How to Finance a Blockchain startup in Nigeria

The range of blockchains has increased over the years. It has made it possible to transact with services on a peer-to-peer basis in a decentralized environment. Compared to the transaction approach used by various centralized systems, blockchain offers a significant advance. 

Financing a Blockchain in Nigeria can be tricky due to the unreliability of cryptocurrencies and the lack of understanding the public has for blockchain technology. Accordingly, this article highlighted four ways you can raise funds for your blockchain project.

How to Finance a Blockchain in Nigeria

1. Incubators and Accelerators

You can try raising funds for your blockchain project through incubators and accelerators. The fact that incubators and accelerators don’t just concentrate on raising money makes them the finest funding sources for blockchain startups. These organizations offer mentorship, capital, and connections to investors and business partners. These benefits far outweigh the financing they provide. 

Popular organizations that finance blockchain projects through incubators and accelerators include Defi Alliance, Binance Labs Incubation program, GreenHouse Lab, and the African Blockchain Incubation program. They have funded several crypto and blockchain projects across Africa. 

When sourcing incubators or accelerators for your project, you should:

Research

Examine the incubator or accelerator to determine if it is the right fit for your blockchain project. This is because investors, incubators, and accelerators also have their areas of interest. Research to find out which one would be interested in your idea. 

Apply Prepared 

Accelerators and incubators are fantastic tools for networking, building relationships with advisors, and acquiring valuable skills. Benefiting from this will require your time and dedication. Make sure you can give these before applying for these programs.

2. Angel Investors

Over the past ten years, angel investors have gained recognition in the startup community. These people work with private funds and often invest during the seed stage (the first official investment round).  They frequently invest in high-risk, high-reward projects, so they won’t be hesitant to invest in a blockchain project. Some of the angel investors in Nigeria are limited Soyombo, Idris Ayodeji Bello, Olugbenga Agboola, Michael Seibel, and Tayo Oviosu. These individuals have several startups, including crypto-based projects. 

You can use various tools, like websites and professional networking platforms, to find angel investors. When doing this, ensure to find those angel investors who might be interested in blockchain firms and projects. Also, ensure to introduce yourself and your project in a way that makes sense when you contact them.

There are two other factors you should take into consideration when searching for an angel investor. They are:

Know their expectations and explain yours

Thanks to the personal interaction you’ll have with your potential angel investor, you can ensure your expectations align with theirs from the onset. Be ready to respond honestly when asked what returns the investor might expect and when they occur. Please do not hesitate to inquire about their willingness to invest and their expectations for their involvement after investing. 

At the same time, you shouldn’t be afraid to ask them how much cash they need for your blockchain project they can provide.

Be Flexible 

Flexibility is crucial when working with an angel investor to finance your blockchain project. You must keep in mind that working with angel investors is different from working with a company. Remember that you must adjust your interactions at various points, starting with the introduction and ending with the investment in your project. 

3. Crowdfunding

Crowdfunding is one of the popular ways to get money for a crypto project. Crowdfunding is obtaining financial backing for a project by having several people contribute modest sums. NaijaFunds, Indiegogo, and Fundanenterprise are Nigerian crowdfunding sites where you can get finance for blockchain projects. 

To have a successful crowdfunding exercise, there are three basic things you must know:

The most common and effective crowdfunding model for the blockchain ecosystem is incentive-based crowdfunding. You should also be aware of the other types of crowdfunding, such as equity- and debt-based crowdfunding.

Crowdfunding is about how well you can communicate your message to the community. So when pitching your idea, make it exciting and engaging.

Give a detailed description of the outcome you hope to achieve with your blockchain project or startup. Initiatives that use crowdfunding raise expectations from a variety of investors. To prevent misunderstandings, you must ensure total transparency regarding your project and its value to the community.

4. Grants 

Grant is also an effective way to fund your blockchain project. A grant is a sum of money given by an entity, often a public body, charitable foundation, or specialized grant-making institution, to an individual for a particular goal associated with the public’s good. Grants are not repaid like loans are. 

Entrepreneurs, small business owners, and individuals in Nigeria have access to a wide range of grant programs they can use to launch or grow their companies. 

Some of the Organizations that give out grants to entrepreneurs in Nigeria are Africa’s Young Entrepreneur Empowerment Nigeria (AYEEN), Tony Elumelu Foundation Entrepreneurship Programme, Shell LiveWire, and GroFin Fund. 

Conclusion

From the above list of how to finance a blockchain, you will observe that they are the same means of raising funds for any conventional startup. 

The main factor in determining how successful your search for funds for your blockchain project depends on your preparation level. Before applying for any of the means of generating funds mentioned above, the necessary framework and plan for your project and how it will generate revenue should be in place. 

Before any investor pumps their money into your blockchain project, they must know that your project has at least a 50% chance of yielding returns. Investments are risky, so you’ll have to show them you’re worth the risk.