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Are There Venture-Capitalists In Nigeria?

Young Nigerians like myself have good business ideas but we are incapacitated by lack of resources to kick-start the business ideas and set the ball rolling. I was just wondering whether we have venture-capitalists in Nigeria that can invest in ideas and become a stakeholder or be paid back their investment after certain years. Your suggestions and replies will be appreciated.

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The presence of venture capital industry in Nigeria is unnoticed and ignored, despite the fact that the country has formidable assets that will necessarily provide the foundation for future economic growth, the country still lacks the venture capital investors needed to help translate these assets into high value firms, products and services, especially now that growing new industries and jobs creation in the country are more urgent than ever. Though there few venture capitalists in the country.See the link below

http://www.vcinvestmentpartners.com/venture-capital-overview/

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No I'm not.

We have angel investors in Nigeria already. I am talking about VCs specifically, who will invest in startup business who are built around creating products and/or services.

The likes of Jumia and Konga are financed largely from overseas VC funding. They would never have gotten any money from Nigerian banks or fund managers, who only finance LPOs at high interest rates. Those businesses would only turn a profit in the medium to long term.

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Ajanle is confusing an Angel Investor with a VC and they're different.

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Look at it from this point of view:

- You are a fellow with no money, and a really good idea. In fact, you have done a bit of work to commercialize the idea somewhat. Or maybe you haven't.

- I (VC) see your idea and I 'get it'. By that I mean, I immediately see the business potential of this product or service that you have. And I have the finance/expertise/contacts to make it take off to a large extent.

- So I can either decide to buy your idea/product/service wholesale, and commercialize it myself. Or, if I still need your expertise and/or vision, I keep you on board. But I basically take over the finance, legal, sales and marketing, and regulatory aspects of the business. I also provide the capital of course.

Why would that not work in Nigeria? You can't possibly take me to court, since I basically control most of the business. Besides, if the business took off, I would probably divest some of my holding at a profit, and keep just enough to stay on board. There is very little risk in that scenario, especially if I was a legal corporate entity and not an individual (angel) investor. You would basically be at my mercy.

Lots of aspiring entrepreneurs in Nigeria would jump at that opportunity in my view. All the talk about no legal framework in my opinion is just excuses. Most Nigerians are opportunistic, and would prefer to put funds in a short-term vehicle, do no work, and expect a sizeable cash return. That's why people invest mostly in real estate. Even asset managers and fund managers invest the bulk of their funds in quick wins like T-Bills and real estate bubble projects.

The real issue is, Nigerians don't know much about creating products and services. We only know how to trade tangible goods. Service or value creation is not really our forte. Fact.

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I don't agree.

VCs are not loan sharks. There are a plethora of idea-driven startups out there. Or at least ideas.

If someone came to me with a good idea, I'd develop it and commercialize it, in exchange for equity. I wouldn't give seed money to anybody, the market isn't there just yet. What most local ideas need in Nigeria is the exposure and the engine to drive it into the profitability realm.

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It's challenging in Nigeria due to a very weak legal system and people feel entitled to your money and don't want to pay back.

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Venia Business Hub they're in Lekki - they do good work.

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There is a difference between VCs and PE firms.

The difference seems to be muddled up in this thread.

There a few VCs around. A well funded local VC has substantial stake in one of the more popular mobile money outfits.

However,there are very few VCs in naija sha. The legal environment is a very limiting factor.

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I'm interested in knowing how VCs start up. Is there anyone around NL with actual VC experience? Not necessarily experience running a VC, even if you have worked with a real-life VC, I would like to learn some things.

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I have a group of investors who will finance good BP's with reasonable ROI, insight and market friendly ideas. If you are interested kindly forward an Executive summary. You can reach me on: mkmyers45@fwdeverglobal.com

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Bigooz

Secondly, I know about an IFC $20,000,000 facility appropriated for only Nigerian SMEs at a ridiculously low interests rate, but this would require an incubation or hand-holding support of a professional service firm that can help you provide the required criteria for fund access eligibility.

Please can you post more information on this IFC thing.

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@ bigben431

@ Tolulop001

Thanks for your valuable insight on this tread ,

I am UK based and tempted to believe that it should be cheaper- if not easier to source funding in UK or the States for a Real Estate Project in Nigeria. Any thoughts?

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sincerely, this thread has really given me much insight.

I thank the poster for bringing up this issue, as there are many entrepreneurial venture that have died due to lack of funding. What is all about this Nigerian factor?

Personally, i and a friend started a business late last year, still in business anyway. My point is that we have used up our sweat capital up to the point where we feel we need external investment to carry on and secure some things.

Actually, we are a business in the dot.com industry.

If as an angel or venture investor you think you can help, pls send me an email: aybanky@gmail.com

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@LAWUYI dont mind getting your contact number ,it would be good to network on this.

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If your your investment is real estate and turnkey in nature, we can arrange the financing, interest-free to the tune of over N1bn.

Contact:daniel/henry, 08033259595,08055342735, website:www.cxploitsltd.com, email:info@cxploitsltd.com

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try this site www.greatbooks.350.com

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@ theforce

Again i repeat that angel investor is a type of VC, what happenes to a rich individual that starts up a VC shop and when he is the sole owner (general partner and limited partner)? terminology might be different but concept is the same, not trying to compare dick sizes just laying out fact,

well good luck with ur fund hopefully u can raise an army of enterpreneurs that the country dearly needs.

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what kinda business with 2 to 5 million, with the sectors, u mentioned?, not convincing.

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@bigben - angel investor is NOT a type of venture capital, BUS 101,

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.

Venture capital (also known as VC or Venture) is provided as seed funding to early-stage, high-potential, growth companies and more often after the seed funding round as growth funding round (also referred as series A round) in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. To put it simply, an investment firm will give money to a growing company.

The Network is a Network of Investment Clubs that focuses on just a few areas. We meet, scrutinise pitches and 2/3 majority agree on the proposals that we would invest in. The real problem is most Nigerians want to own 100% of their business even if they have nothing but the Idea.

The truth is, it is better to own 5%- 10% of a business that kicks off than 100% of a business that is still on paper years after you got the idea. Send a mail to theforceworks@gmail.com and you would get details.

Thank you

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Recharge card printing and selling is a reliable business to start with good returns, the good about it is that the market is there, -I mean people must recharge. I call it fast selling Business. All you will need are the manuals and the software if you have a computer. Then you are good to go, Ok!!07033097160 is my direct line. Have a nice day.

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A society driven by contract mentality can hardly produce venture capitalist

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Yeah there are but the probability of being funded to be sincere is very slim.

Here is a list of Venture Capital firms that operate in Nigeria .com/2010/06/venture-capital-funds-for-nigerian.html

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I do think there are venture capitlists in Nigeria. The real problem would be if the business plan is well written, thought out and if the projections are factual. Many enterprenuers pitch unrealistic targets and get investors in a lot of trouble.

What some people need are actually Angel Investors and not Venture Capitalists (Google the difference). We have just formed a network of Angel Investors and would be looking at investing between 2million and 5million depending on

Projections and maturity

Return on Investment

Pull - out options / escape route

Sector - Agro allied, manufacturin, real estate e.t.c

Risk factors

Send a brief summary with FULL CONTACT DETAILS TO theforceworks@gmail.com

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No, but most innovation comes from universities and research institutions. Look at California, they have one of the highest concentrations of VC's in the world because California has some of the best universities and research institutions in the world. Have you forgotten that one of the richest companies in the world, Google was started at Stanford by two PhD students who were writing there thesis on search engines.

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@POSTER: you are talking about intellectual property on the presumption that your idea is so hot it would be stolen.thats the problem with young people(you must be young i guess).You r so worried about the safety of your so called big idea you have completely lost track of the fact it could just get thrown out of the window without even a second consideration.If you are so worried about your copyright, get money and startup the idea yourself-simple.Forget all these gibberish they are telling you here about patenting.Havent banks gone to Ministry of Trade in abuja to get their own patent for a product already patented,backdating their own patent and quashing the already issued patent via ministerial caveat?Look you nid plenty of prayers and luck for you to even just a lookin from venture capital firms-and there are a handful in Nigeria-theres Actis-they funded The Palms, or shoprite if you like for $40million. There's Vectis somewhere in VI.They are a greek venture firm with $2billion to spend in Africa.theres Grofin,just about toset up shop in Abuja, theres capital alliance, theres fistfunds etc etc.But they wont give you money,cronysim is the other of the day.If you ever got to seat with any of their Md's, you'd rather beg they take up your project, chances are, you wont even get that far, and you are even talking about patent.If they dont run the figures, dont go thru ur P&L, cashflow etc, you dont even stand a chance, dats means you give them your excel worksheet,asides your bplan. you think you'll even have the guts to talk about an NDA or intellectual property at that time? they have so many projects, they dont even care if you walk in.matter of fact, they'l be very happy to see your back through the door with your grand idea.dont kid yourself my idea,no idea is dat grand, not here in Nigeria.wat you should be praying is to get a look in first then hope for best.steal your idea?very funny.last time i was at one of their offices, the folks were looking at a $15million 4 star hotel that Standard Chattered was promoting and you want to start telling a man like dat about intellectual property of N10million project.puhleeeeeeze!

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go fry dodo. u wan free money for naija. u neva serious. who know u and who u know. no be nairaland u go find them.

from experience i dey tell u.

work within your means and when you meet any so called venture capitalist don't even divulge any serious information to them. he! even the main idea/the big picture alone is enough for them to steal the job from you. if it work's out, watch your back and prepare a good mou because you might be killed for your share.

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You are assuming Universities are the only source of innovations or business ideas?

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Hi poster, im willing to partner with you, if you want call me on 07086712681 for discussion

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@ Tolulop001 - I am currently based in the States. You can pm anytime you need to talk or need any advice - FREE of charge.

@ Other posters.

About the article, although I dint read it, u shld know that the finance world has a cut throat mentality, what most investors care about is that IRR because the have limited partners to answer to. Most VC firms try to make 20% return on investments annually - so any "legal tactic" might be deployed.

As per IP/copywrite/patent- you have to know what kind of VC firm is interested in you, what is their track record, mgt background and experience, what other companies have they invested in? Run away from investors who tell you that u are the first enterpreneur they want to invest in, DO YOUR DUE DILIGENCE, I can't stress that enough.

Its not about just getting raising money from family and friends, Legit VC firms bring in operational and industry experince to guide you along the way.

Having said all these, doing VC work in naija na another different story- you just need that one firm to be a pioneer in the industry - do things the right way - and that is what i want my firm to eventually be, it might take me 2, 5 or even 10 yrs, but the most important thing is doing it right.

**IMPORTANT** know your biz plans by heart, you never know when u will need to give an "elevator pitch".

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Ok for some reason, I have tried to post two detailed responses trying to give FREE advice to pple in need and it gets deleted. This is an example why VC can't work in Nigeria when we have non-progressive individuals!!!!

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pls dis cant work here

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@ Tolulop001 - I am currently based in the States. You can pm anytime you need to talk or need any advice - FREE of charge.

@ Other posters.

About the article, although I dint read it, u shld know that the finance world has a cut throat mentality, what most investors care about is that IRR because the have limited partners to answer to. Most VC firms try to make 20% return on investments annually - so any "legal tactic" might be deployed.

As per IP/copywrite/patent- you have to know what kind of VC firm is interested in you, what is their track record, mgt background and experience, what other companies have they invested in? Run away from investors who tell you that u are the first enterpreneur they want to invest in, DO YOUR DUE DILIGENCE, I can't stress that enough.

Its not about just getting raising money from family and friends, Legit VC firms bring in operational and industry experince to guide you along the way.

Having said all these, doing VC work in naija na another different story- you just need that one firm to be a pioneer in the industry - do things the right way - and that is what i want my firm to eventually be, it might take me 2, 5 or even 10 yrs, but the most important thing is doing it right.

**IMPORTANT** know your biz plans by heart, you never know when u will need to give an "elevator pitch".

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@ Tolulop001 - I am currently based in the States. You can pm anytime you need to talk or need any advice - FREE of charge.

@ Other posters.

About the article, although I dint read it, u shld know that the finance world has a cut throat mentality, what most investors care about is that IRR because the have limited partners to answer to. Most VC firms try to make 20% return on investments annually - so any "legal tactic" might be deployed.

As per IP/copywrite/patent- you have to know what kind of VC firm is interested in you, what is their track record, mgt background and experience, what other companies have they invested in? Run away from investors who tell you that u are the first enterpreneur they want to invest in, DO YOUR DUE DILIGENCE, I can't stress that enough.

Its not about just getting raising money from family and friends, Legit VC firms bring in operational and industry experince to guide you along the way.

Having said all these, doing VC work in naija na another different story- you just need that one firm to be a pioneer in the industry - do things the right way - and that is what i want my firm to eventually be, it might take me 2, 5 or even 10 yrs, but the most important thing is doing it right.

**IMPORTANT** know your biz plans by heart, you never know when u will need to give an "elevator pitch".

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what's the point of being a vc in naija, there is no innovation coming from naija universities.

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@Cvibe: thanks for the word. My major fear like I mentioned earlier is even the intellectual property aspect. I can't stand pitching my idea to a "supposed venture capitalist" who will show no interest only to turn his back and start working on the idea. I have a friend who shares this kind of painful experience and as it is, I can stand this happen. I read the "Zappos" experience with Bezos, so maybe I'll just try weathering the storm and stand tall against the odds.

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@ Poster,

So long as you are in Nigeria, don't hope for venture capitalist cos there's none. It's just another word in the dictionary being thrown around. Even the business services being mentioned above will charge you some upfront money to review your project before they'll work with you.

You'll need to start small and build up a track record, that's when you'll start getting mention.

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Well what's your idea? How big is it? Apparently you are looking for funding from the start. Just know there's is no free lunch. Venture capitalists always want their pound of flesh read this http://www.inc.com/magazine/20100601/why-i-sold-zappos.html. You may be better off starting small or getting the money from friends/family.

Peace

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Tolulop001, and any other person looking for funds,

Here are my candid advice:

After much exposure to deals looking for funding in Nigeria (bearing in mind that funds are here, but the custodians use and cycle them on personal selfish deals, from banks to government officials), I realized that you can source funds on your own if you would adhere to the following tips:

1. Have a really niche business idea

2. Be able to communicate it properly with a business plan (professionally done, well researched, all relevant information provided)

3. BE READY TO COMMIT YOUR OWN SWEAT MONEY ( no body takes you seriously as an investor if you don't)

4. Locate a few people around you that believe in your idea and can provide part of the fund (and include a "return on equity" analysis in your business plan to motivate them)

5. Make sure you ascertain the minimum required capital to execute the first milestone of the investment project (a professional can help a lot here especially in helping you locate strategic alliances, lean budgeting measures, shared facility and services options for maximised economy of scale etc)

6. Start small and reinvest as you look out for more investors (most investors are afraid of investing in start-ups, so this stage is more interesting to them)

Secondly, I know about an IFC $20,000,000 facility appropriated for only Nigerian SMEs at a ridiculously low interests rate, but this would require an incubation or hand-holding support of a professional service firm that can help you provide the required criteria for fund access eligibility.

I hope this helps,

Cheers.

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@ Tolulop001

Are you currently based in Nigeria? Is your product already selling in the market? also what type of owenership structure do you and ur friends have?

I understand how fustrating it is to find willing investors, one thing that i would advice is to network, network and network, keep talking to pple and you would be suprised where the funds will come from. Just make sure you can show that you will be free cash flow positive (ebit -(1*tax rate)+depreciation &amort - capex-change in net working capital) and that will do the trick.

I have seen that angel investors are lacking in Nigeria and all the big boy vc/pe firms only do multi-million dollar deals, there might just be a good business potential here, wink, wink

Most investors look for abt 30% stake, this depends on how much they have invested in the company though.

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Saw this thread and got interested. The only problem that i have come across is valuation when the investor is trying to exit the investment. When the client is presenting their business plan. their valuation (using dcf) just seems to be too optimistic, a not too experienced investor gets excited and then funds them thinking they will make a good irr. However, when you want to exit, the valuations do not hold water anymore. In most cases, you have to get a very good lawyer and probably a good audit firm to check the books CONSTANTLY. as most companies try to cook the books as much as possible.

Which industries are you trying to invest in? I am keen on the hospitality and consumer goods sectors. With a population of 150M+, you cannot go wrong with this.

Are you an angel investor, growth capital etc?? Alternatively, are you an entrepreneur looking for funds?

I am actively fundraising now, will have to formally register with CAC and hope to close on some investments early/mid next year.

Hope this helps.

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very interesting thread and good inputs by all

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Raising funds for serious business owners and enterprenurs has gotten easier over the years as several venture capital firms and private equity investment funds now operate in nigeria. several key businesses have raised funds through them.

check out a list and profiles and contact address of these firms free at www.africainvestor.blogspot.com

hope you find these information useful.

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Thanks Olums,

Times are gone when the informed are cheated. I would recommend three solutions:

1. Get your idea protected by acquiring a patent or intellectual property right.

2. Ask the second party to sign a Non-disclosure agreement [/b]with you before you go ahead with giving them access to vital documents.

3. Do not expose your entire [b]business plan at once,rather, do a power point presentation, information memo, executive summary at the initiation of engagement discussions till the other party has shown some level of commitment. etc.

Every professional organisation knows the implications of stealing ideas from people who requested a non-disclosure agreement.

I wish you good luck.

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i wish there were coz i aspire to be one soon

send in ideas & projections to info@bigleapsolutions.net

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Thanks Bigoozz for the NEXTZON suggestion. I'll give them a try but come to think of it, how's the "intellectual property" aspect taken care of by this company. I'm sure that was what Ola.Olabiyi was referring to when he said the judicial system is flawed,

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Nextzon Business Services is the company you need.

They have funded the establishment of over 50 companies in Lagos alone, and are quite networked with many donor and funding agencies, angel investors, corporate institutions and other venture capitalists.

Nextzon is at 33A Bishop Aboyade Cole Street, Victoria Island, Lagos. (www.nextzon.com/index.php)

You can reach me if you need further details on 08191154879.

Cheers.

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venture capitalilists in a country where nothing is documented properly? even documented things can not be trusted. i mean a corruption-riddled society where you can not even call on the judiciary when things go haywire. are you kidding?

they will just disappear 'into' THIN air.

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@theforce How does one join the network and how do you QC the plans sent to you? whats your criteria?

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Different perspective. Well said.

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