Funding for startup in Nigeria is always an interesting topic because almost every startup that springs up yesterday, 2 years back or even tomorrow, believes they need funding. Well, I don’t dispute that, as every business needs funding to run healthy. But there’s a difference between investor funding and revenue funding. While some can depend on the latter, and be good, they are a number of startups on the look for the former and are frustrated when they don’t find one.
In this ecosystem, there are some myths which are still being held by founders, stakeholders and expectedly new members of the system. These myths revolve around funding for startup in Nigeria. In this post, I’d be highlighting them, and correcting too. All you have to do is read on.
1. “We are like Silicon Valley…”
No, we are not like Silicon Valley in terms of funding. We might be like them, maybe because we have a “valley” name for yaba, but surely not funding. Silicon Valley has matured to a stage where funding is relatively easy. Yes, over there, it’s easy compared to other parts of the world. Investors have more risk appetite and tolerance than those in Nigeria or Africa as a whole. They can afford to throw away dollars at a basic startup doing basic things online. You know why? They are fighting a battle for more comfort. While in Nigeria, ours is an infrastructural problem. Most startups getting funds in Nigeria are addressing a REAL problem. You can watch this Youtube video of the session From Lagos to Silicon Valley to learn more about the various investor dynamics.
2. “There is a special funding bias towards FinTech…. “
Now, don’t say “There is a special bias… “, instead, you should know that the metrics and growth of fintech startups are what is making them receive funds. With the likes of Paystack, Paylater, Wallet.ng, Flutterwave, Aella credit, Piggybank getting funding, there is a widespread belief that investors have this craze or bias for fintech. No, check these companies, their records, most importantly, their future prospects (number of unbanked in Nigeria/Africa), and you’ll see that they’re worth investing in, because there is a possibility of scale . So, it’s not just a funding bias.
3. “There are no investors in Nigeria… “
Actually, there are, a lot of them. They might not be up to other ecosystems but we have a handful of them. The main issue is them getting startups worth investing in. Jason Njoku (SPARK and IROKOTV) narrated how he got to invest in Ogavenue. Andrew, the CEO of Ogavenue was sending him financial metrics every month till he got interested. So, don’t say we don’t have investors. If you do, I’ll name a few for you – Ventures platform, EchoVC, Cchub, Greentree investments, SPARK, Fola Laoye (angel), Lagos Angel Network, Tayo Oviosu (angel) and many more.
Bonus myth – This isn’t about funding though.
4. ” Our addressable market is over 180 million people… “
Please, this is not true. Your addressable market isn’t that much. Yes, it might be the population of Nigeria, but not everyone needs your services. Even if you sell salt, there are some who can’t afford it. Now, you’re into tech, and you expect everybody to have access to the internet. Urgh. You can even consider dashing smartphones out to everyone in the country. Thing is, not everyone has the technical know-how to operate them.
So, whatever you may be thinking along the lines of the above, I suggest you stop. Why? They are all myths and far from the actual truth on ground. The Nigerian tech ecosystem has a lot of misconceptions, these are only a few.