Northern Nigeria is a fast-growing region with a lot of potential for startups and venture capitalists. In this article, we will be discussing the importance of VC to accelerating startup ecosystem growth in northern Nigeria and the challenges and opportunities that lie ahead. We will also be looking at the current landscape of venture capital in this region and what ecosystem startups need to do in order to attract venture capitalists. I believe this will be of help to ecosystem startups and attract more venture capitalists investment into the region.
The startup Ecosystem and venture capitals (VCs) have been growing in Nigeria in recent years, as the country moves forward and matures economically.
There are a few reasons why these types of organizations have been seeing increased popularity in Nigeria.
Firstly, there is a growing recognition of the importance of the startup ecosystems within the country adding to the country GDP. This recognition has led to the growth of both ecosystem startups and venture capitals. Besides that, there is an increasing demand for venture capital and startup investment in Nigeria. This is because the Nigerian market is growing more rapidly than ever before, with the country experiencing a lot of technological and business transformation.
VCs play an important role in this transformation. They provide support to early-stage businesses, invest in high-growth startups, and help these businesses scale, with this rapid growth in the ecosystem a region with the largest TAM in the country and possibly the continent is left untapped & underrepresented hence why Thescathcompanies (TSC) has decided to focus on this region to help power early stage seed funding & advisory for founders, building innovative startups that are solving real problems within northern Nigeria & globally, hence this makes us one of the only active VC firm currently focused on this region.
Why is venture capital important for ecosystem startups in northern Nigeria?
“Africa Is The Future, But Northern Nigeria Is The Gold Mine”
50%+ Of the world’s working population will be living in Africa by 2050. According to Africa-focused database The Big Deal, Africa was the only region to record three- digit growth in the first quarter of 2022, with venture funding up 150% to hit a record $1.8 billion compared to $730 million in the same period in 2021.
Funding activity in Nigeria increased by 431% in 2021 when compared to 2020, rising to a record high.
In 2022, “The northern Ecosystem has seen the emergence and existence of over 31fast-growing startups, with many more to come, although most startups in the ecosystem are currently bootstrapped. Just a handful have proper funding.”- Johnpaul Nwobodo, Co-Founder of Elesaro
When it comes to ecosystem startups, venture capital is very important. Venture capitalists are people who are willing to invest their money in startups in order to see them grow. A venture capitalist typically has a lot of experience, and they want to see a return on their investment.
When a startup receives venture capital, it means that the startup has found a group of people who are willing to help it grow. This money can be used to finance the startup’s operations, as well as help it find new customers and partners.
What challenges do ecosystem startups in northern Nigeria face?
There are a few challenges that ecosystem startups face when it comes to venture capital and venture capitalists. The first challenge is that ecosystem startups in this region don’t get enough visibility coupled with a wide infrastructure gap experienced in this region.
How do ecosystem startups in northern Nigeria overcome challenges?
One of the most important things is to build a strong team. A strong team can help startups navigate the complex landscape, and can also help them to identify and address any challenges early on.
This challenges are what Thescathcompanies are currently solving using our hybrid approach to addresses the awareness, talent & infrastructure gap
As we know first hand the potential this region holds off our bootstrapped fund which went on to yield an MOIC of 8X.
How does venture capital help ecosystem startups in northern Nigeria?
The venture capital industry helps play a vital part of the region startup ecosystem growth serving as a financial & advisory tool that is used to help startup companies grow and expand & also support early risk takers in new business idea.
How can ecosystem startups better engage with venture capitalists?
There is no one definitive answer as to how ecosystem startups can better engage with venture capitalists. However, there are a few key things that startups should keep in mind. Startups should understand the different stages of venture capital. This will help them better understand the needs of venture capitalists and tailor their pitches accordingly. They should be proactive in engaging with venture capitalists. This means not waiting for venture capitalists to reach out to them, but instead working to build a relationship with them.
Also startups should be prepared to provide a lot of information and data. This is not only necessary for a proper valuation, but also to help venture capitalists better understand the ecosystem and should be upfront and honest with venture capitals. This means being straightforward about the challenges they are facing and being willing to compromise on certain things.
They should also be prepared to accept feedback and learn from it. This means being open to criticism, but also being willing to listen and learn from the advice of venture capitalists as well as be willing to change their strategy if needed. This means being flexible and open to new ideas.
“ Simplifying funding, building & advisory for founders building out of emerging & underrepresented regions”- Oluwajimi Akitunde CTO Thescathcompanies
THESCATHCOMPANIES is a hybrid VC firm that is powering early stage seed funding & advisory for founders, building innovative startups that are solving real problems within northern Nigeria & globally.
With features such as a co-working space, accelerator program, advisory, a talent academy and a range of portfolio companies showcasing innovative startups in verticals ranging from mobility to proptech to agritech to fintech to logistics to recyclable wearables and much more.