A beginner's guide to starting a technology startup in Nigeria
Now that you have decided on the idea you want to work on, here are some useful tips on getting started:
Getting a co-founder
There is tons of resources online on why you need a co-founder for your business, it is important to keep in mind that it’s like a marriage. Founder breakups are hellish, you can lose your company and you should avoid such outcomes for your business as much as possible.
Your co-founder should be someone you have a history of working with, communicate in the same manner, trust each other, are aligned on the problem being solved as well as the direction of the company. You should spend as much time as possible researching, discussing and agreeing on founder roles and all options before heading into the relationship.
The working relationship of the founders is much more important than the idea.
Incorporating your business
If you plan on raising capital from foreign investors, it is advisable to incorporate your business in a jurisdiction where your potential investors are comfortable investing in.
Non familiarity with Nigerian laws are an important concern for investors as they often times do not have the legal bandwidth or patience for litigation should there be a cause for any in the future.
How to get your first check
For a first time founder the easiest way to get funded might be to talk to friends, family, previous colleagues or employers. Ideally, they should be people who trust your judgement but also won’t be too hurt economically if they lose some or most of the money that they are investing in you.
Outside that, there are seed funds and angels dedicated to investing in early stage founders: Microtraction, Hacked Capital, Ventures Platform, Olumide Shoyombo, Y Combinator, Pacific Vanguard, Maya Horgan Famodu, Samurai Incubate, Future Africa, Greenhouse Capital to name a few.
An easy way to get connected to these investors is to ask for intros or recommendations from founders that they have already invested in.
Do you need an accelerator?
A good accelerator typically runs batches annually or bi-annually (active), invests some capital (skin in the game) and in addition to having some great partners also helps your company out with some of the above.
Often times accelerators operate as a seed fund program. For first time founders, an accelerator can help you figure out incorporation, how to pitch your startup, fundraising, building out a deck, finding product market fit and legal quicker than going through the journey by yourself, there’s a couple accelerators that have helped local founders:
Y Combinator, 500 Startups, Techstars, Launch Academy are all great options to consider.
Incubators are often used interchangeably with accelerators, firms that describe themselves as incubators often tend to also do some venture building with the founders. They are usually the first office space, accountant, legal and check for the founders they bring onboard.
Ventures Platform, Baobab Network, DFS Lab, MEST, Accion Venture Labs are all good examples. There is more reading material on accelerators and incubators here.
How to charge for your product?
Ideally you should charge a fee or commission that nets the unit cost of making and selling that product by a significant percentage. If you operate in a segment where your product is better than that of the competition, you should consider charging slightly higher.
What to spend money on
If you don’t have an MVP, the best thing to invest money on is getting your product out to users as quickly as possible, it’s best to pay for resources that help do this fast.
If you have launched, you should be spending money on improving and distributing the product.
You are an exceptional individual and have most likely not being in a position where you are responsible for managing a team of teams. The slower you wait to hire the less people debt you acquire.
When it’s time to hire, hire people that solve a clear need within the organisation, the clearer the needs they solve the easier it is to measure their performances.
Outsource things that are not core.