In our business ideas category on this blog we have been talking about different business ideas in Nigeria and how to start these businesses. I believe we have done good justice to these business ideas.
However, one major problem I have heard our reader complain about all the time is how they can get capital or funding to start these businesses. Many of them have the zeal to start one business or the other but they are either broke or cannot afford the starting capital or funds of the business.
This is why in today’s article, I will be explaining different ways on how we can get funding for your business or startups in Nigeria – whether these businesses are old or new.
Many of us do not know that there are many options available when in comes to funds so we will be listing many ways on how to raise capital or funds for your business in Nigeria. So just for clarity sake let us explain what a startup is first.
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Table of Contents
- What is a Startup?
- How to Get Funding for your Startup in Nigeria
What is a Startup?
A startup is a business or company that is at its initial stage. At this stage, founders of the business or company usually work with a vision of the business. They are not looking for entrepreneurs that will buy their business from them, rather that are looking for investors – people that are willing to support them with financially. This support can be through loans or any other means.
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How to Get Funding for your Startup in Nigeria
Here are different ways on how to get funding for your startup in Nigeria.
1. Family and Friends
This is the first easy way on how to get funding for your business or startup in Nigeria especially if you have supportive family and friends that are influential and rich. You can meet them telling them about your startup and how you want them to support you with money and they will be willing without being forced or coerced.
Depending on how much you need to for your startup you can meet as many family and friends that you know will contribute a good sum. For example, let us say you need #5,000,000 to start the business or grow your business. You can meet 10 of your friends that you are sure will support you with #500,000 each.
It is important to note that when approaching these people you state in detail that the money is a support and that you are not borrowing. This is to make sure that when the startup fails you will not be obligated to refund any money given.
If you are in doubt as to whether your family and friends will support you financially then you need to question your character because if you are someone with a reputable character who knows how to manage money people will definitely support you. Other People’s Money also known as OPM is one of the easiest ways to get money for startups in Nigeria.
2. Angel Investors
Another way on how to get funding for your business in Nigeria is through anger investors. Angel investors are not scarce in Nigeria; you just have to look at the right places. Just in case you do not know who angel investors are, they are a group of people who gather resources (mostly money) to support businesses at their (pre-seed) early stages.
Asides angel investors coming together as a group to support startups, there are individual angel investors in Nigeria. Many of them are well known. Some of these angel investors are Jason Njoku, Adejoke Olubisi, Femi Kuti, Kola Aina and more.
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3. Business Loans
Another way you can get funding for your startup in Nigeria is to seek business loans from commercial banks or microfinance banks. While many entrepreneurs choose to borrow money from commercial banks, others choose to borrow money from microfinance banks for good reasons.
The truth is both of the types of banks are the same especially in terms of the interest paid on loans. However, there are some banks that support startups businesses. These banks are mostly microfinance banks in Nigeria. With these specific banks you can get funds for your startup with very low interest rates.
However, there is one major disadvantage of getting funds from microfinance banks in Nigeria and that disadvantage is that you only have one year to pay off your loan after borrowing and this does not matter whether you are making profits from the business or not.
If you are looking for how to start startups with no money you can raise funds for your startup in Nigeria by using popular crowdfunding platforms.
If you are looking for ways to raise funds (capital) for your agriculture business you can use crowdfunding platforms like thriveagric, porkvest, Kobotalk, farmcrowdy, porkmoney, and others. These organizations are free money givers in Nigeria.
These crowdfunding platforms know how difficult it is to grow agric businesses in Nigeria so they support you with not just capital but resources and advice you need to strive.
If you have any other startup that is not agric related you can use crowdfunding platforms like GoFundMe, Lending club, Indiegogo, Patreon, Kickstarter, CircleUp and more. With these crowdfunding platforms you can receive as much funds with any restrictions.
Bootstrapping is a popular method in which you can get funding for your startup in Nigeria. Just in case you do not know what bootstrapping means. Bootstrapping is when you start a business from scratch without any financial support or advice externally. Most intellectual entrepreneurs call this method self-funding.
Bootstrapping might be the best option for you if you do not have any external support and your business is still in its developing phase. When you self-fund your business to the extent that you are now making sales or profits you will now start getting support (investors) from outside (other means).
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6. StartUp Grants
Another way you can receive funds for your business in Nigeria is through startup grants. If you are looking for a way on how to start a startup with no money in Nigeria, this is the best option for you.
This is because with startup grants the funding you get is free. This means there is no interest on whatever funding you get and no pay back. Startup grants are hard to come by however, there are no terms and conditions attached to them when you are able to access them.
Examples of organizations that give startup grants are AYEEN – Africa’s Young Entrepreneur Empowerment Nigeria and the Tony Elumelu Foundation Entrepreneurship Grants.
7. Bank of Industry
Bank of Industry (BOI) are for startups in Nigeria that are already running and are making profits even though they are still small.
Before you can access BOI for funding your business must be registered under the Corporate Affairs Commission (CAC), you must have a business account and your business must have been running for a while showing that you are making profits.
8. Business Incubator
Business incubators are another good source on how to raise funding for startups in Nigeria. With a business incubator you will get advice to grow and you will get funding. Top incubator and acceleration programs are 440NG, L5LAB, Co-creation hub and more. Business incubator provides start up training, network opportunities, mentorship and more.
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It is very difficult to start a business in a country like Nigeria so if you are a passionate entrepreneur you do not need to be stressing yourself again on how you can get funding for your business. This is why we wrote this article to support many of our readers across Nigeria. Try any of the above ways to access funding for that business and start that business now.
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