Founders in the startup journey in Nigeria always wonder how to raise money. People say it’s hard to raise money anywhere. I think it is ten times harder to raise money in Nigeria for a couple of reasons:
- Nigerian tech is still in its early days.
- Local angels who are meant to stimulate the ecosystem don’t understand tech investment
- Access to foreign investment isn’t straight forward etc
I and a bunch of entrepreneurs met with Sim Shagaya (CEO of Konga.com) recently and the first question everyone asked was “does schooling in America or Europe give you a better chance?”. He answered “Not exactly”, stating that most Nigerians who study in Nigeria usually have that hunger and desire to do great things. He went on to say that majority of the top 10 richest people in Nigeria didn’t school abroad. Jason Njoku also echoed the same sentiments at the TechCabal Sessions last year.
However, I feel even though studying abroad doesn’t guarantee investors will throw money at you, it has its advantages, that is, making the right connections, getting acquainted with how funding works and gaining trust.
It’s unlikely that big VC firms like Tiger and Kinnevek will fund early stage startups. If Nigerian startups will get seed and angel funding therefore, local angels with have to get into the mix. 440 and Spark have done well in this regard. We need more.
Getting funded is luck. That is opportunity meets preparation. For the founder who is waiting to get funded. Here are a few things you should do:
Get started: It 50% easier to get people interested in something you’ve tested and is working than an idea you have in your head (Build-Measure-Learn). Also, a simple business model that requires little capital to start and doesn’t involve government regulation will always interest investors. Market size and growth potential is also a factor.
Get traction: It could be revenue, users or page visits depending on the type of business you’re in. Investors are turned on by numbers.
Get knowledge about funding: The more you demystify how funding works the better equipped you are when talking to potential investors.
Get a mentor: A mentor who is into tech will also help a great deal as they can show you how things work practically and possibly introduce you to potential investors.
Sell: Sell yourself, your team and your product. A great pitch will improve your chances with investors.
That said there’s no perfect formula to getting seed capital. Besides many of us think that it’s just a case of man-know-man. And so the debate continues.
Photo Credit: Philip Taylor PT via Compfight cc
