Grants made up 60 percent of funding secured by 14 Nigerian startups in the first quarter of 2018, according to a study carried out by TechPoint Nigeria.
TechPoint highlighted three other different forms of funding namely seed funding, bridge funding and equity funding.
Grants refers to non-payable funds or products disbursed or gifted by one party (grant makers), often a government department, corporation, foundation or trust, to a recipient, often (but not always) a nonprofit entity, educational institution, business or an individual.
Seed funding also known as seed money is a form of securities offering in which an investor invests capital in exchange for an equity stake in the company. Bridge funding is an interim financing option used by companies and other entities to solidify their short-term position until a long-term financing option can be arranged.
Equity funding or stock fund on the other hand is a mutual fund that invests principally in stocks and can be actively or passively managed.
According to the report, equity investment which hit $5 million accounted for more than half of the total $9,241,196 funding. Bridge funding was $3.5 million, seed funding $250,000 while grants was at $491,196.
Startups in healthcare, production and media received the most funding. The start-ups with the most funding successes include Terragon Group (media) which secured $5 million in equity investment from TLcom; Rensource (energy) received $3.5 million from Amaya Capital Partners, Omidyar Network and CRE Venture Capital; and FarmCrowdy’s $325, 000 in grant from GSMA Ecosystem, Accelerator Innovation Fund in February.
LifeBank, a healthcare startup secured $200,000 in seed funding from EchoVC and CcHub Growth Capital.
Unsurprisingly, funds that came from foreign investors were the largest and most frequent in the first quarter. The biggest Nigerian investors in the period under review are Yomi Martins, a non-institutional private investor who put a $50,000 fund for Handyman Nigeria, an online marketplace.
