Venture capitalists give push to Nigeria’s technology start-ups
Nigeria’s technology start-up market is gathering serious momentum this year with a growing number of venture capitalists and Fortune 500 global technology companies increasingly showing willingness to invest in these new businesses, industry analysts have said.
Buoyed by the country’s budding, technology-savvy middle-class and massive online population (45 million internet users), Nigeria’s fledging technology start-up scene is witnessing a flurry of activities in the frame of new investment drive, acquisitions, strategic partnerships as well as plans to establish more incubation centres.
Jumia, a leading online retailer in Nigeria, recently raised $35 million in fresh funding from Millicom to expand its domestic market and move into a new 90,000-square-foot warehouse located in Lagos, Nigeria’s commercial nerve centre. Spark, the Lagos-based internet group that invests in Nigerian start-ups, has also raised a $2 million investment from a syndicate of 17 international high-net individual investors, based on a $10 million valuation for the three-month old company. This investment comes swiftly after the success of internet entrepreneurs Jason Njoku and Bastian Gotter’s start-up, iROKOtv.
Earlier this year, the Ministry of Communications Technology had secured $3.5 million seed capital from National Information Technology Development Fund (NITDEF) as part of its TechLaunchPad initiative, aimed at creating, before the end of 2013, 10 successful software businesses that will focus on providing industry solutions for critical sectors of the economy.
Pools of funds, like the Tony Elumelu Foundation (TEF)-CCHUB Grant Scheme, have been expanded to provide the initial financing required for more potential innovators to build the first working version of the technology. This would assist start-ups to drive their enterprise and pilot their business models. The TEF provides a seed funding of $5,000 to each qualified start-up to support their ventures at an early stage.
“Nigeria has a thriving and growing technology start-up scene with a lot of potential for growth,” Teemu Kiijarvi, head of ecosystem and development experience at Nokia Corporation, said recently. The oil-rich country is brimming with fresh opportunities in Information Technology (IT) industry.
Analysts have said that Nigeria is on course to become Africa’s largest technology hub by 2020. This is in view of the number of tech start-ups that have sprung up within the last two to three years. Since 2010, over 50 technology start-up firms have come on stream. But the emerging tech start-up scene, according to them, is still a long shot from being the ideal ecosystem for tech-driven entrepreneurship to flourish.
“Running a start-up in Nigeria…is quite challenging in different ways, and I think the two biggest are infrastructure (electricity, rent, government regulations) and what I’ll call ‘perception’,” said Uwa Agbonile, chief executive officer, Infoware Nigeria Limited, adding that local start-ups have to climb over the perception that their offerings are inferior to foreign competitors.
Interestingly, Nigerians are getting rave reviews for the quality of solutions they have developed. Apple, with $416 billion market capitalisation as at May 2013, acquired HopStop, a Nigerian entrepreneur’s start-up. HopStop.com is a mapping app that provides an online city transit guide for people who need to move around in different cities.
Following an intensive process, two Nigerian start-ups, Nearest Locator and Prowork, were among 13 finalists selected for the VentureOut Challenge – an initiative of infoDev and CRDF Global with support from CCHUB Nigeria. These companies would compete for $10,000 in seed funding before a live audience and a panel of mobile experts in Moldova next month.
These are indeed exciting times for Nigeria’s tech start-up scene. Global technology firms such as Canadian smartphone maker, Blackberry, and United States (US) technology giant, IBM (International Business Machine), have disclosed plans to build incubation centres in Nigeria.
But what’s really responsible for this growing interest in Nigeria’s technology start-up scene? Femi Longe, co-founder and director at Co-Creation Hub Nigeria (CCHUB), has an answer.
“The last few years since around 2011 have seen a gradual shift to focusing on solutions that address our own problems,” he said. Nigerian technology entrepreneurs are moving away from merely cloning international brands to channelling their energies and resources towards developing locally relevant solutions. Analysts say the international investment community can see this trend, which spurred their enthusiasm in the Nigerian ICT industry. Microsoft Corporation, in strategic partnership with 88mph, has also announced plans to provide mentorship, technology guidance, seed funding and joint selling opportunities to African technology start-ups.
By: Ben Uzor Jr
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