A rash of local and global technology accelerator programmes is springing up, seeking to bridge the funding gap to digital start-ups and indicative of growing investor interest in the Nigerian economy.
This is despite the scarcity and high cost of developmental finance otherwise constituting a drawback to business here, as banks in Nigeria can charge 22-35 percent as interest for a business loan.
Industry watchers are, however, of the view that the growing number of accelerator programmes setting up shop in Lagos, the nation’s commercial nerve centre, is providing the much-needed funding, space, necessary developmental programme, mentoring and market access to aspiring ‘technopreneurs’.
With many of these accelerator programmes comprising serial entrepreneurs who invest time, resources and expertise to mentor start-ups in return for small equity, the next wave of digital game-changers and economic boom will emanate from frontier markets such as Nigeria, industry watchers say.
In February, Chika Nwobi, founder of Lagos-based L5Lab, and Kresten Buch, founder of Cape Town and Nairobi-based 88mph, launched a new fund for Nigeria’s best mobile and internet start-ups.
Speaking on the rationale for creating the accelerator programme, Nwobi, in an interview, said what they were hoping to do through 440 was build successful companies and make some return on investment (RoI).
“So out of about 10 start-ups we take in, we’re working towards having maybe three or four, or even five very successful companies that become billion-naira businesses over, say, five or more years,” he said.
“Investors invest in people. If we are to recommend you to bigger investors after the programme, we need to know who you are and how you deal with challenges,” he added.
Amit Pau, director, EnterpreneurCountry, told BusinessDay in an interview that Nigeria remained very attractive to global investors due to the country’s “large and young demographic, huge mobile penetration and usage, strong economic growth indices and the lack of legacy issues that more mature markets face when trying to innovate”.
Seventy percent of Nigeria’s population (167 million) are under the age of 30, and all are digital natives. Nigeria, Africa’s most populous country, is the fastest growing mobile market in the world, with more than 100 million active mobile subscribers.
According to Pau, the strength of infrastructure deployment is also enabling a platform for digital revolution, specifically in the area of mobile financial services, e-commerce, and digital content services for the business market.
He further pointed out that Nigeria’s success in building digitally-enabled services laid the foundation for easily scalable advanced services such as e-commerce, marketplace and social media.
“This is well reflected by the rise of electronic commerce (e-commerce) places such as Jumia, Konga, DealDey, Gidimall, Jobberman, Paga, iROKO, Kaymu, to name a few,” Pau said.
In view of this, the organisation has lined up series of initiatives strategically geared towards addressing the funding vacuum in the country’s emerging technology start-up scene.
LeadPath Nigeria, another technology start-up accelerator, in March began operations in Nigeria, with a $1.5 million fund. The technology accelerator at the launch engaged key stakeholders in the Lagos technology ecosystem, including other deep pocket investors, entrepreneurs and developers.
Starting with a $1.5 million fund, LeadPath Accelerator will make seed investments in start-ups doing business in software applications, mobile applications, electronic payments and big data.
LeadPath is led by Olumide Soyombo, a technology entrepreneur based in Lagos. A serial entrepreneur, Soyombo sits on the board of several organisations including LeadPath Global Asset Management, Bluechip Technologies, Bluechip Haulage and Logistics Limited, Global Executive Management (GEM) Limited, Accutrade Nigeria Limited, and West Acton Limited.
Spark, another technology accelerator programme, led by Jason Njoku, has raised $3 million in total with which it supports 12 start-ups.
The most successful of the Spark bunch is looking to be Hotels.ng, in spite of having to take on competition from a significantly better funded Rocket Internet counterpart.
Launching on the heels of the Co-Creation Hub, the Wennovation Hub adopted a markedly different approach from the former’s incubator model and is one the earliest, if not the first, technology start-up accelerators in Nigeria.
Managed by Wole Odetayo, the accelerator currently operates out of the iDEA Hub in Yaba. Start-up businesses are set to receive a major financial boost after CcHUB (Co-creation Hub) boosted its incubation programme with the launch of a $500,000 seed investment fund.
The fund is intended to support early stage start-ups for a period of two years. According to the firm, start-ups will receive sums ranging from $10,000 to $25,000 to support business model experimentation and operations. According to allafrica.com, the announcement comes on the occasion of first anniversary of CcHUB incubation office, which, among other services, provides entrepreneurs with mentorship, user testing, access to markets, office space and administration.
The initial beneficiaries of the seed investment went through CcHUB’s Pre-Incubation programme, which identifies and supports aspiring technology entrepreneurs looking to address local market problems with relevant solutions.
Ben Uzor
