Funding the Nigerian Ecosystem
Funding for tech-start-ups doesn’t really exist in Nigeria. The banks tend not to lend to those who aren’t wealthy already and even for those that do, interest rates are prohibitively high. Without private investment, you almost certainly will not be able to start up your own internet company; the vast majority of young people cannot even afford a decent internet connection for themselves, let alone enough bandwidth to power an office.
With office spaces requiring two years’ rent upfront, they cannot afford office space either. I have no idea how many potentially great tech businesses have stalled at the first hurdle in Nigeria because of this.
With my business partners, Bastian Gotter and Mary Remmy-Njoku, we started Spark last year because we saw a huge gap in the Nigerian tech and internet ecosystem and wanted to see if we could bridge it. No, in fact, we believed we could bridge it. That gap was seed-investment and laser focus on turning an idea into a profitable business. We didn't want to invest in people coding for the sake of it and we weren't going to invest in just 'ideas'. We wanted to write cheques - relatively big cheques - for young, hungry entrepreneurs who had the imagination, business nous and requisite skills to set-up and start building Nigeria's next big internet companies. Our money, our decisions, our cheques, and we found a bunch of awesome, enterprising, business-minded creative men and women who simply needed a catalyst that frustrates and, for the most part, curtails most start-ups in Nigeria: money.
In the space of just a few short weeks, we spoke to a number of people, discussed their business ideas, looked at what traffic they had garnered already, analysed their business's potential and wrote out those cheques. No lengthy due-diligence reports from consultants, no 3,000 page PowerPoint decks, just some top level conversations, agreed terms favourable to both parties and that was it. We set everyone up under one roof where their mission was to go forward and conquer Nigeria's internet space. Spark was born.
What we are doing at Spark is rare in Nigeria. There are a number of incubators and a couple of very big international VC funds ploughing a lot of money into internet start-ups. However, there are very few Nigerians investing in the Nigerian tech scene, and this is a serious cause for concern. Whilst we should welcome foreign investment, indeed, I myself have benefitted from it, we also need to balance it with local, homegrown investment to ensure that profits and growth will benefit Nigeria and Nigerians. This can only be achieved if we cultivate the right atmosphere and infrastructure for local investors to invest in the next generation of internet entrepreneurs.
The delicate, nascent ecosystem that is the Nigerian tech scene needs local solutions to local challenges, conceived by local entrepreneurs and creative types, funded by locals whose liquidity can be channelled at the right people on the ground. It would be a great shame indeed if we saw the vast majority of profits gleaned from the first tranche of multi-million dollar Nigerian internet companies squirrelled away overseas, rather than reinvested in Nigeria's future entrepreneurs. I hope this trend changes and that I can persuade my fellow African entrepreneurs and potential investors to look at the future emerging markets straight in the eye and make smart, strategic investments where they are needed most.