One of the big challenges for entrepreneurs, especially SMEs, is raising finance. The capital to start up or grow their business.
Most people give up saying banks don’t fund ideas in Nigeria. But that’s not necessarily true anymore. While it may be difficult to access finance from commercial banks, especially if you’re not a very established customer in terms of quality and consistent cash flow, there are other financing institutions you can leverage on.
For some time, I have worked with SMEs and mid-level businesses on their strategy, business development and business planning to help them raise government support finance from especially Development Finance Institutions in Nigeria like Bank of Industry, NEXIM, NIRSAL, Bank of Agriculture, etc.
However, the purpose of this brief article is to shed some light on another kind of funding vehicle; Venture Capital and Private Equity financing. For some time, we didn’t have much of this in the country to support budding business and entrepreneurial ideas. But since the emergence and eventual success of start-ups like Jumia and Konga in 2012, specifically the rise of e-commerce market in the country, foreign and some local venture capital firms began to give more attention to start-up ideas in Nigeria, especially in the tech/e-commerce space.
From 2016 till date, however, that number had begun to rise exponentially. A number of venture capital firms are now trooping into the country and local ones are arising doling out multimillion dollars to start-ups in Nigeria and across Africa.
For some perspective, in spite of the Corona virus pandemic and economic disruptions of 2020, venture capital financing in Nigeria totalled about $170m, 17% of the approximately $1 billion raised across Africa, according to report compiled by StartupLists. In just the first quarter of this year 2021, between January and March, at least $219m has been raised by Nigerian start-ups from both local and foreign VC firms.
Leading that list are companies like Flutterwave (considered the newest Nigerian unicorn, being now valued at over $1 billion), Havenhill, Kuda bank, Kwik, uLesson, and a host of others mostly fintech and Edtech start-ups. With the way things are going, that amount would double or likely triple before the close of the year.
Now this funding is not limited to tech or fintech start-ups, although there seem to be a high preference towards that. Technology or digitization has permeated everything. However, any idea that can show great promise in terms of its value proposition, innovative functionality and business model can stand the chance to access the financing you need to implement your business offering. Whether you have a unique idea or business solution in agriculture, transportation, logistics, real estate, services, etc, you can access finance if you are patient enough and can work with a professional to structure and present your idea based on sound financial and business modelling standards and requirements of the kinds of firms involved.
If this is your situation, if you have a uniquely great idea that you think can really make great impact in our country and even across Africa, then we can really work with you to develop your venture proposition and help you approach the right VC or PE firm(s) for upward investment. Send us a mail at info@apnetconsult.com and we can work with you and your partners to present your case to the right prospective investors or VC firms for finding.