How Startups Can Attract Angel Investment in Nigeria

(Last Updated On: April 5, 2019)

As a token of love we have for our merchants, we keep looking deeply into problem areas where startups and SMEs can learn and grow their businesses. We are aware that we make money only when our merchants make money. This is one of our many efforts to ensure that all startups, that are doing business with us or not, to succeed by accessing great information that will transform their business lives. Feel free to share this with all your friends and family who have entrepreneurial minds.

Running startups in Nigeria don’t have to bite hard like plagues. We have advised in the past on how you can save from your current job, how you could bootstrap to fast track the growth of your business. Here and now, we present to you a concept you might have heard but don’t know much about or yet to tap into as a startup. Nigerian economy may be going through hard times, banks may find it hard to give startups and SMEs loan to boost their businesses but there some good Samaritans among us that are willing to take some risk with you and also share from your profit over time.

They are called Angel Investors, or Angels for short. Be prepared for a value-for-value relationship as you pitch them to fall in love with your business when you finally find them. Some startups in Nigeria may be aware there are angels among us but do not know them and where to find them, we will provide you with a short list of some angel investors whom you could contact.

Who are Angel Investors?

An angel investor or angel (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.  The term “angel” originally comes from Broadway theatre, where it was used to describe wealthy individuals who provided money for theatrical productions that would otherwise have had to shut down. High-profile success stories like Uber, WhatsApp, and Facebook have spurred angel investors to make multiple bets with the hopes of getting plenty of returns. 

Angels could be professionals from any field of specialization –doctor, engineer, lawyers and so on. Startups must avoid this stereotype mindset that their businesses could actually appeal to a particular class of professionals or some philanthropists. By keeping an open mind and exhuming confidence that angels will make more than their money back in due time will boost their chances of sweeping an angel off his feet. Startups don’t necessarily have to look up to ONLY those who have succeeded in their industry before. What matters is that angels are wealthy and are willing to invest cheerfully into your business in return for a piece of the action.

How does Angel Investment work for Startups?

Angels pump money into your startup or small business in exchange for equity in the business. Apart from funding, angel investors can provide valuable management advice and important contacts. There are several ways through which private companies meet angel investors. These include referrals from the investors’ trusted sources and other business contacts; at investor conferences and symposia; and at meetings organized by groups of angels where companies pitch directly to the investor in face-to-face meetings. A good amount of profit may not the only reason an angel investor wants to fund your startup business, it may be to keep abreast of current developments in a particular business arena, mentoring another generation of entrepreneurs, and making use of their experience and networks on a less than full-time basis.

Angel investment works for different types and sizes of businesses. It works for startups that are already running on seed fund but need handsome capital to develop a product or fund a marketing strategy. It works as well for SMEs that need some cash to kick the enterprise to the next level, expand the scope of business or venture into a new line of business based on their success in an existing venture. This could be helpful when you find an innovative way your business can better meet your primary or secondary audience in order to boost revenue.

What is bad in angel investment?

The truth is, no matter how great something is in this life, it has its own flipside. Although, this is not enough for you to completely shut down helping hands from sincere and trustworthy business angels in your business life. So many brands that are rocking the technology and business world, in general, benefited immensely from angel investment. Uber is one brand you could pick on and study today. You will see how they became the world’s most profitable fleet company through angel investment and without owning a car!

How can Startups find angel investors in Nigeria?

There are several ways you could find and meet business angels in Nigeria as a startup. This piece won’t explicitly deal with that now, but we have for you a list of reputable Nigerian angel investors. Dotun Olowoporoku, Opeyemi Awoyemi and the rest on that list are serial entrepreneurs who have grown many mere business ideas into lucrative ventures over time. You will benefit a lot from their wealth of knowledge, contact, access to fund and information plus experience as a startup or SME who need funds and some form of mentorship.

What do angel investors look out for in startups and SMEs?

We will give you in bullet points, what angels particularly care about so you can prepare ahead.

-The quality, passion, commitment, and integrity of the founders.

-The market opportunity being addressed and the potential for the company to become very big.

-A clearly thought out business plan, and any early evidence of obtaining traction toward the plan.

-Interesting technology or intellectual property.

-An appropriate valuation with reasonable terms

Please check around soon to know more about how you could fully prepare yourself and your business to attract angel investors. You will learn all that startups should know about angel investors as you follow us on this platform.

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    1. admin

      Thank you Andrea for reaching out to us. We will get in touch with you.

    1. admin

      Yes, we wrote the guide as we wanted to help you succeed in your venture.

      We hope you attract all the funding you need….and even become a unicorn startup. This is our wish for you, go and make it happen.

  2. Excellent article. I think angel investment is much better than venture capital. VC’s often try to take over your business.

    1. admin

      Neither of them is bad. Businesses need angel and VC funding at different stages of the business. It is advisable that the founders know their term sheet very well before committing to funding. This will ensure that they do not dilute their equities too much which might make them “lose” the majority stake to investors.

  3. Great article guys. I totally agree with Aaron C. often times Venture capital tries to take over the entire business. I have seen this happen.

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