November 15, 2016

Need funding for your startup in Nigeria? Here are 9 things you must do

Early last year I took up a role in a technology seed funding company. Before then, I had just been on the management team of a few technology companies that had raised money for growth.

My perception had always been from the receiver side; the high hopes that fill your heart when an investor is interested in your startup, the wait, the distraction to the business, the nerve-racking due diligence preparations and the long silence that often means the investor could pass on this opportunity.

In my experience with startups, I have learned that investors’ interest doesn’t always result in investment, and when we tried to find out why the investment didn’t go through, we most times never got any clear, specific reasons.


After a year on the other side, especially at a time when the tech space is abuzz, I have been asked a few times for some sort of checklist or a set of criteria that startups can work with to guide themselves to make sure we invest in them. That is like working to be exactly what the investor wants which is not the goal of investment. The goal is to take you on the part you have created and provide support in various areas where necessary.

In this article, I’m going to share with you a few important points you’ll need to keep in mind if you plan to attract investment funding for your startup. However, you must keep in mind that a compelling business idea, and the capabilities and experience of the founder(s) are focal points for investors.


Let’s now take a look at a quick checklist:

Funding is not a source of revenue; it is a short term lifeline to gain traction. Show that you understand that!

The key reason an investor would fund you is because they see the potential of your startup growing into a viable business. Hence, it’s not always impressive to still be articulating the value of your product while asking for funding. Your very clear plan to raise more money but sketchy revenue assumptions and no definition of who your customers are don’t help anyone to completely believe you.

I have often heard a lot of founders say: ‘…but when Facebook and Twitter started they weren’t making any money and really weren’t sure how they would make money.’

My response: If your product isn’t exportable beyond Nigeria and you aren’t in Silicon Valley, it will best serve you to make assumptions based on the local environment.

Do your homework and show it!

What are the alternatives to your product/service? What is your exact market size – is it a marginal niche or mass market? What are the barriers to entry for new competition? Is the technology replicable? Who are your early customers? What is your burn rate? What is the go-to market plan with little budget? Do similar product exist in other markets?

My advice: Think it through, Technology as a business goes beyond the product, understand your value add- how trivial or important it is. Do some internet research for similar products abroad. I once listened to a pitch from a startup that was working to create a platform for drivers, and I asked the entrepreneur, ‘have you heard of Uber?’ And he said ‘No’.

On another occasion, I listened through a pitch on audio format e-books and I asked the entrepreneur if he knows that does something similar. And he didn’t even know about Audible.

Please take the time to do some research. You must know that except you are creating a very disruptive product, a similar product probably already exists on the market and you can learn from it.

Also, when presented with areas you failed to cover, show you have a learning spirit by taking down points for research and after you figure it out, send the investor an email with your thoughts. That way you show investors that you are teachable and passionate to innovate.

Too young to fund

There is a stage just before your startup becomes attractive to an external investor. It is that stage where you have a clear focus of who your customers are, and you’ve most likely bootstrapped to the point where you have an MVP(Minimum Viable Product). Anything before this is an emotional decision on the part of an investor that might lead to loss of a large percentage of shares on your part.

My Advice: Bootstrap as much as you can.

Outrageous start-up funding needed.

Whenever I see a funding need of $2 million for a start-up (happens very often even for eCommerce sites built on templates), I quickly go to the financials to see the cost breakdown and revenue projections.

Most times, a chuck of the funds are allocated to recurring expenses. If your product development costs $2 million, the product had better be disruptive, or you need to have a monetization in place to meet some of your needs.

Again, best practice in the technology startup realm is to develop the product in phases. At the seed level, you should be presenting the funding you need for a particular phase, and make sure that phase results in a working prototype.

My advice: If your recurring expenditure is high and you don’t have a big pocket to draw money from, you would run out of money.

Stagnant! Still the same way it was 6 months ago.

The first time you talk to an investor might be the beginning of an interest in your startup. So, even though they don’t make an offer immediately or act interested, they might want to look at your start-up 4-5 months later to check out your progress.

Zero users and a stagnant MVP in technology where product iteration and feature release is key doesn’t give an investor confidence. If the conversion of your prospects list from 6 months ago is still zero, there is a problem.

I have talked to a few startups with this issue and most of them attribute it to financial constraints. I once read a quote by Eric Ries that says: ‘starups that succeed are those that manage to iterate enough times before they run out of resources.’

The future returns isn’t big enough. 

Some products and services in the tech space right now are not just disruptive enough, even though there is a market for some of them. What this means is, at their peak, these startups may make enough returns to get by, but the returns would not be large enough for an investor.

A number of good startups actually fall into this category and sometimes I have been upfront with trying to break down the facts with the entrepreneur. Consider looking for grants, loans from friends and family and growing your customers quickly.

The Founder is too focused on raising money, and not growing the business.

One of the top 10 mistakes that can kill a startup is when the founder is focused on chasing investors, and not customers. While you’re trying to raise funds quickly, it’s important to know when to draw back. Be careful not to notoriously become the ‘always trying to raise money’ entrepreneur.

Remember, impressions don’t go away very quickly. And more importantly, focusing too much on raising money can distract your business growth.

You have to look the part.

Asking for a seed investment of just $50,000- $100,000 when you’re unkempt and look kind of homeless doesn’t give any investor confidence that you’re not asking for investing funding to take care of your personal needs.

You don’t need to wear expensive clothes or be fashion forward; looking clean and making an effort to dress the part usually helps.  Always remember that investors often make investment decisions based on both subjective and objective factors.

‘All I need is funding’ … That’s not correct!

Ever watched the show, Dragon’s Den? If you haven’t, you really should.

On the show, there have been a few occasions where an entrepreneur had to choose which investor they want and the very strategic ones say they want a particular investor because of his business networks in the market they are currently trying to get into.

When you pitch to an investor, it’s always an effective strategy to request for more than the seed funding. You should indicate interest in their business network, resources and skills. Doing this gives the investor security that you are in this to win.

The truth is, not all startups get funding. Most eventually fail, which is not a bad thing for the ecosystem as we only learn from failure. Always remember, a Startup is a temporary organisation used to search for a repeatable and scalable business model… Steve Blank.


As a technology enthusiast, I am excited at the next wave of products to be developed as more entrepreneurs begin to understand the need to properly define value, and price it correctly. Aspiring entrepreneurs in the ecosystem have also become aware that to build a viable business they need to think deeper and outside the box. A rush idea in the shower that got you and your friends excited isn’t just enough to make you Mark Zuckerberg.

By Ifeoma Uddoh: Chief Operating Officer  Sasware

Leave a Reply

Your email address will not be published. Required fields are marked *