Y-Combinator visit in Abuja
There is money to be raised…if you are a technology startup
In July, Tim Draper, an American venture capitalist visited Lagos. He’d come to check in on Paga, a Nigerian financial services company in which he is an early investor. Draper, notorious for making bold and early bets (most notably in Baidu, China’s largest search engine), didn’t make any apparent public ripples while he was in town.
But then in August, Facebook founder, Mark Zuckerberg dropped in unexpectedly. Not believing their luck, ecstatic founders fell over themselves to grab selfies. A few impetuous ones even got their pitches in. Because, why not? The Chan-Zuckerberg foundation had recently funded Lagos-born Andela in the sum of $24 million.
In the middle of a recent international live broadcast, WeCyclers’ founder and CEO, Bilikiss Adebiyi while speaking about the challenges of running her business in Nigeria’s unique circumstances received an offer from an investor, also a guest on the programme, to provide technical and financial support.
Last week’s Nigerian tech headlines were abuzz with news of Tolet.ng. The four-year old Lagos-based real estate listings startup raised $1.2 million from Frontier Digital Ventures, a Kuala Lumpur-based investment firm.
Clearly, something is happening in Lagos.
“Every year, we organise the tour of tech. And every year, the investors say they want to come to Lagos, and only to Lagos”, says Maya Horgan-Famodu, the founder of Ingressive, an investment group that connects Silicon Valley investors to African investment opportunities. Since the 24th of September, she’s helped top Y Combinator executives, Michael Siebel and Qasar Younis, navigate Nigeria’s technology startup landscape, organising close to a dozen public and private sessions with entrepreneurs and investors in Lagos and Abuja.
Nigeria is in a recession. Yet while other sectors are certainly feeling the bite of hard times, somehow, the macro-economic headwinds do not seem to have dampened foreign investor appetite in its technology startups. And even without the help of local sherpas like Ingressive, they have been finding their way to the most promising deals. Before Y Combinator CEO and COO, Michael Siebel and Qasar Younis decided to come and see things for themselves, the “world’s most powerful incubator” accepted four hot Nigerian startups in its programme, and six more across Africa. Most, if not all, of these investments happened within the last 12 months. Startups that get accepted into Y Combinator receive $120,000 in exchange for 7 percent equity. Most YC alumni typically raise even more money on demo day, after going through its 3-month incubation programme.
More investors are coming. Ingressive’s next tour of tech is taking place in November. In March 2017, Geeks On A Plane will bring 500 Startups’ top executives to Lagos. Like Y Combinator, 500 Startups has also made some recent African bets, and is looking for more opportunities to get behind. While times might be hard, there’s probably never been a better time to be a technology startup in Nigeria.
Of course, that is by no means a guarantee that dollars will be handed to any venture that christens itself a tech startup. Asked what types of companies they invest in, YC COO Qasar Younis said “companies that make something that people want”. Which in English actually means companies that can grow very big off user demand. Technology investors are interested in ventures that can become billion dollar companies. With blockbusters like Airbnb and Dropbox propping up its cred, Y Combinator and its ilk will be looking out for startups with Pan-African ambitions and unicorn potential.
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