Nigerian Entrepreneurs: A Fundraising Case Study

nigerian entrepreneurs

The Capital Finder allows organizations to facilitate entrepreneurs and SMEs seeking financing by providing access to unique funding opportunities. As a new intern at AlliedCrowds, I wanted to put the Capital Finder to the test. So, I decided to invent a peri-urban Nigerian cassava farming company called Cassava Inc. and see how many funders I can identify using the Capital Finder. In this blog, I will outline my journey as one of many Nigerian entrepreneurs seeking funding for their company.

Overview of SME Funding for Nigerian Entrepreneurs

Nigeria is a vibrant, diverse, and opportune place, making it well-suited for entrepreneurs. As a Nigerian myself, I wanted to explore more of what my country had to offer in the way of business opportunities. What I found is a growing startup space where fashion and tech are just some of the burgeoning industries that are contributing to the country’s economic growth and productivity. Agriculture, a mainstay of the Nigerian economy, is one of the more rapidly growing and innovative industries, with companies similar to Cassava Inc. creating technologically-driven solutions that are introducing new farming techniques.

Unfortunately, there are problems facing SMEs that are often inhibitive; these problems affect not just Nigerian entrepreneurs, but many founders around the world. Poor access to funding restricts entrepreneurs’ ability to raise capital for small businesses, and underdeveloped infrastructures and government inefficiencies exacerbate this problem. Knowing where to begin searching for capital is difficult, and class and nepotism are tough obstacles to surmount without access to the key players in any industry. Despite its promise, with all of these early obstacles, it seems like finding funding for Cassava Inc. is going to be a challenge.

The Solution: The Capital Finder

Cassava Inc. is a business with $650,000 (₦235.95 million) in annual turnover seeking $500,000 (₦181.5 million) in equity funding for a cassava processing plant in northern Nigeria. Traditional methods of processing cassava produce inconsistent results, and Cassava Inc. is looking to introduce a number of process controls that will lead to improved cassava products that are more competitive in the international market.

On my fund-seeking journey, I initially ran a Google search on “cassava SME investors in Nigeria”. After going through several pages of search results, I found myriad articles on cassava’s importance to Nigerian agriculture, and the commitment of various organisations to boost cassava-related investment, but I could not find any access to a single investor – much less of one tailored to a startup like Cassava Inc. I ran numerous additional searches, combing through hundreds of pages using search terms like “agriculture VC Nigeria”, “agriculture angel investors Nigeria”, “farming VC Nigeria”, “funding Nigerian entrepreneurs”, and about fifteen more. In total, I spent two hours looking for funders on Google, resulting in just two viable options. It seems that Google is a great resource for providing an overview of an industry, but due to the peculiarities of finding relevant funders in the developing world, it turned out to be a bad resource for funding.

nigerian entrepreneurs google results

Using the Capital Finder, I ran a search tailored to Cassava Inc. I searched the agriculture sector and was able enter keywords such as “cassava”, to further refine my search. The Capital Finder’s bespoke matching algorithm searches through over 7,000 capital providers to surface the platforms most relevant to the cassava industry in Nigeria.

From the list provided, I was able to extract five capital providers relevant not only to my sector and country, but also my funding type and funding size! The Capital Finder also pulled out the context in which “cassava” was mentioned. For instance, my top search result, Sahel Capital Agribusiness Managers Limited, “is a private equity firm focused exclusively on the Nigerian agribusiness sector” whose website features an article on cassava as a staple Nigerian crop. Other results included:

  • Grow Africa– a joint initiative between the African Union, the New Partnership for Africa’s Development, and the World Economic Forum with a sector focus that includes the rice and cassava business in Nigeria
  • African Finance Corporation– an infrastructure investment firm with a sector focus on natural resources, including “arable land”
  • Verod Capital Management– a private equity firm active across various sectors, including agriculture
  • Synergy Capital Managers– a private equity firm focused on making investment in select high-growth sectors in Nigeria and Ghana, including agri-processing.

Other results included CardinalStone, an investment bank investing in key growth sectors of Nigeria’s economy, and Kaizen Venture Partners, a venture capital firm whose sector focus includes agribusiness. These providers make minimum investments of $2 million and $3 million, respectively, and therefore would be good options when Cassava Inc grows.

A similar search on a search engine would be far more exhaustive, providing me with generic results on anything and everything related to “cassava.” For entrepreneurs, time is scarce and I was able to find the investors above in a matter of minutes, not hours. This allows entrepreneurs to focus on what they do best — running their company, not looking through search results in hope of finding a suitable investor.

So, now that I know who the investors are in the cassava space, my next step is actually securing funding for the farm. This can be a challenge for Nigerian entrepreneurs (and others) who haven’t raised money in the past. Fortunately, AlliedCrowds’s Entrepreneur Hub is a customisable platform that provides users with the informational tools to unlock private capital. 

Have more questions about the Capital Finder or Entrepreneur Hub? Get in touch at capital.finder@alliedcrowds.com. You can also learn more about SME access to finance in Nigeria in our report on the topic here.

Written by David Alfred-Olufeyimi.

Image: Fabricated cassava processing machines by IITA is licensed under CC BY NC