The current economic stagnation of western developed countries has made young Nigerian come back to their country looking for financial help to begin their Startup journey and make of this emergent market one of global relevance.

1. Nigerian entrepreneurs,
one of the luckiest ones in the world
Image contribution: Photo courtesy of VC4Africa at flickr.com
The current economic stagnation of western developed countries has made young
Nigerian come back to their country looking for financial help to begin their Startup
journey and make of this emergent market one of global relevance.
When you start your first entrepreneurship the main source of financing should
come from friends, family members or your own personal savings before looking
for private investors or capital risk funds, this is what Ozioma Obiaka says, he is
one of the directors in TalentBase, a software service for human resources and
accounting.
Ozioma makes part of a growing trend of Nigerian people that have gone back to
their country after several years of studying and working abroad in different parts of
the world. The main reason for this return has been the positive tendency in a
macroeconomic level from developing countries and western economy’s downturn.

2. While many of the returnees have found opportunities in emerging professional
sectors like the investment banking sector and the consulting companies, a recent
study about Nigeria, performed by the Global McKinsey Institute revealed that this
country is developing a broad network of consumers that is estimated to grow a lot
in the next few years and reach a staggering amount of 160 million for 2030 with a
discretionary expenditure of about triple its current value up to one million of
billions.
Nigerian Easy Taxi co-founder, Bankole Cardoso who has also returned to Nigeria
is very optimistic about the new situation of his country, for him the Nigerian market
has gone through a big development and it currently offers opportunities that
cannot be found in the western world. There is high index of youth population that
is responsible for the growth of the Nigerian economy, economy that in the next 20
years will be positioned amongst the strongest of the world.
There are a lot of young people that meet the requirements to kick start their
startup, innovative ideas, capital coming from friends and family and a
knowledge/access to the Nigerian incubator networks for startups, to angel
investors and to risk capital. However is good to know and understand that all of
this financing sources want to witness some kind of progress before they
compromise their capital in any entrepreneurial project.
Startup incubators
These are collaborative programs managed by public and private entities, destined
to help companies in its initial stage by providing them with work spaced, an initial
funding, tutoring and training. Some of these Nigerian incubators are Co-creation
Hub, Tony Elumelu Program and Wennovation Hub.
Angel Investors
These are people with a good financial situation that provide capital for the
Startup’s creation, usually in exchange for shares from the companies or
convertible debts. The private investors also tend to collaborate with each other
through networking. These social networks of angel investors are sometimes
associated to incubators and between them make use of common resources with
the intention of helping aspirant entrepreneurs. There are many of these kind of
investors that have also been entrepreneurs in the past and investors for
successful projects, the most popular network of angel investors make part of the
Wennovation Hub initiative.
Risk capital
Risk capital is the money given by investors to the entrepreneurships that are in its
initial stage and small businesses with a high growth potential. Most of this risk
capital comes from groups of private investors with good economic situations,
investment banks and other financial institutions. All of these groups get the
resources combined in funds and associations knows as risk capital companies.

3. One of the key differences between risk capital funds and financing by angel
investors is that the risk capital funds are more appropriate for companies in its
initial stage that have received some kind of investment funds from angel investors
but require an important fund infusion to impulse their growth.
Image contribution: Photo courtesy of Kipp Jones at flickr.com
Other differences between risk capital and angel funding are:
• The risk capitalists frequently ask to be part of the administrative counsel and for
that some information from the same, achieving in this way a participation in the
important decision making process of the companies.
• Risk capitalists always conduct a very prolonged diligence in order to further
know how these companies work before they make a decision on the investment
capital, most of the times these studies take up to 6 months or more.
Some risk capital companies with Nigerian interests are Adlevo Capital and
EchoVC Partners.
Even though the new ways for initial funding are very beneficial and are growing
rapidly, they need to be very organized to be actually efficient, for this more
government programs created for small companies are needed, together with more

4. accessibility to bank loans at low rates, this way Nigerian Entrepreneurs will find
more ways to thrive and Nigerian economy will do the same along with them.