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How Smart Nigerians Are Creating Wealth Through Venture Capital And Private Investors

An appraisal of how smart Nigerians have been creating wealth through Venture Capital can not be beautiful justified without a synopsis of the current economic state of the country.

Different writers and social commentators have called Nigeria all sort of negative names. While some liken Nigeria to a Banana Republic, others will depict the most populous black country on earth as a ‘Jungle’. The derogatory names did not even elude Donald Trump, a former president of America when he called Nigeria a ‘shit hole‘ and the way at which Nigerians node their heads in affirmation to what he said was annoying.

A shit hole in a black understanding is where you out your ‘bumbum’ when you want to make use of the loo. No sane citizen of any country would roll out drums to celebrity such toxic word when attributed to his or her country. However, I do not intend to question their motive and rationale because, in many instances, the way at which the Nigerian Government has conducted its affairs and slapped its citizens with unhuman actions makes it closer to those words.

The leadership of the country in all sense of responsibilities has failed the people. But in the face of these challenges, amidst youth unemployment which stands at 42.5 per cent, Nigerian youth have never been smarter. They have discovered a way to find their businesses through venture capital and private investors. The way at which many of them are creating wealth through venture capital is amazing, lovely and creative. The ‘Paystack and Flutterwave’ stories are enough testimony that Nigeria Youths are not “lazy” as said by the first citizen of this country whose constitutional duty is to protect and project the good image of the people he leads. Interestingly, the Nigeria Venture Capital Deal NVCD is now five times the Foreign Direct Investment FDI (WOW). Some of the Nigerian startups that raised over $100million include: 

Opay raised $400Million

Andela raised $200Million

Flutterwave raised $170Million

Tradedepot raised $110Million

It is interesting to note that over 751 deals were done in Africa in 2021. These deals combined was over $4Billion with Nigeria taking the lead with over $1.4Billion in 215 deals, followed by South Africa with $838Million in 118 deals, followed by Egypt with $588Million in 119 deals. It is more interesting to note that the Nigeria startups ecosystem which attracted $1.4Billion 215 deals is now three times higher than the entire Federal Ministry of Youth and Sport which was pegged at 193billion naira to cater for more than 80million Nigerian youths.

Below are the deals as captured by ‘The big deal’ in this infograph

FIVE THINGS TO DO WHILE RAISING FUNDS THROUGH VENTURE CAPITAL OR PRIVATE INVESTOR.

1. SETUP A SOLID TEAM

Venture and Equity Investors either institution or private are often concerned about the team or better put, the workforce. The team has to be solid, visionary, creative and most importantly smart. The team is the mind and spirit behind every project. The team leader if not the entire team members has to be spontaneous, young and smart.

2. ONLINE PRESENCE

The importance of having an online presence cannot be overemphasized. It is most times the first thing an investor or a venture capitalist will check before they give you an audience. In some cases, the venture capitalist will keep a tab on your social media presence for a while before they grant an audience. Thus a business will need a website and an updated social media presence. Richard Dukas CEO of Dukas Linden Public Relations, said, “If you don’t have a website and have no material online presence, you likely won’t get past the first hurdle with potential investors.”

3. SET UP AN INVESTMENT DESK OR HIRE AN EXPERT

I will advise any startup that requires funds to set up a deck for that purpose. The truth is, looking for funds could be interesting but also demanding. It could affect the operational output of the organization if not well managed. In addition, hiring an expert is not out of order. An alternative fund expert will know how to navigate through. This is the most efficient and promising way. In most cases, notable Startups which have been able to raise a huge sum of money hired an expert. 

4. INCORPORATE YOUR BUSINESS

No investor will fund a Startup that has not been registered and incorporated. Although some venture capitals often accommodate Startup ideas for seed funding. In most cases, venture capitals will tend to seek company registration and incorporation documents, they will also desire to know company directors, share allocation and all. 

5. PLAY WITHIN YOUR NICHE

Investors have specific interests. There are investors whose interest lies in fintech startups while there are some who enjoy investing in the eco-commerce space. However, there are serial investors or venture capitalists that invest in random but safe and promising businesses. The game is to at the first instance, identify potential investors within your niche before you broaden the search list. 

I must say that raising capital for your business has never been easier. Africa is an emerging market with a large room for opportunity. Foreign investors understood this much and the over $4billion invested in Africa last year by these investors is s testimony to the beautiful market opportunity in Africa. Nevertheless, venture capitals do their due diligence and thus the above tips will be a guide towards your journey to raising funds for your business. 

Taofeek Adekunle is a business writer based in Abuja, Nigeria.

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