Venture capital is a type of capital provided by large institutional investors (Venture Capitalists) to growing startups in exchange for profit. Unlike start-up loans, there are no monthly payments or start-up debts.
Venture capital is best for startups that are growing fast, have a well-rounded team, and are in a growing market. Venture capitalists offer startups access to capital at various stages, including developing a sustainable product, establishing customer attraction, scaling growth, and saturating demand before an IPO or acquisition.
It’s important that startups and private investors choose a suitable Venture Capital firm to enjoy the benefits of venture capital. Before the list of top 10 Venture Capitalists in Nigeria, here are the pros and cons of Venture Capital:
Pros and Cons Of Venture Capital
- A large amount of capital: With venture capital, startups have access to funding much more than any other traditional source of startup funds available.
- No interest payments: Without the burden of paying interest, your company has a much better chance of success because it can use cash flow to reinvest and create more growth.
- Additional Guidelines and Resources: Venture capital firms refer to the capital they provide as smart money. The reason for this is that they not only provide funding, but also actively participate in nurturing relationships, getting to know each other, providing guidance, and providing expertise and resources to help you expand your business.
- Although early rounds of venture capital sometimes take the form of convertible debt, most investors will convert to equity if your start-up is successful. Subsequent rounds will usually replace equity with company equity, which can reduce your ownership of the entire company.
- It reduces your control: When you lose a majority stake in your company, you will also lose a lot of control over its direction. When you raise the circle of venture capital, you will usually need to provide managerial positions to your investors, giving your board complete control over broad strategic decisions in the company.
- It can be difficult to qualify: Startups would need to present a business plan. Then, the business plan will be scrutinized by the Venture Capitalists. This may take some time. Thereafter, the founder will be invited for an interview, to further discuss the business. If the VC finds the business presentation as something to go with, they will make further scrutiny of the business plan.
If the outcome of the diligent scrutiny is satisfactory, then, they will go ahead with funding. This is a long process.
Top 10 Venture Capital Firms in Nigeria
1. Future Africa
Future Africa partners with mission-driven innovators turning the continent’s most difficult challenges into global business opportunities. Future Africa is primarily focused on investments in the technology, media, and infrastructure spaces.
Future Africa since 2015 has been instrumental in the founding, funding, and building of many of Africa’s fastest-growing startups – from Andela and Flutterwave to Jumia, Kobo360, and 54gene amongst several others.
The mission of EchoVC is to be the Sequoia Capital for underestimated founders and markets. They have offices in Africa, the US, and the UK. The current portfolio of Echo VC comprises companies delivering value in the following sectors: Smart Planet, Health and Human Services, Emerging Fintech, The Next Frontier, Commerce, Media & Entertainment, Access to Energy, Sustainable Mobility, and Connectivity, among other themes.
3. Ventures Platform
Ventures Platform partners with entrepreneurs building early-stage companies in the following verticals;
- Financial Services and Insurance
- Life Science and Health Tech
- Edtech and Digital talent accelerators
- Enterprise SaaS
- Digital Infrastructure Plays
- AgriTech and Food security
Ventures Platform has invested in more than 30 companies in these verticals.
4. Greentree Investment Company
Greentree Investment Company provides entrepreneurs in their portfolio the following:
- Access to funding
- Governance structure
- Simple financial planning
- Technical support
- Legal advice
Some of the businesses in Greentree Investment Company’s portfolio include Paystack, Big Cabal Media, Precurio, and many others.
5. TLcom Capital
Since 1999, TLcom Capital has demonstrated support for innovative entrepreneurs that leverage technology to find market solutions to significant challenges. Beyond the provision of capital, TLCom also provides strategic, operational, and financial support in designing and executing superior business models in large markets. Some of the businesses in TLCom Capital include Andela, Ilara Health, Kobo, Twiga, etc.
6. Growth Capital Fund
Growth Capital is Nigeria’s first social innovation fund aimed at creating an unprecedented path to scale for outliers driving social change in Nigeria. Growth Capital support high potential, early-stage businesses building our next generation infrastructure using technology.
Digital Infrastructure companies in their portfolio include Taeillo, Edges, Riby, LifeBank, Delivery Science, and DrugStoc.
Microtraction funds smart, relentlessly resourceful founders who are building high-growth, technology-driven businesses in $Bn markets. Microtraction is geographically focused on Nigeria. Businesses in the portfolio of Microtraction include Cowrywise, wallet.ng, schoolable, Buycoins, Accounteer, Thankucash, Riby, etc.
8. Unique Venture Capital
Unique Venture Capital Management Company Limited, is an SME-focused private venture capital investment firm established in 2004 by 5 major Nigerian banks. UVC was primarily conceived to manage, amongst other funds, the funds set aside by its owner institutions under the Nigerian SMEEIS scheme, and the application of the fund is strictly in adherence to the SMEEIS guidelines.
In January 2009 UVC was adjudged the best venture capital company in Nigeria for 2007 by the Central Bank of Nigeria. From over 700 bids worldwide, through a rigorous process, UVC was selected by the World Bank/IFC as the Fund Manager for the IFC SME West African Ventures for Liberia and Sierra Leone.
9. GreenHouse Capital
GreenHouse Capital is a Fintech investment company in Africa. GreenHouse Capital invests capital and specialized expertise into companies that they believe are building the financial services that will power Africa’s economic future.
GreenHouse Capital GreenHouse Capital is the investment arm of Venture Garden Group(VGG) – a leading provider of innovative, data-driven, end-to-end technology platforms addressing reconciliation and payment processing inefficiencies across multiple sectors of the African economy.
10. Lead Path Nigeria
LeadPath Nigeria is a seed capital fund that specializes in providing short, medium, and long-term funding to small and medium-sized start-up businesses in high-growth technology areas such as software, web, and mobile technologies. Leadpath capital also focuses on providing technology entrepreneurs with the required mentorship and enabling environment.
The companies in the Leadpath capital portfolio include Piggyvest, Paystack, teamapt, PushCV, Mono, and Gloopro.
Take advantage of these Venture Capitalists to fund your startup, to give it the expansion it needs to compete with other businesses in the global world. Also, you can apply as an investor to make your money safe and work for you.