Having a tech startup can be nice, but securing funding opportunities for startups is a different ball game entirely in the startup ecosystem. It’s like entering a war, where only the fittest survive. This is one of the most important decisions you’ll have to make as a startup founder i.e. whether to pursue funding or bootstrap your startup.
For context, funding refers to raising money from external sources, such as venture capitalists, angel investors, or crowdfunding platforms. It basically means having external capital. While bootstrapping involves starting a business with little to no external money, mostly relying on personal savings and revenue generated by the business itself.
In Nigeria, we have tech startups sprouting everywhere in different industries, but while it is a tight competition filled with pitch decks here and there, some startup founders are still unsure of where to start or which funding opportunities would be the best fit for their needs.
In this article, we have curated funding opportunities in the major categories that startup founders can explore in the second half of this year apart from personal savings and funds from friends and family.
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Funding opportunities for startups founders
Most government-backed funds come in as loans and grants. These loans often come with lower interest rates, favourable repayment terms, and reduced collateral requirements, making them more affordable for startups.
Grants, on the other hand, are non-repayable funds provided to startups to support specific projects, research and development, or business initiatives. Unlike loans, grants do not need to be paid back. Governments offer grants to promote innovation, job creation, economic growth, and societal development.
Some of the options startup founders can explore include:
Nigeria’s $618 iDICE fund
The Investment in Digital and Creative Enterprises (iDICE) program was launched in the first quarter of 2023 by Prof. Yemi Osinbajo. who was the Vice President of Nigeria at the time, It is for young Nigerians between the age of 15 and 35 years, building startups or micro, small, and medium enterprises (MSMEs) or enterprise support organizations (ESOs) i.e. hubs, accelerators, venture capital, and private equity firms. The program has a dedicated budget of US$1.14 million to nurture women-led startups in the technology and creative sectors.
Bank of Industry (BOI)
It is a government-owned development finance institution that provides financing to Nigerian businesses, including equity-free loans, for startups and SMEs in Nigeria. It also has the Youth Entrepreneurship Support (YES) scheme.
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YouWin Connect Nigeria
Sponsored by the Federal Ministry of Finance, the program is focused on promoting entrepreneurship, job creation, and wealth through enterprise education for young Nigerians interested in Small and Medium Enterprises (SMEs).
Lagos State Entrepreneurs Trust Fund
There are other government-backed funding opportunities that are tailored to specific industries. As a startup founder, do well to do your research.
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Venture Capital Firms
Another method for startup founders to raise funds is through venture capital (VC) firms. These firms provide financial backing to startups in exchange for an ownership stake in the company. Venture capital firms typically invest in early-stage or high-growth companies with significant potential for returns on investment.
In addition to providing financial support, venture capital firms often bring valuable expertise, industry connections, and strategic guidance to the startups they invest in. They may offer mentorship, networking opportunities, and access to their professional network, which can be instrumental in helping the startup succeed.
Some of the popular venture capital firms that fully support Nigerian startup founders include;
- TLcom Capital
- Oui Capital:
- Ventures Platform:
- Ingressive Capital
- Future Africa
- Co-Creation Hub
- EchoVC Partners
- GreenHouse Capital
- Novastar Ventures
- FirstFounders Inc etc.
Angel investors are individuals or groups of individuals who invest their personal funds in early-stage startups in exchange for equity ownership. Unlike venture capital firms, which pool money from various sources to invest in startups, angel investors typically use their own capital.
These individuals are often experienced entrepreneurs or high-net-worth individuals who not only provide financial backing but also offer their expertise, industry knowledge, and valuable networks to help the startups they invest in succeed.
Some ways startup founders can find them are listed below:
- One way to connect with angel investors is through networking and startup events. You can also contact the through databases like the options below:
- Lagos Angel Network: This is an exclusive network of Angel Investors that aims to enable the Nigerian and broader African ecosystem and early-stage startups.
- Another place to find angel investors is AFSIC. The platform has built an extensive network globally of investors focused on Africa including Angel Investors in Nigeria.
- ABAN (African Business Angel Network) is also a non-profit making angel investment network that offers support for startup businesses and helps them navigate their path to phenomenal growth.
- Interested startup founders can also check Angellist databases for more specific details of investors that fit perfectly into their startup field.
Putting your business out there for crowdfunding can be a viable option for raising funds, but it’s important to carefully consider several factors like market validation, platform selection, limitations, marketing, and also legal and regulatory considerations before deciding to pursue crowdfunding.
Ultimately, the decision to pursue crowdfunding should be based on a thorough assessment of your business model, target market, and funding needs. Proper planning, execution, and ongoing engagement are crucial for a successful crowdfunding campaign.
However, some Nigerian crowdfunding platforms include:
You can explore other international crowdfunding sites like GoFundMe, CrowdCube, and Indiegogo.
Accelerator and Incubator programs
There is always a mix-up between incubators and accelerators. Both are programs or organizations that provide support, resources, and guidance to startups during their early stages of development. While both serve similar purposes, there are some differences in how they operate.
When it comes to equity, Incubators usually do not take equity in the startups they support. Instead, they charge a fee or rental cost for the use of their facilities and services. While accelerators may offer seed funding or invest in participating startups in exchange for equity.
Some incubation and accelerator programs to check as a startup founder include:
- Co-Creation Hub
- Wennovation Hub
- MEST Africa
- Google for Startups Accelerator Africa
- Future Hub
- DFS Labs
- Mastercard Start Path
We understand the stress of securing funding opportunities for startups, but conducting thorough research, building a solid business plan, and networking within the startup community can significantly increase the chances.
Startup founders should also leverage resources like entrepreneurial support organizations, which can provide guidance, mentorship, and connections to potential investors.