I was once told that if the first job of a startup founder is to seek customers, the second is to get funding. Usually, you can’t make a good effort at the former if you fail at the latter. Every opportunity should be explored provided it maintains your creative freedom and control over the project, does not foreclose funding from other sources and brings in additional value apart from money.
Venture Capitalists are as rare as black swans in Nigeria. Doing a good job of fund raising for your venture is often limited by the wherewithal of your social network. But then, we are often ignoring the biggest elephant in the room. That is, the government.
In 2012, the Federal Government started YOUWIN. It is a business plan competition, underwritten by the Federal Ministry of Finance. Successful candidates receive seed funding of up to ten million naira ($60,000). For the two years running now, the program has generated 1200 winners annually, and another is planned for next year.
YOUWIN obeys all my not very original rules of acceptable funding. It is a grant with only one condition: you must start and run the venture for which it was applied for. You must exert your best efforts to make it a success. I can’t see the downside to that.
However, according the Ministry of Finance, only 11% of the winners in first year were from the Info-tech sector. The second year was designated female only and I doubt if the percentage is any higher than it was in the first year. I feel like asking, are the Info-tech startups not applying or are they not winning?
This is not begging government for a handout. Government, at both state and federal level has a duty to intervene in the economy in a manner that would create sustainable jobs. Startups create sustainable jobs. Countries like Chile, Russia, Canada, Columbia, and Singapore have similar schemes whereby they offer seed funding either as grants or as as equity investment. It is a system that has been seen to be successful elsewhere.
My suggestion is that a government seed fund specifically for Info-tech startups is necessary in Nigeria. I will not go so far as to suggest that YOUWIN 2014 should be for IT based business plans only. But a separate scheme is desirable.
Meanwhile, let our budding startup founders start getting their business plans ready. If a significant percentage of the proposals received are from IT next year, it should be harder for the government to ignore the sector.
Photo Credit: Tico.
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