Pedal To The Metal – Seven Tech Startup Accelerators In Nigeria

The first quarter of 2014 isn’t over, and three technology startup accelerators have come into the space, engines ablaze.

While some of them have been around for a while, the launches of 440, Leadpath and Passion Incubator within weeks of each other suggests that a fast and furious trend is at play here. Others are sure to follow soon.

Right now, we are aware of six active startup accelerators, and at least one more on the way. Let us introduce them to you, one after the other.

1. SPARK

spark

“We are not a fund and we are not an incubator; we are a company that builds companies”, says SPARK’s about page. Yes, yes, so they are an accelerator. One that has raised $3 million in total with which it supports twelve startups.

SPARK’s investments range from $50k – $150k, so between commitments to the startups, infrastructure and overhead, the fund must be approaching the terminal end of its life cycle by now — except they raise more, that is.

Update: Jason Njoku has reached out to say that typical investments are now between $100k – $250k…and that the SPARK fund is “far from terminal”, because they are always fund raising.

The most successful of the SPARK bunch is looking to be Hotels.ng, in spite of having to take on competition from a significantly better funded Rocket Internet counterpart.

2. 440

440ng

Kresten Buch’s 88mph and Chika Nwobi’s L5Labs came together and had a baby. The result was 440, a 1.5 million dollar fund that will deploy into early stage tech startups in Nigeria.

Both bring cash to the table. 88mph brings an international network. L5Labs bring the local startup filter and support infrastructure. 88 will have to prove that they can keep their international patrons motivated by succeeding in Nigeria. L5 will have to prove that they can pick more clear winners after striking it rich with Jobberman.

3. Leadpath Nigeria

IMG_4514

You had no idea who these guys were until last week. Neither did I until a couple weeks ago. But anyone with a $1.5 million funding war chest is suddenly a serious contender, as the trio of Olumide Soyombo, Tope Ajao and Kazeem Tewogbade (right to left in the picture), managers of the new Yaba-based accelerator have become.

The accelerator aims to invest anything from $25k to $100k, office space and hands-on business support in return for anything from 20 – 40 percent equity.

Leadpath Nigeria is currently accepting applications for enrolment into its first batch of five startup “Pathfinders”.

4. iDEA/TechLaunchpad

techlaunchpad

An initiative of the Nigerian ministry of communications and technology, TechLaunchpad graduated its first class of tech startups on the 7th of March. All eight received undisclosed amounts of funding during the acceleration period and were given use of the iDEA facility that was opened early in 2013 in Yaba for that purpose, among other things.

Whereas the first edition of the TechLaunchpad accelerator was focused on banking, financial services, oil and gas and enterprise solutions, TechLaunchpad 2.0 is targeting startups that are working on solutions in telecommunications, agriculture and logistics, building and construction and health. Registration is ongoing.

5. Wennovation Hub

wennovation

Launching on the heels of the Co-Creation Hub, the Wennovation Hub adopted a markedly different approach from the former’s incubator model and is one the earliest if not the first technology startup accelerator in Nigeria. Managed by Wole Odetayo, the accelerator currently operates out of the iDEA Hub in Yaba.

Update: Wole Odetayo is still on the Wennovation board but has ceased to manage its day to day operations. He now works as Operations Manager at iDEA

6. Passion Incubator

passion incubator
Also one of the new accelerator kids on the block, Passion Incubator is offering a 3 month accelerator course to five startups. There is no mention of investment on the website, only talk of access to investors. We’ll be watching keenly to see how things proceed.

7. Savannah Fund

savannahfund

We’ve got it on good authority that like 88mph, the Nairobi-based seed capital fund and accelerator is about to throw its hat into the Nigerian tech startup fray and come to Lagos. In 2015. But before then, they want startups in Nigeria to come over to Nairobi for their three month accelerator programme.

Founded in 2012 by Mbwana Alliy, Erik Hersman and Peter Bragiel, Savannah Fund has invested in nine startups and is currently on its third accelerator class. At $25k a pop (only BiNu has raised more), they’ve barely dented their $10 million fund, so things will still be interesting on that end for some time to come.

Did we miss anything? Let us know.

36 Comments

  • Iyinoluwa Aboyeji says:

    Too many accelerators. Too little accelerating.

    Fora just joined one of Canada’s top accelerators (Extreme Ventures) and they have done pretty well for us. We gave us a 6% stake and we are being pushed fucking hard. I hardly have time for my usual bullshit (even this but I thought it was important).

    I just have a few points of advice for fellow founders looking at accelerators

    1. Don’t be a guinea pig.

    If you can, WAIT and talk to the first group of founders that graduate from these accelerators. They will tell you the good, the bad and the ugly. These accelerators will invariably make mistakes with the first set of companies and the type of mistakes they make will tell you whether you want to risk your baby with them or not.

    2. It isn’t wise to work with an accelerator that wishes to own 20% of your company.

    Leadpath, I’m looking at you. An accelerator is supposed to get you started. Your series A which should come immediately after the accelerator will take another 30%. So just when you are starting to hit your stride, 50% of your company is gone. Harsh. How will you stay motivated? (You won’t). Personally I think 10% is a lot set but given this is Africa, I think it makes sense to stick with accelerators that will take below 15%.

    3. It is all about the demo day.

    An accelerator is supposed to be a high leverage moment in the life of your startup. You literally have 3 months to create the most value you can because you are in the spotlight and everyone is watching. Every move you make matters. But no matter how hard you work in an accelerator, it will not matter if the right people are not there at demo day. That is just the fact. “If a tree falls in a forest and no one is around to hear it, does it make a sound?”. Your accelerator needs to be able to get top investors (not prospectors) to come to your demo day otherwise your 3 months of handwork will just be a fucking waste.

    Accelerator owners might not want to be straight with you about their investment connections but there are a few ways to find out if they have serious connections to growth money or not :
    -Ask who their LPs are. If their LPs are funds, they probably have good connections with them. I think Savannah can be trusted in this regard.
    – Find our who is in their mentor network for startups. If an accelerator owner thinks he can teach you everything about your business without reaching out to subject matter experts, he is a joker. Accelerator owners with good mentor networks will be able to connect you to money.
    – Are they operators? Accelerator owners who are operators that have raised and successfully exited from a previous company are much better than a bunch of ex-bankers thinking an accelerator can make them a quick buck. The previous have the backing of investors they have made money for before and who trust their judgement. The latter are useless to you until you IPO (which is a long way away).

    There is a lot more key things to note for those looking to join accelerators but this is all I have for now.

    Key thing to remember is that whether you accelerate or not in an accelerator is largely in your hand. Remember that an accelerator is the highest leverage period of your startup’s history – it will make or mar your startup. You can take advantage of it and build a quantum of value in a short period or you can waste your time and go slow for the rest of your life.

    Your decision.

    Iyin

    • OluwaTobi Banjoko says:

      highly enlightening

    • Zainab O. A. says:

      This should be a blog post on its own. Valualble Info.

    • Jay says:

      See what Jason has caused? Everybody thinks it is cool to write using swear words. A good response that was marred by the unacceptable use of swear words.

      Iyin, it is not acceptable to write for public consumption in this manner. It is your opinion but not you blog.

      Having said that, accelerators in Nigeria are quite exploitative. I know a few guys who were forced to part with 30% of their equity to accelerators for under $50k. I imagine what their Series A and B funders will demand from them. Like you rightly mentioned, the motivation to keep working will be greatly diminished by the time you raise Series B. Founders need to be careful of falling into the trap of “little money in return for greater equity is better than no money in return for no equity”.

      • Anon says:

        Man, let him talk. We need people who can speak out and face tha real ish. I salute Iyin’s boldness. Fcuk the manner or approach, as long as you’re passing a message across, no problem.

        This is a free world!

        • Jay says:

          …and to you, using swear words and cursing out doesn’t mean you (or he is) are talking. Bezos, Zuckerberg and outspoken Kim Dotcom are never been recorded swearing.

          Quote me, even the extremely rebellious ones like McAffee, Assange and Snowden are not known “cursers”.

          This is why the ecosystem not grow as quickly as it should, when we continue to celebrate mediocrity masked in brute intelligence.

          • Anon says:

            How will the ‘fuck’ word affect or change the ecosystem? Man, fuck it mehn.. You gotta be real and stop faking it.

            I guess you’re the type of people who will notice or see some bad stuffs and will still keep quiet. This is a free world man, you’re free to say anything but what happens next is what nobody knows.

            Anon or Iyin is different from Zuck or Bezos. Dave of 500startups is different from Jason Njoku. Dave do use the F word, yet his firm is growing.

            F word won’t stop the ecosystem from growing, the ecosystem won’t grow only if it’s cursed not to grow.

            Talk about something else man.

          • Jay says:

            Anon,

            I won’t blame you if you cannot see beyond your nose. The F word by itself will not destroy the ecosystem. It is celebrating the man who uses the word that destroys the system. He sets a precedence that every other person follows, morality goes down the drain and it snow balls into a catastrophe.

            Celebrating mediocrity is a norm in this part of the world. If we rebuke mediocrity in its entirety.

            In response to your 2nd paragraph above, testosterone can be very misleading, shortens blood supply to the brain and it spurs grunt like behavior, all of which you have exhibited in your post above.

            My advice, always think 5 years ahead in any situation. You will see how differently things loo.

          • Anon says:

            Where in my comment did you see that I yab you? I hate to say this but you are a useless dyslexic patient. Go rejoice with a blow job.

            If you want to preach about the ecosystem and swearing, go to ikeja under-bridge to spit your useless rants.

            Since you said blood ain’t flowing into your brain properly, then your brain needs a hard reset. Do yourself a favour, find a transformer and hit your head hard on it.

            By now, you should be reaping the fruit of your labour, but you this old fool can’t still figure out your purpose in life. I know you hated on your life, you should go spit the bitterness on your fams and not on TC.

            Shame on you old cargo.

          • Jay says:

            I take no offense to you gibberish because your inability to be civil and ability to be barbaric are not hard to come by.

            Again, you do not disappoint me as you have lived up to the expectation with your uninformed and irrelevant prognosis on who I am. Testosterone surges are synonymous with teenage tantrums and hysterical fits. As you have proven with the way you have been going about the whole F word issue all the while.

            For all I care, I am sure you are even older than I am. Raise above your emotions young man, travel around the world, learn a new language, start a business, get a life.

          • Anon says:

            Ohh shit. is this all what your brain can spit out?! Damn..you need to give those tissues in your brain to dogs to feed on. You’re a disgrace to mankind.

            You should have listened to your own advice years ago. I’d been you’ve done that, you won’t be wasting your life like this and trying to claim champ on TC.

            Burn nigga, you a clown. We know you have problem(s) and one of it is Testosterone surges, stop crying bout your probs on TC. Go to your village for a medical checkup.

            shame on you slow mofo.

          • Benny Bing says:

            Seriously who gives a fuck!

          • Jay says:

            You, I guess?

          • Anon says:

            Yeah man, the universe doesn’t give a flying fuck.

          • Jay says:

            What do you know about the universe? The world is a whole lot different from Google maps you know?

      • The Taichou says:

        @disqus_lZq2FCR1F2:disqus, “little money in return for greater equity is better than no money in return for no equity”? Is that a trap? It sounds more like [harsh] reality. I think managing expectations on both sides (VC/Angel and Startup founder) of the table is critically important to new venture creation.

        • Jay says:

          That is why I said they should be careful.
          I have just put a caveat on it. Do so at your own risk. Those who have been down the line will tell you that they regret jumping into such deals without thinking it through very well.

          Get a lawyer, negotiate harder, do whatever you need to do to get the best deal possible… Many founders give in easily because they have never seen real money prior to VC investments/funding and they don’t seek enough opinions before signing away their future.

          eg I assume Bastian was instrumental in getting Jason a good deal with VCs, Bastian has seen money before.

      • Chisomy says:

        Jay you’re very right. I wish there is a way I could talk to Jason Njoku about his use of offensive language when writing on his blog. It’s such a huge turn off and makes a huge mess of his awesome lessons.

    • Alex Oladejo says:

      Ha, baba vex gaan.

  • Donfelix Odoh says:

    5, 20 or 40% equity, the bigger, less obvious question is: what is the the real ($) market value of ideas/solutions/products/startups/traction/revenue milestones or opportunities on offer? When there is a low supply of potentially profitable startups in a market with limited supply of early stage capital, investors are usually attracted with higher equity for higher risk.

    Believe it or not, it is better to own 10% of a $10,000 – $100,000 or $1000,000 startup than holding 100% of a startup whose value remains at $0 while Time and Opportunities passes fast.

    Or
    Are we all unconsciously believing it is impossible to break even with $20,000 – $100,000 even without reaching Series A, B, C Maze?
    Just in case someone has forgotten: The end motive is profits/exits, not ownership of high risky stakes. Until you start generating revenue/profits, you may be spending your energy, time and money in a Futile Hobby.

    • The Taichou says:

      Good talk, @donfelixodoh:disqus

    • Okechukwu Nnamdi says:

      Exactly my sentiments.. too much talk about investment, Series A, Series B.. blah blah blah.. Little talk about the quality of the businesses. Ever since Jason everybody’s eye is popping… and everyone is talking big. A decent / profitable tech startup may not need any funding at all. The way I see it, somefolks just want to cash out at the investment stage.
      Sad

  • Anon says:

    Passion incubator makes me laugh! No seed funding and they will get at least 10% .

    Mama, WTF is this? Damn!

    • The Taichou says:

      @47Gunshots:disqus, is that accurate? Mehn!

      • Anon says:

        Bruuh.. I don’t think so.

        • Hi Anon and Taichou,
          Happy to engage with you guys if you want. We have a cell num on our website. If you want to talk, please call us. It should go directly to a staff member or one of our founders.

          Now to the main issue. Please let me clarify. You need to understand what drives us at PI. We believe in creating value. Also, we don’t think money is the only thing a startup needs to be successful. It actually needs to “great value” for its end-user. Because of this belief, we are focused on helping our startups get to a winning product.

          When a startup comes in we are involved in all major parts of the product/business evolution. These are the things we DO offer the startups:

          1/ A 6 month accelerator class (with a 3 phase approach – entrepreneurship training, product development, business development cycles)
          2/ We also provide an additional 6 months access to our workspace after the startups graduate (free)
          3/ We build the Minimum Viable Products for our startups (for free and as required). YES, we do this at not cost to the startups.
          4/ We have a robust mentor list (entrepreneurs, technologist, corporate strategy professional) that ensures our startup get high-touch mentoring and access to a wide range of expertise throughout the process.

          Now, I agree that this may not appeal to all startups. For those it does appeal to, we want to be in it with them for the long haul. I hope this provides more clarity. Shoot me additional question on here. Happy to keep talking about PI.

          Thanks,

          • Anon says:

            Thanks for the response man. But money is needed in this game. It won’t be bad if you provide seed funds for your startups, at least $5k will do.

          • Anon,
            I do agree with your comment. Money is needed in this game. That seed funding is needed to develop a prototype or a demo product and to chase down your first few opportunities. The PI model does exactly these 2 things.

            Taking money off the table this early ensures our startups don’t have to handover 40%of their equity just yet. Also, it’s one of the ways we separate founders with real drive to build a real companies from those who are just looking to live out their Silicon Valley fantasies (nothing against these guys off course).

            Finally, we know our role, and we are not Angels or VCs. We are there to help you build a valuable product. There are a few angel/VC guys entering the Nigerian tech space. So we hope our guys get to pitch these investors down the line. It’s hard for an investor to turn down a winning product that has evidence of success with its end users (i.e., active users or subs).
            Once again, great comment. Always happy to engage on this issues.

            Thanks,

          • Olufemi A. Omosuyi says:

            Much of the problem associated with accelerators and VCs in Nigeria, and their grab for equity is to an extent caused by tech founders themselves. Some of us go around pitching as though our lives depend on it. Remember, if your product is indeed that good to catch an investors’ attention then if there is any inequality in bargaining power it should be in your favor! You as the founder, are the one with the innovation that has the prospects of multiplying the investors dollars- they either take it on your terms or nothing at all. After all, you are the reason they (VCs, accelerators, angels etc) are all here. Wealth turns around for the better on the back of many a tech startups.

            If we can’t get the bargaining chips right now then when are we going to develop to the stage where tech startups are developed just so they can be sold off at a sizable profit?

            As a lawyer to tech startups (and a founder in my own right!) I have painfully watched many founders make the wrong decision against better counsel. We need to weigh in stronger against investors, and bargain harder. Else, our innovation is up for easy grabs!

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