One of the surefire ways to make money in Nigeria is to start a business. And these days, almost everyone has a “big” business idea but finds it hard to finance it.
To be honest, raising capital in Nigeria can be a tough nut to crack. But the good news is that most successful entrepreneurs started from scratch, just like you.
You can raise capital for business in Nigeria through crowdfunding, grants and loans, business partners, angel investors, accelerators, venture capital, bootstrapping, and friends and family funding.
Most of these funding strategies may sound complicated at first glance. That’s why we’ve scoured the land, talked to the pros, and put together a foolproof guide.
With these tips in your box, you’ll be well on your way to raising the capital you need to take your business idea to the next level!
How Can I Raise Money for My Startup in Nigeria?
There are many ways to get capital for your business in Nigeria. Some of the successful methods include crowdfunding, grants and loans, business partners, angel investors, accelerators, venture capital, bootstrapping, and friends and family funding.
Whether you’re starting a POS business or launching a business with 500k, you can use these methods to raise capital for business in Nigeria.
Below, I will give you an overview of each method and how you can use it to grow your business.
1. Look for Angel Investors
One option worth exploring in Nigeria is angel investors. These heavenly beings, so to speak, are individuals who are willing to invest their money into promising startups. They can provide the financial boost to bring your business to life in exchange for equity.
In simple words, equity means owning a part of a company. It’s like having a share or stake in the business.
Angel investors are ideal for startups or new businesses with fast growth potential. They are attracted to fresh, innovative ideas that disrupt the market. A classic example is Olumide Soyombo, who invested in Piggyvest and Paystack.
Want to find angel investors for your business? Attend pitch events or networking sessions created for entrepreneurs and investors. These events allow you to meet potential investors and present your business idea. You can also contact industry experts who may have links to angel investors. Nothing beats building a solid network when looking for the right investors for your business.
Now, when pitching your business idea to these angel investors, you should keep a few things in mind:
- First, highlight your unique value proposition – what makes your idea different from others.
- Secondly, you’ll want to demonstrate the market potential of your business.
2. Seek Venture Capitalists
Venture capitalists are a big deal when it comes to funding fast-growing startups in Nigeria. Like angel investors, they’re looking for businesses that can grow fast and make a lot of money. But instead of dealing with an individual, you’ll deal with enterprises investing in early-stage startups.
Some of the most popular venture capital firms include Future Africa, Ventures Platform, EchoVC, Greentree Investment Company, and TLcom Capital. We have a post detailing all the active venture capital firms in Nigeria.
To find venture capitalists in Nigeria, networking is key. You can meet potential investors at industry events, pitch competitions, and startup conferences. Building relationships and showing off your business’s potential can catch the eye of venture capitalists.
Remember, venture capitalists usually invest in your company in exchange for a share of ownership. They become stakeholders and have a say in your business’s important decisions. Before making any deals, be ready to negotiate and fully understand the terms and conditions.
3. Consider Crowdfunding
Crowdfunding is another way to raise money for your business. It is the process of gathering small amounts of money from many people, usually through an online platform. This method is a great way to connect with your target audience and get the funds you need.
Crowdfunding is a great fit if your business has a captivating story or product that appeals to a broad audience. It works incredibly well for startups in creative fields or those focused on making a positive impact. For instance, crowdfunding could be the way to go if you want to create fantastic new software or start a community project.
To start crowdfunding, you’ll need to choose the right platform. Several popular crowdfunding platforms are available in Nigeria. These platforms allow you to showcase your business idea and attract potential backers.
When creating your crowdfunding campaign, remember to:
- Set a clear funding goal.
- Craft a compelling story that captures the essence of your business and its impact.
- Offer rewards or incentives to backers.
4. Explore Government Grants and Loans
Government grants and loans are also beneficial. They’re made to support entrepreneurs like you and can give your business a big boost.
This method is most suitable for businesses that meet specific criteria. For example, the Bank of Industry Youth Entrepreneurship Support (YES) program focuses on supporting young entrepreneurs. At the same time, the Central Bank of Nigeria’s (CBN) Agric Small and Medium Enterprises Investment Scheme (AGSMEIS) targets businesses in the agricultural sector.
To get funding, you need to know about available grants and loans. Every program has its own rules and ways to apply. So, learn about them to improve your chances of getting funding.
When applying for government grants and loans, it’s essential to:
- Pay attention to detail and ensure that you meet all the requirements.
- Create a well-written business plan outlining your goals, strategies, and financial projections.
- Enhance your chances by acquiring solid financial management skills or hiring a skilled financial manager.
To find out about available government grants and loans, visit the websites of relevant government agencies or reach out to business support organizations in your area. Our post on the top grants in Nigeria is also a great place to start.
5. Business Incubators and Accelerators
Business incubators and accelerators are great for startups. They offer funding, mentorship, and other resources that match your business’s needs.
If interested, check out well-known incubators and accelerators like Co-Creation Hub and Ventures Platform. They have programs designed to help you improve your business model. You will also get the chance to connect with mentors and catch the attention of potential investors.
To apply, visit their websites and follow the application instructions. Ensure your pitch deck is persuasive and explains why their resources and expertise would benefit your business.
6. Utilize Bank Loans
Bank loans are a traditional yet reliable option for raising capital for your business. They offer various loan products tailored to different business needs, including working capital loans, equipment financing, and commercial property loans.
To secure a bank loan:
- Establish a solid relationship with a bank that understands your industry.
- Confirm the bank’s history of supporting small businesses.
- Open a business bank account and maintain good credit history and financial discipline.
- Prepare a comprehensive loan proposal that outlines your business plan, financial projections, and repayment strategy.
Banks want to see that you have a clear roadmap for success and a reliable plan to repay the loan. Check out the top banks and platforms offering SME loans.
7. Grants and Competitions
Private foundations and organizations often provide grants and loans to support social and environmental impact initiatives. The Tony Elumelu Foundation and the Ford Foundation are examples of such entities in Nigeria.
To access these grants and loans:
- Identify foundations that align with your business goals and values.
- Research their application processes and requirements.
- And craft a compelling grant proposal that showcases the positive impact your business aims to achieve.
Additionally, keep an eye out for business competitions that offer financial rewards and resources to the winners. Participating in these competitions can provide capital, valuable exposure, and networking opportunities.
8. Get a Business Partner
Collaborating with business partners can be an effective way to raise capital for your business in Nigeria. Partnerships allow you to pool resources, share the financial burden, and tap into each other’s networks and expertise.
When seeking business partners, look for individuals or companies that complement your skills and expertise. Identify potential partners who share your vision and have a keen interest in the success of your business.
To find business partners:
- Network within your industry and attend relevant business events.
- Engage in conversations with like-minded entrepreneurs and explore potential synergies.
- You can also utilize online platforms and professional networks to connect with potential partners.
When reaching out to potential partners, be ready to explain the value of your business and how working together can benefit everyone involved. Clearly define responsibilities, roles, and expectations to ensure the partnership works well for both parties.
9. Explore Friends and Family Funding
Despite your best efforts, you might experience delays or failure in some of the methods we talked about. You’ll have to fall back on family and friends at this point. They know you well and might be more willing to support your entrepreneurial journey.
When talking to your loved ones about funding:
- Be open and professional.
- Clearly explain your business plan, including your goals, finances, and risks.
- Talk about the potential profits and any repayment terms or agreements.
To make things official, you can create a formal agreement or contract for the investment and repayment plan. This way, both parties understand what’s expected. Throughout the process, keep communication open and manage expectations to maintain trust with your family and friends.
10. Start with Bootstrapping
Bootstrapping means starting and growing your business without relying on outside funding. Sounds difficult, right? Honestly, it takes extra effort and determination, but it gives you complete control and ownership.
However, this funding strategy works better for small businesses.
To bootstrap your business successfully:
- Focus on making money right from the start.
- Find ways to earn from your products or services, prioritize sales, and gain customers.
- Look for ways to save money, like running a lean operation, negotiating good deals with suppliers, and using affordable marketing methods.
- Being creative with limited resources is also important. Find low-cost or free tools, software, and marketing platforms. Think like an entrepreneur and come up with innovative solutions that save money.
Start Your Entrepreneurial Journey
Now, I believe you know how to raise capital for business in Nigeria. Each option has its benefits and things to think about. So, go ahead, explore the options, and confidently start your entrepreneurial journey.
Don’t forget that it’s crucial to have a clear business plan, build a strong network, and find funding sources that match your business goals. Keep pushing, stay determined, and be flexible when looking for capital. And don’t hesitate to seek professional advice if you need help.