Shout out s’awon goons
awon eruku mi
awon loni kin ma para toni keeping cool mi
~ Olamide, Awon Goons Mi~
So you have built an amazing startup, you have survived on garri and epa or cereal or indomie ( insert austerity food of choice here) , you have a small team, you have brought a new meaning to the word bootstrapped, BUT you are seeing growth, you are earning revenues, you have customers who love your product, if you are super ambitious you have built a brand and are killing things online in your sector in Nigeria. But now you need to grow, you need money, so you create a killer investment pack, and off you go to the jungle that is “Nigerian FundRaising Scene”!
So whats it like trying to raise as a Nigerian Startup in 2015?!
First of all, things have changed since 2008-2010 which when I hear of the deals then, essentially there was a lot of “shafting”going on. However maybe “shafting” is not fair term. Some people made money, some people gave up significant percentage of their company for what some may consider little amounts. However there were winners and losers, such is life!
In 2010, something great happened though, Tiger Global ( Huge VC based in NY) and invested some of the very early startups, great news they essentially created the very first solidly financed tech companies in Nigeria.
Then they LEFT.
They have not been back since.
Apparently everyone is too small.
Class of 2012: Made notably included Konga and Jumia those guys are different from class of 2010 because they raised before they even started , funded by Rocket, Kinnevik. They started with a pile of cash. Do not compare yourself to those guys if like class of 2010 you are bootstrapped.
Then theres class of 2013 and 2014. well theres a lot of us in the class, but then there are guys who are the top of that class. How can you spot a class leader?. They are probably allready category leaders, so Fashpa today is a leader in Online Fashion category, they are are past idea stage, they have a concept that works, traction, growth stage ventures, they probably have a CV which looks investible, probably littered with Google, McKinsey, HBS, Jumia, Konga, JP Morgan and in some cases all 5!, they are probably bootstrapped and focusing on growth and building a team, can be found at tech cabal round table and maybe bottles on wednesday (am joking oh) ( disclaimer startup maybe top of class without this attributes also)
Ok, so you get the picture, everyone thinks its easy for those guys to raise.. WRONG! its bloody difficult for everyone to raise ,for the following reasons!
1) There is a lot of focus on very early early stage funding: Companies who need between 10k-50k. idea exploration. There was a flurry of accelerators and now also Tony Elumelu fund promising 10k. They will all say they have space room for growth stage startups but they are really not structured in that way. But they are great for the ecosystem they create a great pipeline and their valuations are getting there, better than class of 2010 for sure. So Today, if you have an idea, you should be able to get enough funding to get you to concept stage this is is progress!
2) There is no”angel scene” in Nigeria : Well again there are various makings of one, but not quite there, I have met a few members of the Lagos Angel Network but I dont know of anyone who has raised through them I could be wrong. There are lots of HNIs for sure but most people do not get tech or internet companies YET.. they will be soon but for now most HNIS prefer to put money in property or private jets, where they are guaranteed returns or enjoyment at least!
3) International VCS are not interested in “small deals”: Most startups at this stage are typically trying to raise between 250k and 1million and unfortunately this is too small for most global billion dollar funds. They are watching though and may or not be back when it times for your series A. I have generally been surprised with the quality of high profile VCs who have reached out to me re:fashpa, so some myths are true, if you are doing something good, you will be found!
Its not all doom and gloom. it is still possible to raise in Nigeria, start small, be creative, start within your network, reach out to family and friends, again start small and you be surprised to see the puddles create an ocean, have a playlist that helps you through those long nights ( I recommend Olamide- I imagine its just me with my goons and we will make it much to everyones surprise) and be prepared to hear your fair share of NOs!
Some crazy guys I know ( am so happy to be your classmate), one startup I know raised $2 million from Nigerian “Angels” in Nigeria and another two have raised north of $1 million too for their growth stage startups, so it is possible, its just difficult, time consuming and heart breaking.
But hey nobody promised that it would be easy!
There is so much to say on this topic, I didnt even touch on valuations- Nigerian style or Chasing Investors, look out for for future posts.