Venture capitalists are the people and companies that provide funding to early-stage and growth-stage companies. They operate by assessing the viability of a business and helping it grow. In Nigeria, startups don’t have easy access to traditional sources of capital like banks, so venture capitalists play an essential role in assisting new companies in getting funding and patents, which helps them stand out from their competitors.
A venture capital firm is a company or organization that invests in and mentors new, early-stage, and growth-stage companies. In contrast with angels and angel networks, which typically make smaller (usually non-strategic) investments than VCs do and are often closer to the founders, VCs focus more on the strategic vision of investing in startups and their potential exit routes.
This article on venture capitalists in Nigeria is a complete guide on what venture capitalists are about, how to start one, and other essential details.
Venture Capital in Nigeria: An Overview
The venture capital (VC) landscape in Nigeria has grown significantly in recent years, with more investors and startups entering the market. In 2020, the country saw a rise in venture capital investments, with funding reaching over $300 million, primarily driven by increased investment in fintech and e-commerce startups.
Major VC firms in Nigeria include EchoVC Partners, Microtraction, Co-Creation Hub Nigeria, Greentree Investment Company, Ventures Platform (VP), and Ingressive Capital (IC). The government has also launched initiatives to support startups, including the Central Bank of Nigeria’s National Financial Inclusion Strategy. Additionally, several accelerators and incubators have emerged, offering mentorship, resources, and access to investors for early-stage startups.
Despite the growth in VC, there are still challenges to accessing capital in Nigeria, including limited deal flow, inadequate regulatory framework, and an underdeveloped exit market.
How Do You Become a Venture Capitalist in Nigeria?
To become a venture capitalist or create your own venture capital firm, you must understand that venture capital firms have a particular structure.
A VC firm is generally structured as a limited partnership, in which the firm acts as the general partner and investors serve as limited partners. All partners have an ownership stake in the firm’s funds and share profits generated from the investment of the VC.
You understand that one person cannot make up a venture capital firm based on the above. It is also imperative to note the requirements for starting a venture capital firm in Nigeria.
Requirements to Start a Venture Capital Firm in Nigeria
According to the Securities and Exchange Commission (SEC), the requirements for registering and starting your venture capital firm include;
Payments.
There are four documents you are expected to have as a venture capital firm. These documents include a filing/application fee, a processing fee, a registration fee, and a sponsored individual fee. Before your application to become a venture capital firm is approved, you will need to pay and fill in these documents. The table below provides the cost of each document:
| DOCUMENTS | AMOUNT IN NAIRA |
|---|---|
| Filing/Application Fee | 50,000 |
| Processing Fee | 200,000 |
| Registration Fee | 300,000 |
| Sponsored Individual Fee | 50,000 (for each sponsored individual) |
Forms
The SEC has specified forms that an intending venture capital firm must obtain. Your venture capitalist application must contain Form SEC 3B, Form SEC 2, and Form 2D. Form SEC 3B is to be filled out for the company, while Forms SEC 2 and 2D will be filled out by the sponsored individuals, a compliance officer, and the directors of the company.
Every venture capitalist application form must have at least three sponsored individuals and a compliance officer. The Form SEC 2 and 2D must be filled in duplicates as well.
Fidelity Insurance Bond and Minimum Paid-up Capital
The SEC requires a venture capital firm to have a fidelity insurance bond covering at least 20 percent of the minimum paid-up capital. In addition, the VC application must be accompanied by evidence of the company’s minimum paid-up capital of Twenty Million Naira (20,000,000), which can be in bank balances, fixed assets, or investment in quoted securities.
Sponsored Individuals and Directors of the Company
As part of the requirements for a venture capital firm, the SEC has demanded that every VC company have:
- A minimum of three sponsored individuals and one of those sponsored individuals will act as the compliance officer.
- The VCs’ Managing Director must be among the sponsored individuals.
- Complete postal addresses of immediate previous employers, bankers (with Current Account number), and nominated referees of sponsored individuals.
- Curriculum vitae detailing the sponsored individual’s professional experience and education, showing details of activities arranged from secondary school to date with dates and explanations of any gaps in employment or educational history.
- Proof that each sponsored individual has a minimum of four years of post-graduation experience to perform the function as stipulated by the Commission’s Rules and Regulations.
- A police clearance report addressing each sponsored individual.
- Copy of means of identification for directors and sponsored individuals (international passports, utility payments, and tax payment documents).
Each sponsored individual is to report to the SEC head office in Abuja or the Lagos zonal office with two recent passport photographs to commence the process.
Applicant Company Details
The company applying to become a venture capital firm should provide a company profile that should include, among other things, a brief history of the company, its organizational and shareholding structure, as well as the names of its principal officers, and details of its past and current activities. Other documents that you should provide include:
- Details about the company’s subsidiaries/associated companies, including their names and addresses, the nature of business, and percentage holding in each subsidiary/associated company.
- A sample agreement between venture capital management and venture capitalist.
- Proof of payment of shares allotted to the shareholders.
- Evidence of the company’s intended venture capital funding sources.
- An organizational chart or operational manual of the company.
- Business plan.
- Bank statement of accounts operated by the Company for the last six (6) months.
Important Corporate Documents
The company is expected to provide a copy of each of the following, duly certified by the CAC:
- Certificate of Incorporation.
- Memorandums and Articles of Association should include the power to perform the specified function.
- CAC Form(s) showing Statement of Share Capital, Return of Allotment, and Particulars of Directors.
It is essential to note that, depending on your application, the SEC may make other demands on an intending venture capitalist firm.
Top Venture Capital Firms
The following are some of the best venture capital firms in Nigeria:
- EchoVC Partners
- Microtraction
- SpeedUPAfrica
- Co-Creation Hub Nigeria
- Greentree Investment Company
- Ventures Platform (VP)
- Oui Capital
- Ingressive Capital (IC)
- LeadPath Nigeria
- Unique Venture Capital
The following section includes a brief description of each VC listed above, including details on the company’s worth, startups invested in, and funds disbursed.
EchoVC Partners
EchoVC Partners is a seed and early-stage venture capital firm that invests in financing and leading cross-pollinating technologies and teams globally. The venture capitalist firm has invested in several companies at various funding rounds, including seed, pre-seed, Series A, B, C, and D.
Microtaction
Microtraction is a pre-seed VC firm that invests in early-stage startups. The company’s stipulated investment range is from $25,000 to $150,000. Microtaction is open to investing in technical founders who develop innovative and disruptive technology for Africa and Africans. Microtraction has invested in Riby, 54gene, Sendbox, Bitsika, Festival Coins, Termii, and Thankucash.
SpeedUPAfrica
SpeedUPAfrica is a seed venture capitalist firm in Nigeria and Ghana that provides non-equity assistance and seed investment to startups in the West African region. The company has had three (3) exits and made up to 89 investments in companies scattered across West Africa and beyond. SpeedUPAfrica has invested in Nurlux, RubiQube, CanGo, Save Our Agriculture, Traveler, and Farmable, to mention a few.
Co-Creation Hub Nigeria
Co-Creation Hub Nigeria is a multi-functional, multi-purpose space where work to catalyze creative social tech ventures takes place. Located in Lagos and designed as an open living lab, the firm is a place for technologists, social entrepreneurs, government agencies, tech companies, impact investors, and hackers in and around Lagos to co-create new solutions to the many social problems in the country.
So far, the Co-Creation Hub has made 35 investments and two acquisitions. The company is majorly a pre-seed and seed venture capitalist firm. Some of the startups Co-Creation Hub has invested in include Kwaba, Shuttlers, Identitypass and Payday.
Greentree Investment Company
The Greentree Investment Company offers startups in the tech industry all they need to scale their businesses. It has invested in some big names in the Nigerian tech ecosystem, such as Big Cabal Media, the guys behind TechCabal, Paystack, and Precurio. They have also invested in startups such as MDaaS Global, Eazyhire, and Riby.
Ventures Platform
Ventures Platform is one of Nigeria’s top venture capital firms. They have invested in over 70 startups and companies pre-selected for Series A funding rounds. The investments of Venture Platform cut across several sectors, including financial services and insurance, life science and health tech, edtech, digital talent accelerators, enterprise SaaS, digital infrastructure plays, agri-tech, and food security.
Through the Ventures Platform Fund, the VC invests in mission-driven founders who are building capital-efficient platforms that democratize prosperity, plug infrastructural gaps, connect underrepresented communities, solve non-consumption, and improve livelihoods in Africa.
Oui Capital
Although Oui Capital is a US-based venture capital firm investing in early-stage startups in Africa. Oui Capital is an investment firm seeking to level the playing field between high-growth technology startups in sub-Saharan Africa and the smart capital available to take advantage of these opportunities.
Some of the startups Oui Capital has invested in include Duplo, Herconomy, Ndovu, MVX, Affluence, TeamApt, and Akiba Digital, to mention a few.
Ingressive Capital
Ingressive Capital targets 10% ownership in pre-seed and seed tech-based companies in Sub-Saharan Africa. The VC investment range is pegged at around $400,000 and more. Ingressive provides funding for post-launch startups through its investor network, some of whom run the leading funds for startups worldwide.
At Ingressive Capital, the investors help founders address their problems with business development and partnerships while offering financial support to help them grow and scale. They recently helped Sava raise $2 million in the startup’s pre-seed round. Other startups Ingressive Capital has invested in include Bridgecard, Afropolitan, Remedial Health, Mecho, OnePipe, and so on.
LeadPath Nigeria
LeadPath Nigeria is a venture capitalist firm in Lagos, Nigeria, that provides startup seed capital funding. The firm provides short, medium, and long-term funding to SMEs in Nigeria. Its mission is to herald the emergence of high-growth, technology-driven African companies by bridging the gap between start-up and market dominance. They work with only those entrepreneurs with an irrevocable appetite for achieving the extraordinary.
One of the notable investments of LeadPath in a Nigerian startup is in PiggyVest, a fintech company making waves in Nigeria, West Africa, and beyond. Other investments by LeadPath include AfriQbuy, Meditell, RealE, PushCV, RSVP, Simer, etc.
Unique Venture Capital
Unique Venture Capital Management is an SME-focused private venture capital investment firm specializing in expansion financing, acquisition and management buyouts, and multiplier effect and SME spin-offs. The company is committed to helping good businesses realize their full potential.
Who are the Biggest Investors in Nigeria?
Nigeria is considered one of the most attractive honeypots among African countries. Despite the challenges and setbacks the country faces, local and international investors see the country as an investment hub. Below are some of the biggest investors in Nigeria today:
- Quona Capital
- Clock Tower Technology Ventures
- Bossanova Investimentos
- Sequoia Capital
- Bertelsmann Asia Investments
- Thescathcompanies
- Adaverse
- Insurpass
- Timon Capital
- The Athari Fund
The investors listed as numbers 1 to 5 are international companies that have made the largest investments in the country between January to July 2022. The VCs listed in numbers 6 to 10 are Nigerian-based investors who have made investments in several startups within the space.
Top Funded Startup Industries in Nigeria by VCs
Nigeria is a hub for investments. What makes it interesting is that almost every day, a new startup is taking off with innovative products.
Some of the top-funded startup industries in Nigeria include:
| Industry | Total Fund Raised ($) |
| Financial Technology (Fintech) | ≈600 Million |
| Logistics Technology | ≈300 Million |
| Medical technology (MedTech) | ≈139 Million |
| Agricultural Technology (AgroTech) | ≈100 million |
| Educational Technology (EduTech) | ≈50 million |
The first three industries are heavily populated and receive the most investments, while Edutech is new and suffers from low participation.
Some of the most funded startups in these industries are listed below with the funds raised by VCs.
| STARTUP | FUNDS RAISED |
| Lidya | $16.5 million |
| Alerzo | $16 million |
| VertoFx | $12.2 million |
| AppZone | $10 million |
| Okra | $4.5 million |
| Edukoya | $3.5 million |
| Bankly | $2.1 million |
| Shuttlers | $1.6 million |
| Edenlife | $1.4 million |
| Bitmama | $750,000 |
Conclusion
Venture Capital in Nigeria is gaining traction. We believe this guide has provided insight into how to become a venture capitalist firm in Nigeria and some of the startups that have enjoyed VC backing and funding. Becoming a venture capitalist firm involves meeting regulatory requirements and playing by the rules of the regulatory body, SEC.
Ensure you consult a credible and qualified law firm to help you handle matters concerning venture capitalists’ startups and investments.
5 thoughts on “Venture Capital in Nigeria – Complete overview”
Beautiful write up. Very informative.
I am in Nigeria & want to start a new education system which will start with e-based learning & graduate in few years to both on-line & on-campus education systems. Want to get a VC that will invest up to $50 Millions for intial project setup. can I get a list of them. Thanks?
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