Download Investment Guide NG

124 Pages·2017·3.94 MB·English

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Scale Up!
Entrepreneurs’ Guide to Investment in Nigeria
Scale Up!
Entrepreneurs’ Guide to Investment in Nigeria
SCALE UP! ENTREPRENEURS’ GUIDE TO INVESTMENT IN NIGERIA
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Foreword
Laogs , Niegr i a , a c ti y fo e ov r 2 0 m i l l noi i n h a t ib a t n s , h a s a r a dip l y
g row i n g s hpe r e fo t e c h s t a p u s - r . t A n es t i m a t e d 4 0 07 0 0 - a c t i ev
a n d v i a elb s t a p u s- r t i n Laog s b e mc o e ke y d r i e v r s fo j o b s a n d e co -
m o n ci g r o w t h . Th e etn r e rp e n e u r i a l e co s y s t e m i s g a i n i n g rom e
a n d rom e i tn e r n a t n o i a l at t e t n noi – a n d e monc o ci t r a c t n o i .
Adrio c ncg ot Sta r t p u G’em o ne s Gabo l S pu t - a r t Eso ycs m te Rrpeo t
, 7 2 1 0 Laogs’ s t a pu - r t e c o s y s t e m v a u el i s t h e h i g h e s t i n Af r ci a ,
v a uel d a t USD 2 ib l l n o i .
Mos t e tn r e rp e n e u r s , ,eowh e v r s t i l l s u f e f r f mro l i m t i e d a c e s s t o
b u s i n e s s a d v c e i , t a e l t n , m a r k e t s a n d c a tip a l . Thes e nco s t r a i t n s
a r e e e v n h i g h e r ro f m o e w n , t oh s e w oh a r e ou y n g , ro l i ev o ut s d i e
fo t h e me t pr o l o t i a n re g n o i s . On e fo t h e ke y c h a l e l n e g s ew h eva
h e a dr m a yn t i m e s f mro s t a p u s - r , t i s t o f i n d t h e r i g th f i n a n c i n g
po t n o i , a n d ro kw no t h e s p e c i f ci du e d i l i e g n c e re q u i r e m e t n s fo
t h e s e i n s t r u m e t n s .
Th i s g u di e a i m s a t he ip l n g s t a p u s- r t u n d e r s t a n d a n d n v a i g a t e t h e
v a r ei t y fo f i n a n c i n g po t n o i s . Thes e i nc u dl e d ie v r s e me c h a n i s m s
s uc h a s g r a t n s , s e e d f u n d s , a n e g l i e v n s t m e t n , i m p a c t ro ei t n e d
evtn u er t i a c p a l , tbe d e c t . uF r t erer , h o m t e h g eu d i t u o l ise n q u e r i e r -
t n e s m , rse o t i v n e x p c e t n taos i a s el wl a s rse o t i v n t y pse i n a n ea is yl
e l seis b c c a , w y a a n d fo e f r s rp a c t c i a l s pup r o t t o e tn r e rp e n e u r s i n
a sk i n g t h e r i g th q ue s t n o i s w he n ap rp o a c h i n g a n i e v n s . t ro
I n re d r o ot cte e a r a ene ev h is r p m o c r e v o v ew i e w dec a hr t u o ot er o m
t h a n 23 f i n a n c i n g p a r t n e r s w oh rp e s e tn t h e i r p ro t l o f oi a n d re q u i r e -
m e t n s i n t h e g u die b o ko . Smo e fo t he m , l i k e DEG , GTren e c Catip a l
a l s o he p l e d u s a n d g eva v a u l a elb e f e d b a c k t o i m erpov t h e g u die .
Th e rp i tn e v r s noi w i l l b e s o no a l s o va a i l a elb a s a n i tn e r a c t i ev no l i n e
ev r s n o i . B a s e d no a q u c i k a s- e l s s e f s s m e tn t o l o , t h e no l i n e g u di e
w i l l p el h e u n e t r rnepe s r ot f id n t eh s u-dte i b s e t f i n a c n i ng ce h m a n i m s ,
a n d die t n i f y p ot e t n i a l f i n a n c i n g p a r t n e r s .
Foreword
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At this point, we have to acknowledge one person especially:
Anton Root, who shared his knowledge and experience for this
guide. Thanks to him and the Allied Crowd team (Lars Kroijer,
Malcolm Kapuza), who have proven to be experienced partner
in navigating through the finance landscape in East and West
Africa. We also received valuable feedback and support from GIZ
colleagues from the finance sector Diana Hollmann, Gabriela
Rosales-Rogge and Annette Kleinbrod (Stifterverband). Last but
not least, many thanks to my team from Make-IT in Africa:
Chiemelie Umenyiora, Mutembei Kariuki, Matthias Fröhlich,
Stephanie Wiedner and Jonas Schug for organizing, proofreading
and final editing.
We will frequently update the guide to include new financing
partners, and improve the methodology based on your feedbacks.
So, please, don’t hesitate to contact us via
SCALE UP! ENTREPRENEURS’ GUIDE TO INVESTMENT IN NIGERIA
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Tech Entrepreneurship Initiative Make-IT in Africa
Make-IT in Africa promotes digital innovation for sustainable and
inclusive development in Sub-Sahara Africa. Deutsche Gesellschaft
für Internationale Zusammenarbeit (GIZ) GmbH implements this
project on behalf of the German Federal Ministry for Economic
Cooperation and Development (BMZ).
In collaboration with more than 20 corporate and financing part-
ners, social enterprises, hubs and networks, ‘Make-IT in Africa’
strengthens an enabling environment for young tech entrepreneurs
– to provide better access to finance for growth, international
markets and entrepreneurial skills.
More information and contact:
www.make-it-in-africa.org
Contents
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Contents
Foreword ........................................................................................................................................... 4
Contents ............................................................................................................................................ 7
Glossary ........................................................................................................................................... 10
Introduction ................................................................................................................................. 14
Chapter
1.0 Funding Instrument Overview ................................................................................20
Grant ............................................................................................................................................. 24
Debt ................................................................................................................................................26
Equity..................................................................................................................................................28
Mezzanine ...................................................................................................................................30

2.0 Investor Overview .......................................................................................................... 32
Accelerators / Incubators ....................................................................................................36
Angel Investor Networks .....................................................................................................37
Lagos Angel Network Aims to Promote Access to Finance .....................................38
Foundations ...............................................................................................................................39
Crowdfunding Platforms ....................................................................................................40
Public/Semi-Public Funders..............................................................................................41
Lagos Innovates Looks to Support Yaba’s Start-ups ...................................................42
Banks .............................................................................................................................................43
Impact Investors ..................................................................................................................... 44
Corporates ...................................................................................................................................45
Venture Capital Fims .............................................................................................................46
Private Equity ............................................................................................................................48
How to Connect With Funders...............................................................................................49
3.0 Raising Capital ................................................................................................................50
Different Stages of Startups and Typical Funding Needs at Each Stage .....54
Start-Ups 101. What Makes a Start-Up Appealing to Investors?.....................55
Putting Together a Board of Directors ...............................................................................57
When to Fundraise .................................................................................................................58
Typical Negotiating Process With Investors. ..................................................................59
S C A L E U P ! E N T R E P R E N E U R S ’ G U I D E T O I N V E S T M E N T I N N I G E R I A
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What you Need in Your Pitch Deck............................................................................... 60
Three Fundraising Tips From Francis Sani,
Acceleration Programmes Manager at Cchub ..............................................................62
Key to raising money successfully: Telling YOUR Story ...........................................63
Start-ups, Your Valuation Matters! ................................................................................ 64
Valuing Your Start-Up ................................................................................................................65
Three More Tips From Cchub’s Francis Sani ..................................................................67
Negotiating With Investors: Tips From Entrepreneurs ............................................67
4.0 Nigeria’s Investment Scene .........................................................................................68
A Brief History ..........................................................................................................................72
Top Africa- and Nigeria-Focused Tech Blogs and News Sites ..........................73
Universities’ Interest in Entrepreneurship ................................................................74
Choosing a Market Focus ....................................................................................................75
Investor Scene Growing, but From a Small Base ....................................................76
Local vs. International Investors ..........................................................................................76
Pitching Effectively ......................................................................................................................78
5.0 I nvestor Directory* ........................................................................................................80
Fast Forward Student Innovation Fund ......................................................................83
Enspire Hub ............................................................................................................................... 84
Tony Elumelu Foundation ..................................................................................................85
Wennovation Hub. ..................................................................................................................86
Lagos Angel Network (LAN) ..............................................................................................87
Microtraction ............................................................................................................................88
Imeela ............................................................................................................................................89
Sasware ........................................................................................................................................ 90
Growth Capital by CcHUB..................................................................................................91
Beta.Ventures .............................................................................................................................92
Greentree Investment Company .....................................................................................93
StartPreneurs ........................................................................................................................... 94
Afvest .............................................................................................................................................95
FINCA Ventures .......................................................................................................................96
Contents
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Global Partnerships/Eleos Social Venture Fund.....................................................97
GreenTec Capital Partners ..................................................................................................98
Singularity Investments ......................................................................................................99
eVentures Africa Fund .......................................................................................................100
GreenHouse Capital ............................................................................................................ 101
Factor[e] Ventures ................................................................................................................ 102
Africa Tech Ventures .......................................................................................................... 103
Accion Venture Lab .............................................................................................................104
Africa Enterprise Challenge Fund (AECF)............................................................... 105
DEG Up-Scaling Programme .........................................................................................106
Acumen Fund ......................................................................................................................... 107
All On ..........................................................................................................................................108
V8 Capital Partners ..............................................................................................................109
TLcom Capital LLP .............................................................................................................. 110
IFC Venture Capital ............................................................................................................. 111
Doreo Partnerst .....................................................................................................................112
Convergence Partners ........................................................................................................ 113
Energy Access Ventures .................................................................................................... 114
Helios Investment Partners ............................................................................................ 115
6.0 Conclusion ........................................................................................................................116
Key Takeaways ............................................................................................................................ 119
Useful resources ..........................................................................................................................120
Acknowledgement ....................................................................................................................121
Imprint .......................................................................................................................................... 124
* The funders are ordered by average investment amount,
with smaller funding amounts appearing first.
SCALE UP! ENTREPRENEURS’ GUIDE TO INVESTMENT IN NIGERIA
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Gsaso r l y
Ac e l e r a t o r | a programme that takes in relatively early-stage start-ups, helps
them develop their product, providing mentoring and teaching, and access to a
network of potential investors or partners; at the end of the programme, the
accelerators typically put on a pitch day during which companies can pitch their
services to investors. As a key difference from incubators, accelerators usually
have a set timeframe from a few weeks to a few months
Aneg l i e vn s t o r s | individuals with disposable income who like to invest part
of their portfolio in start-ups. Usually they would invest their cash, time for
coaching and mentoring and make business introductions
Bu s i ne s s pl a n | a detailed outline of your business, including the problem it is
solving, the strategy for growth, revenue projections, marketing strategy,
team profiles, and more
B2 B – B u s i n e s s t o b u s i n e s s | business that aims to sell products and services
to other businesses
B2C – B u s i n e s s t o c on s u m e r | business that aims to sell products
and services to consumers
CAPEX – Capi t a l e x p e n d i t u r e | the funding needed to invest in assets that
your business needs to get off the ground (e.g., computers, stock, machinery),
or improving these assets
Capti a l i z a t o ni t a b e l | also referred to as the cap table, this is a simple breakdown
of who owns how many shares in the business, and the ownership percentage
that corresponds to
Clo l at e r a l | an asset (machinery, vehicle, etc.) used as a security when
taking out a loan
Cre vten ol i b t e b d / t e o n | short-term debt that may or may not covert to equity in a
future financing round. Commonly used to defer the valuation discussion to when
an early-stage company has historical financials to guide the valuation process
Cdrow f u n d i n g | raising (typically) small amounts from a large group of people