- Nigerian Startups Attract $110m Investment in First Half
Economic uncertainty and weak investment sentiment were not enough to deter investors from investing $110.9 million in 44 startups in Nigeria in the first half of the year.
A data compiled by Techpoint Africa showed Nigerian start-ups raised the funds in more than 50 rounds denominated in naira and dollar.
Crop2cash, an Agric-tech company raised $100,000 pre-seed round while another startup, Provider, an AI-powered food delivery firm, received $1000 pre-seed funds from Rowland Eno, an Angel investor, in January.
In February, only one startup raised fund. TeamApt, a Nigerian fintech start-up, received $5.5 million Series A fund from a number of investors led by Quantum Capital Partners, a Nigerian venture capital company.
CredPal from Y Combinator and Kudi, a digital payment start-up raised $150,000 and $5 million in March, respectively. Paylater owned by OneFi received $5 million debt facility from Lendable and MiddleTrust, an escrow service provider, also raised $5,000 pre-seed investment in March.
Jumia raised $56 million corporate round investment from MasterCard shortly before it went public in April, while Gokada raised $5.3 million in a Series A funding round. Several other startups received funds in the first half of the year.
Experts however advised that while the funds were good for the country and economy at large, it could disrupt the ownership structure of the businesses.
“Although, some people believe that these funds are Foreign Direct Investment and beneficial to the country, but that would have been a sound argument except for the fact that if you allow too much foreign interest into your economy, then you own nothing at the end of the day,” said Yele Okeremi, the President, Institute of Software Providers of Nigeria.
He explained that “FDI is good and should be encouraged but if we know what we are doing, it should be a fraction of the local investment. Start-ups are better off having the bulk of their capital from local investors than when it is from foreign investors.”
Tomi Davies, the President of the African Angel Business Network, said funding is still a challenge for seed stage startups as investors are focusing more on growth stage start-ups.
“While we are awash with funding for the growth of start-ups that have found product-market fit, there is still a shortage of funding for seed stage start-ups in incubation that are still trying to develop their minimum viable product. As they require smaller ticket size investments in addition to more mentoring and advisory, they are still lacking adequate attention in the commercial world,” he said.
In recent years, Nigerian tech startups have become one of the preferred investment destinations for investors, largely due to the huge internet penetration, 119.5 million internet subscribers, and rising number of financial technology companies amid a growing smartphone population.
The rush to seize a reasonable chunk of the Nigerian tech space is compelling investors, both locally and foreign, to take a risk on Nigeria given her huge potential and opportunities.