as through seeking for partnerships or sponsors, seeking for an investor, the question of whether a child should go through those avenues is one that arouses debate especially if the parent can afford to give the child startup capital.

For a child, in due course, some might resort to a less formal source of funding, that is to say; asking their parents for money to act as startup capital.

Asking parents for money in form of seed capital is a commitment that comes with lots of questions because it is allegedly believed to pop up at a time when the parents are planning for either retirement or clearing pending debt.

This poses a question of is it right to give a child startup capital?
In this day and era, things seem a little different. Those who want to pamper; their children think it is a new trend. This means that the perception of children taking care of the parents after completing their education could be eroding.

Ms Chrystal Mutiibwa, a mother of three, says the reason parents pay school fees is for a child to raise up and defend his/her credentials and  also be able to navigate the world on their own.
“Back in the days we were brought up in a sense that when a parent caters for your school upto when you are finally out of school, there is nothing more you require from them. At such a point, it is up to the child to start a life worth it and be able to sustain themselves,” Ms Mutiibwa says.

She notes that failure to start a life after parents paying your school fees means that you cannot afford your own startup capital and therefore you become a disgrace to the family.

“When a child completed their education, they would go back and take care of their parents. This meant that it was time to appreciate the parents for the job well done of upbringing them (child). The child learnt how to be responsible and personally drive,” she explains.  

She believes that giving out without putting in an effort can backfire.  

“A child must try to learn on his/her own. If he invests in a business using his own hard earned money or savings, there is a lot he/she can learn. For instance, how to budget for it. Someone who does not know the hassle of trying to get money tends to recklessly spend the money with a view of being given more money by the parents.”

Glen Muhumuza, a father of four, says the parents are carrying the burden of their children and they (children) are comfortably getting back home due to fear of the unknown and the responsibilities.

“As much as I might support my children, I do not know how much time I might have on earth. This looks like the black tax or Western culture is catching up with us and children no longer have to take care of their parents,” Muhumuza says.

Some others say children who get seed capital come from wealthy families. Where does this leave those who donot grow up with their parents? Don’t they have a right to startup capital?

Samuel Bakutana, chief executive officer, Inspire Leaders International, says giving start-up capital to your child who has just graduated is many things to different parents.

“For some parents, it is a form of further pampering for the big boy/girl instead of weaning them off the parental financial breast. For others, it is a cover-up of their unavoidable shame and guilt from glaring parental gaps whereby they never equipped their child to go into the world and make sense of life,” Mr Bakutana says.

Yet for other parents, it is a form of financial commencement after the university has given them a commencement speech.
In addition, even for other parents, it is a normal aspect of their support to their child along the journey of his/her usual daring ventures.

“I could add that for other parents, they’re feeling the pain of seeing a good-for-nothing child who has studies for more than 20 years but can’t do anything for himself, not even boiling water for drinking; so they try to feel that gap by stuffing it with money in the hope that something will work out,” Mr Bakutana notes.

All this he explains ranges from family to family, and from situation to situation. It requires one to consider issues on a case by case basis.

“If a child has a great entrepreneurial idea and the parent has some money to kick-start off this young thinker, why not? Why should the graduate go to loan sharks to get start-up capital at exorbitant interest rates if his parents can offer the needed capital at little or no interest at all?” He asks.

He however quickly cites one of the challenges as, most young graduates will then feel entitled and even have no greater motivation to make this money do wonders since they know that, after all, unlike the loan shark, daddy won’t imprison them if they don’t pay back.

But if they knew that the interest accumulated would be increasing, collateral getting into danger, and themselves risking imprisonment, they would work harder and become more serious with the money.

A report by Ernst & Young found that only 3.5% of university students who had the option to work for their parents immediately after graduation actually intended to do so. But more than one-third wanted to start their own business.

Opportunity to receive startup capital
But how many parents give their children start-up capital?
Bakutana further adds that indeed, it is prevalent among the well-off who have extras.

He elucidates: “A parent who has been sweating blood to pay school fees won’t have the extra to give the child as start-up capital. The start-up capital most of these parents give is a long lecture along the lines of “I have done my part and now it is time for you to do your part. I toiled to get you to this point; please go and toil to earn money for yourself and help your siblings too.”

Role of upbringing
A financial advisor at Be Money Wiser Ms Flavia Nabukwasi, says that startup capital is for children during vacation.

“Encouraging children to save from childhood means that the money saved in an account accumulates interest. This means that they will use that money to start up a business of their own,” Ms Nabukwasi says.