How to scale your business with venture capital/angel funding in Nigeria
I have spent the past few years, along with my colleagues Abas and Mr Bode Agusto figuring out how best to help tech companies in Nigeria scale using capital, mentorship & training from the Greentree Investment company.
Greentree is one of Nigeria’s most exciting early stage investors in Nigeria. All directors are also entrepreneurs that have built successful businesses, we believe that this gives us the operational experience, mentorship capabilities and network; in addition to the capital required to support start up companies in Africa.
Next month will be be hosting our pitch day and are looking for the next set of dynamic, determined, smart entrepreneurs to invest in. These are some of the things that we (or most investors actually) will be looking for when selecting companies to invest in.
Your Team
‘for any investor it takes a miracle to get investment dollars out of them if they’re not impressed with the team’
- Mark Suster
- Previous experience in the industry they are facing
2. Good local knowledge; I actually prefer people that have lived in Nigeria and have networks here
3. Technical AND business knowledge
Size of the market
Brand new markets are very tough to estimate in size. Your best estimate can be wildly off on both the downside or the upside. Startups routinely overestimate their markets. This is especially true in Nigeria.
There are 180m people in Nigeria. But according to Mckinsey, only 11 to 18% of urban households , numbering over 2m, have purchasing power and annual incomes over $10,000, which puts them in the modest affluent class.
A middle class market of 2m makes the Nigerian market far smaller than countries with small populations, but larger middle classes like Switzerland, Norway and South Africa.
Products targeted at middle class earners will struggle to scale.
However, the CEO of IBM once said the worldwide market opportunity for computers was only 5 machines. Therefore in evaluating the new market opportunity, you must look for genuine pull from customers and you watch out for false demand from unsustainable marketing practices
Valuation
One of the most frequently asked questions at any startup event, is “how do investors value a startup?”. The irritating answer to the question is: it depends…on a whole number of factors.
Startup valuation is more of an art than an exact science. I think Seedcamp puts it best when they say:
The biggest determinant of your startup’s value are the market forces of the industry & sector in which it plays, which include the balance (or imbalance) between demand and supply of money, the recency and size of recent exits, the willingness for an investor to pay a premium to get into a deal, and the level of desperation of the entrepreneur looking for money.
As a general rule, start-ups that have nothing more than a business plan will likely get the lowest valuations from all investors. As the company gains traction, starts to achieve revenue and profit, investors will be willing to put assign a higher value.
If you have a great tech enabled business in an exciting market that is generating revenue, backed by a strong professional team , apply to pitch at our pitch day. We will be aiming to make up to three investments of up to $200,000 dollars each (although we are happy to invest less for smaller, promising companies).
To apply simply visit our website:
