N100 million sounds like a lot of money until you convert it into dollars. Then it doesn’t seem like that much money. But it’s still a lot more than any local investors have publicly invested in Nigerian startups — lots of deals happen behind closed doors, we hear.
Backroom investments do little to inspire confidence, since the larger ecosystem remains largely oblivious. If you are going to convince more local high net-worth individuals that they should consider investing in technology startups, and not, say land in Lekki, you will need to stage a spectacle. That is what the Lagos Angel Network is trying to achieve with the Lagos Startup Deal Day, on the 31st of March.
Skin in the game
As the event’s name suggests, members of the Lagos Angel Network will come and listen to vetted startups. But with a twist. Investors who want to access the startup pool on deal day will be required to form or join syndicates. Each syndicate will in turn be required to invest a minimum of N5 million on the day — startups will be able to request between N5 – N25 million.
LAN membership is not a prerequisite to joining syndicates. The network is looking to attract a broad range of investors, regardless of affiliation.
Popularised by Angellist, the syndication model that LAN is adopting here is instructive. Investing as a group makes an investment easier, and less risky than if one investor had to take on all of the cost and exposure from a single deal.
Less experienced investors can form up behind a veteran, because their commitment to the investment’s success de-risks it significantly. Already, there are at least two confirmed syndicates, formed by active Nigerian angel investors — TechnoVision, led by Tomi Davies, and Sasware, led by Collins Onuegbu.
Not a one-off
The March 31st event is only the first of these deal days, which will take place quarterly. Which means that early stage startups will have an opportunity to engage pre-committed Nigerian angel investors who at least four times every year. The network will be leveraging relationships with the VC4Africa community, TechCabal, the Africa Business Angel Network (ABAN), hubs, incubators and accelerators.
To get into the room with investors, startups will have to register and pitch via VC4Africa for a chance to make a final shortlist that will be announced on the 21st of March. For the investor side, Interested angels and syndicates are invited to get in touch with Segun Odukoya at the LAN Secretariat for information on how to participate.
For startups who have grown weary of pitching to tire-kickers, the promise of real funding could inspire them to be better prepared. For local investors who aren’t in on the action, the fear of missing out might well inspire them to join in. The Lagos Angel Network has itself invested in a number of startups. But the bigger plan here is to get more moneyed locals to put their money where their mouth is.