Findings show that 2019 was a good year for startups in Nigeria. According to WeeTracker, African startups raised a total of $1.34 billion in 2019, its highest figure yet. Out of the $1.34 billion, Nigerian startups raised a total of $663.24 million which represents a whopping 50.5% of the total funding raised on the continent. While this is good for the economy as a whole, it can present a challenge for entrepreneurs seeking funding.
Most investors seek startups that have clear and unique solution and value proposition that ultimately create profitable returns on investment for the investor and owners/stakeholders of the business.
Professional investors place a great deal of importance on your previous experience running a business, clear and bankable business plan, and with the number of new startups surging every day, they can afford to be especially discerning. This can box out a large portion of entrepreneurs who are trying to get their first startup off the ground.
For this reason, you may opt for other ways to fund your business, which can include:
- Raising funds through friends and family (F&F)
- Applying for startup loans (Banks, BOI, DBN etc.) which has been made easier with the CBN’s loan to deposit ratio policy on deposit money banks to give out 65% of their deposits as loans.
- Joining a startup incubator or accelerator. These are organizations that support startup and small business development.
- Angel investors. They are high net worth individuals who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. Many angel investors are current or former entrepreneurs themselves. While money is, of course, their primary concern, many support startups out of a genuine interest in the idea and the desire to see the business become a success.
- Crowdfunding : The use of small amounts of capital from a large number of individuals to finance a new business venture.
- Small Business Grants. There are NGOs or government funds allocated to support new businesses. Some are meant to boost economic development in low-income areas, others are for advancing science, medicine, and education. i.e. TEF
- Self-Funding. If you’ve already saved up a substantial sum, like a down payment on a home, you could instead use that as your startup capital. It’s a risky move to be certain, but if you believe in yourself and your idea, it can further incentivize you not to let yourself down.
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