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Speaking at the Africa Angel Investment Summit in Lagos, leading investors and entrepreneurs shared the importance of today’s success stories growing the ecosystem for tomorrow.
Tayo Oviosu, founder of Paga, bootstrapped for six months before raising cash to become the leading mobile payments player in Nigeria, with over one million active subscribers. The initial funding came ‘from about 37 angel investors and six intuitional investors’ to get Paga started.
The story reflects what is going on in the African market compared to other tech ecosystems. Similar businesses in The Valley could ‘raise cash from six or seven angels, instead of large number of angels it took in Nigeria’, shared Oviosu.
Mark Essien also spent an entire year raising money for his online travel venture Hotels.ng. The funding situation is difficult and ‘Nigeria is the worst environment in the world for raising money right now’, shared Essien. Africa is not a copy and paste environment, 54 markets are very dynamic and execution of ideas are crucial. Oviosu believes that a lot of tech ideas are ‘too early for Nigeria’, and investors should be looking for non-tech areas where the market need is now.
A dose of reality is also required. Some of the best people are working in tech, rather than founding tech companies because they need the money. ‘Nigeria is a poor country; people need money to survive and don’t have time to play around with start-ups. Therefore, some of the people that are starting tech companies are not the right people to do so,’ added Essien.
Despite the challenges, Oviosu is looking at the next phase of African start-ups with his new fund which will invest in four to five companies based around the rising consumer in Nigeria, FMCG and related areas.
Jason Njoku, founder of Iroko, one of Nigeria’s biggest success stories, invested in Mark and Hotels.ng which has now expanded in Rwanda and Kenya. Through Spark, they are together investing in new Nigerian ventures with well-defined and scalable revenue models. Basically putting their money where their mouth is.
However, funding is only one part of the pie; ‘people just don’t want the money, they want the advice and support helping them to grow their businesses across Africa,’ adds Oviosu. Essex also believes local founders ‘can’t speak the same language as big investors’, so experienced angel investors and entrepreneurs are key in helping educate the next wave of founders.
Mobility of people across the continent still needs to be figured out for tech, investment and talent to thrive. Many founders and investors cannot move freely with visa issues and African investors ‘need to be more mobile for the market to move faster,’ added David Osei, founder of Dropify.
Essien believes there are 15 to 20 investable companies right now in Nigeria, but in five years there will be no room in the market for $20,000 cheques when the bigger investors come in to the market. A point echoed by Mikul Shah founder of Eat Out: ‘In five to ten years from now all the acquisitions will happen with bigger VCs coming in.’
This article was first posted in AppsAfrica