How To Source Funds For Your Startup Business In Nigeria: The Dos And Don’ts
Getting funds for your startup business in Nigeria can be pretty challenging as it can collapse your business if done in the wrong way. In Nigeria today, most people, especially the youths have great and wonderful business ideas that can conquer the world. When you discuss with these people, the problem on the lips of virtually all of them is startup capital. You will see them seeking a loan for startup business in Nigeria.
Although entrepreneurship funding in Nigeria has relatively increased, more needs to be done in order to cover for the teeming number of youths with brilliant ideas. So, when you set out to source funds for your startup business, there are certain ways to do it effectively. It is paramount and very important that you don’t jeopardize the longevity and survival of your business in your quest for startup capital.
Also read: How to overcome the challenges of startup growth in Nigeria
There are lots of federal government loans for small business in Nigeria but the challenge has always been accessibility. This article provides you with the best way to source funds for your startup in Nigeria. It is important that you understand the dos and don’ts involved in raising capital for your startup business in Nigeria.
There are several ways to seek for funds for your startup business in Nigeria. You can seek out angel investors, venture capitalists, business grants in Nigeria, the federal government loans for small businesses, etc. Whichever one you decide to go for, the onus lies in the fact that you must understand how the game works so that you can play it very well.
Best Ways To Source Funds For Your Startup Business In Nigeria
Below are some of the various ways you can get funds for your startup venture in Nigeria.
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You Can Save From Your Current Income Stream
There is no doubt about the fact that the best startup capital to fund your business is your personal money. Instead of moving from pillar to post seeking startup capital for your business in Nigeria, you can start saving from the very little you have. It is always easy but if it is what you must do to make your dream a reality, then it is a small price that you should pay.
Currently in Nigeria, saving money has been made easy and mouth-watering. For instance, I heard that SumoBank, one of the leading online savings and investment platforms in Nigeria allows you to save as little as #100 every day for an annual interest of 10-15%. You can visit www.sumobank.ng for more details.
This means that if you save at least #1000 every week for one year with Sumobank, it will amount to #52, 000 plus your added interest. There are also other savings and investment platforms like Piggyvest, Cowrywise, etc.
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Family, Relations, And Friends
Aside from raising your startup capital on your own, the next best option is to seek help from those close to you. Your immediate family members, close friends, and relations. The good thing about sourcing funds for your startup from family and friends is that they rarely require you pay them back and if they do, they don’t add interest on the money.
The major thing you need to do is win their trust first, no one will commit his or her hard-earned money into your hands if such a person doesn’t trust you. It won’t be easy for you to get startup capital from your family and friends if they don’t trust the feasibility of your idea. This is where you will raise the trust capital and no one can do that for you except yourself.
Also see: How to solve the Nigerian startup growth problem
It is important that you have great and enormous trust in the success of your idea before selling it to another individual. If you don’t believe in your idea, no one will. You must come to know that there is no shame in seeking help from your family and friends.
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Government And Private Individuals Grants And Loans
Another avenue to source funds for your startup business in Nigeria is through government grants and loans. There are lots of federal government loans for small business in Nigeria and you can apply for each and every one of them if you meet the requirements. You need to see my article on 2019 government grants and loans in Nigeria.
You need to always be on the lookout for the Bank of Industry, Bank of Agriculture, and the Central Bank of Nigeria. Aside from the government grants and loan for startup business in Nigeria, there are private individuals that support entrepreneurs in Nigeria. The Tony Elumelu entrepreneurship foundation has been supporting entrepreneurs in Nigeria. You need to make out time and study such entrepreneurship foundations and how you can source funds for your startup from them.
The grants are non-repayable funds given regularly by the government and some well-meaning Nigerians
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Venture Capitalists And Angel Investors
In your quest to get funds for your startup business in Nigeria, venture capitalists and angel investors should be your last resort. These set of people are basically wealthy individuals who provide capital for business startups. They often provide such capital in exchange for ownership shares or convertible debt. It is not always advisable for you to seek out these venture capitalists during the infant stage of your business startup in Nigeria.
To be able to convince angel investors and venture capitalist to put their money in your business, all you need to do is prepare a convincing and outstanding business plan or proposal.
Conclusion
All have been said on how you can source funds for your startup business in Nigeria, but it doesn’t end there. You need to ensure a good business plan and a feasible roadmap is in place for an easy transition of your idea into a physical business. It is very important that you utilize your startup capital exclusively for your business and nothing else. You should never make the mistake of venturing into an unintended and unplanned business because you have money at your disposal. If you do that, it is the beginning of the end for your business and there are no two ways about it.
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