One
of the major challenges of start-ups is sourcing of capital. Almost every
start-up across the globe shares the same lyrics. A number of potential
businesses ventures have been flushed down the drain essentially because of
lack of access to capital.
When
sourcing for funds to start grow or increase a business, entrepreneurs have perpetually
learnt over time to first look at the family as a source. Some though succeed
but not more than 2%. A good number source among friends and colleagues; not
too many have succeeded in pulling in sufficient funds needed offset the
business. Very few succeed at getting bank loans for obvious reasons. A source
many businesses have not explored is venture capital. Quite a few explore this
option. This is basically because of fear of losing stake in the business, but
amazingly, venture capital is one of the proven sources of financing for small
business especially and one of the very best options if well informed.
Before
diving deeper, venture
capital is simply a financial capital provided to early stage, high potential,
growth start-up companies. Venture capitalists earn money by owning equity in
the companies it invests in. It is particularly
attractive for new companies with limited operating history and that are too
small to raise capital in the public markets and have not reached the point
where they can secure bank loan or complete a debt offering.
Venture capitalists are not jack of all trade.
Some are interested in solely agro based ventures, while some are strictly
interested in the manufacturing sector, although a large number of them invest
in technology related ventures. The first level of success finding the right
venture capitalist that will invest in your business is defining your business
and then identifying the venture capitalists for your business. Firms like
Interswitch, Dealdey, Iroko TV, Jobberman, Paga, etc which are some of fastest
growing firms in Nigeria are all beneficiary of venture capitalists.
Here are top six venture capitalists to
direct your search on;
1. Adlevo Capital
Adlevo Capital is the
first private
equity firm focused on investments into technology-enabled companies across
sub-Saharan Africa. It is a Mauritius-based private firm. They actively
seek to invest in ambitious companies. Adlevo Capital is committed to sub-Saharan
Africa and believes that market intelligence is developed through a
local presence and an understanding of the dynamics of the local market. In line
with this philosophy, Adlevo Capital maintains active local presence through
its base in Lagos, Nigeria.
They invest primarily
in technology driven firms. Some of the firms in Nigeria that they have
invested in are; InterSwitch limited, Rancards, paga, SOLO etc.
2.
Sahel Capital
Start-ups
in agro related industries will find Sahel Capital Interesting. Sahel Capital
is a leading fund manager and advisory firm focused on West Africa
with deep roots in private equity, financial advisory, management consulting,
and agribusiness. It offers partners quality financial and operational
experience, broad industry knowledge, and a powerful network of global
relationships.
In Nigeria, their major Sahel Capital’s principals investments include:
AACE Foods, a Greenfield agro-processing company in Ogun State.
It
recently raised $33m for agribusinesses in Nigeria. Business Day on Feb.
12th 2014, reports has it that “Sahel
Capital raised $33 million to invest in agribusiness SMEs across Nigeria, and
will be seeking to raise additional capital during the course of the year to
reach our $100 million target.” The reports
further states that “The fund which has a
ten-year lifespan will target SMEs across the agriculture value chain in
Nigeria. It will also partner with intermediaries for on-lending to
agricultural SMEs and smallholder farmers”.
3. Actis
Capital
Actis
Capital is another venture capital entrepreneurs should look at as a
viable source of fund. It is a private equity firm focused on emerging markets
in Africa, Asia and Latin America. It has over $5 billion in funds under
management. It invests in businesses in six industries: Consumer Goods,
Financial Services, Healthcare, Industrials, Energy and Real Estate. In
Nigeria, the firms they have invested in are, Starcomms, UAC, Diamond Bank,
Mouka Foam and Seven Energy. Actis is a a good source to look at if you are a
start-up in any of these related industries
4.
Ashish J. Thakkar (Mara Group)
He is Africa’s youngest
billionaire and the founder of Mara groups.
Thakkar is a Uganda born business clout and also a venture capitalist. He is the founder of
Mara groups a pan-African conglomerate with interest in real estate, tourism,
financial services, technology, renewable energy, and manufacturing.
5.
Echo Venture Capital
Echo Venture Capital is a
seed and early stage venture capital firm focused on financing and cross
pollinating lead gtechnologies, teams, business models and knowledge across North
America, Africa and SE Asia.
They are interested in
finding and funding amazing team to build, deliver and scale services and
products that matter to local and eventually global audiences. Their segments
of interests include consumer internet and services, smartgraph and smartdata,
mobile, digital media, content and advertising, E/M-commerce, software,
Tech-enabld services and enterprise.
6.
African Capital
Alliance (ACA)
ACA is an independent
investment firm focused on Nigeria and West Africa; it was formed in 1997 and
has aggregated capital commitments of over $750 million so far. ACA invests in
companies with high growth and return potentials and an experienced management
team, ACA has invested in Cornerstone Insurance, eTranzact, BevPak Nigeria
Limited and Swift Networks among others. ACA invests in primarily businesses
looking to expand and grow.
To find out more, visit www.padronconsulting.com
or call +234(0)814 8185 144.
Written by
Ryta Moemeke.
