Top Venture Capital Firms in Nigeria 2024

Top Venture Capital Firms in Nigeria 2024

Top Venture Capital Firms in Nigeria

Many people wonder if there are venture capital firms in Nigeria, and the answer is a resounding yes. With tech enthusiasts like Oui Capital and Afro-centered ventures like Venture Platforms, these growth accelerators are well-prepared to support your next groundbreaking idea.

Despite a recent decline in global Fintech investments over the past two years, there remain active VCs that actively seek promising startups or existing businesses that bring a fresh perspective to the field. Notably, Piggyvest raised $1.1 million in 2018, and Moniepoint amassed $50 million in 2021, offering hope to aspiring entrepreneurs.

At the end of this article, you will grasp the concept of venture capitalism and be better equipped to identify the firm that aligns most effectively with your business. We dived deeper into:

  1. The significance of venture capitalism.
  2. The top 10 venture capitalists showing interest in Nigerian fintechs.
  3. The preferred stages for investment by these firms.

What is Venture Capitalism in simple terms?

Venture capitalism is the process of investing money into a business that promises high growth potential.

Venture capitalists are the individuals who provide not only investment funds but also business expertise, access to their network, and other related and helpful actions that can lead to the absolute success of the business.

They have a hands-on approach to the business and work closely together with the founders to ensure the business yields the profits they know it can.

What’s the difference between a Venture Capitalist and an Angel Investor?

Venture Capitalist Angel Investor
Stage of InvestmentVenture capitalists typically invest at a slightly later stage of a startup’s development. They often look for companies that have already proven their concept, gained some traction in the market, and are ready to scale up.Angel investors, on the other hand, tend to invest at the very early stages of a startup. They might provide the initial funding that a startup needs to develop its product, create a prototype, or get the business off the ground. 
Investment AmountVenture capitalists typically invest larger amounts of money, sometimes in the millions of dollars. They often pool money from various sources to create a fund for investing in multiple startups.Angel investors usually invest their own money, and their investments are generally in the tens of thousands to a few hundred thousand dollars range.
Involvement and ExpertiseVenture capitalists often take a more hands-on approach to their investments. They might take a seat on the company’s board of directors, provide strategic guidance, and offer industry connections to help the startup grow.Angel investors can be hands-on or hands-off, depending on the individual. Some angel investors are content with just providing funding, while others might also offer mentorship and advice.
Source of FundsVenture capital funds are usually pooled from various sources, such as institutional investors, pension funds, and wealthy individuals. They manage these funds and invest them in multiple startups.Angel investors invest their personal money, which means they are using their own savings or wealth to support startups.
Level of Formality Venture capital firms are formal investment entities with structured processes and teams of professionals who manage investments.Angel investors can be individuals who invest on their own accord, often based on their personal interests, experiences, and connections.

Pros and cons of Venture Capitalism?

Pros of Venture Capitalism for Fintech Startups

1. Access to Capital for Growth

 Undoubtedly the biggest reason, venture capitalists can provide substantial funding to help your FinTech grow quickly. This infusion of capital can be used to develop technology, hire skilled professionals, and expand operations.

In 2022, Flutterwave raised $170 million in a Series C funding round led by Avenir Growth Capital and Tiger Global. This investment allowed Flutterwave to expand its payments platform across Africa.

2. Expertise and Industry Connections

 Venture capitalists often have a wealth of experience in the business world and can often offer valuable guidance and mentorship to startups. They also have extensive networks that can help startups form partnerships and collaborations.

 Paystack, a Nigerian payments processing company, was acquired by Stripe, a global FinTech giant. Stripe’s investment and expertise helped Paystack scale its operations and strengthen its position in the market.

3. Validation and Credibility

Securing funding from reputable venture capitalists can enhance a FinTech startup’s credibility. It serves as a validation of the startup’s potential and can attract more customers and partners.

>>> Read More: Top 10 Fintech Apps in Nigeria by Customer Reviews 2024

Cons of Venture Capitalism for Fintech Startups

1. Loss of Control and Ownership

Venture capitalists usually require equity in return for their investment, which means giving up a portion of ownership and control over the company. This could lead to decision-making conflicts in the future.

In the case of Andela, changes in business strategy led to the laying off of developers. Some investors disagreed with this move, highlighting the potential clash between founders’ vision and investor interests.

 2. Pressure for Rapid Growth and Exit

Venture capitalists often expect a high return on their investment within a relatively short time frame. This can put immense pressure on startups to achieve rapid growth and potentially pursue an exit through acquisition or going public.

Jumia faced challenges after its IPO on the New York Stock Exchange. It encountered criticism for its growth strategies and financial performance, reflecting the pressures of being a publicly traded company.

 3. Risk of Misalignment with Vision

Fintech startups may experience misalignment with venture capitalists in terms of long-term vision and goals. Investors seeking quick profits might push for decisions that prioritize short-term gains over the startup’s mission.

Konga went through a change in ownership after financial difficulties. The new investors restructured the company, leading to changes in strategy that affected Konga’s original vision.

Now that you’ve considered the pros and cons of bringing a venture capitalist into your business journey, let’s delve into the top venture capital firms that invest in Nigerian FinTechs.

Top 10 FinTech Venture Capital Firms Investing in Nigeria

Company NameHQ Location Notable Investments in Nigeria
Venture PlatformAbuja, NigeriaLagos, Nigeria.
EchoVc PartnersLake Oswego OregonOctamile, FinAccess and Ponto
MicrotractionLagos, NigeriaNestcoin, Cowrywise, and Payday
NovastarLondon, Nigeria Moniepoint,Komaza and Max.Ng
Oui CapitalNairobi, KenyaNestcoin, Cowrywise, and Payday
500 GlobalSan Francisco CaliforniaThriveagric, Flex Finance, Ez store
SequoiaMenlo Park California Opay
Village CapitalWashington United StatesYouVerify, Piggyvest
BIILondon, Nigeria Moniepoint, Azura and Rack Centre
CchubLagos, Nigeria Payday, Oneport and Shuttlers

Venture Platform

VC Firms - Venture Platform

Founded in 2016, Venture Platform is a discovery fund that invests early in mission-driven founders building capital-efficient platforms that democratize prosperity, plug infrastructural gaps, connect underrepresented communities, solve for non-consumption, and improve livelihoods in Africa.

They invest from pre-seed to Series A and across several sectors and are bullish on Financial Services and Insurance, Life Science and Health tech, Edtech and Digital Talent Accelerators, Enterprise SaaS, Digital Infrastructure Plays, Agri-Tech and Food Security.

  • Industries focusing on FinTech, software, health, and transportation
  • Stages: seed, early VC and grant
  • Number of Nigerian FinTechs in portfolio: 21

Apply for funding

EchoVc Partners

VC Firms - EchoVc Partners

EchoVc’s mission is to be the Sequoia Capital for underestimated founders and markets.

Founded in 2011, the firm finances entrepreneurial inspiration in diverse founding teams.  They are a VC fund unapologetically investing in women, underrepresented founders (particularly of African descent), and underserved POC markets, backing bold ideas and business models that harness the power of technology to deliver value to mass markets.

  • Industries focusing on:  Smart Planet, Health and Human Services, Emerging Fintech, 
  • Stages: seed, series A, series B
  • Number of Nigerian FinTechs in portfolio: 4

Apply for funding 

Microtraction

VC Firms - Microtraction

Microtraction is an early-stage venture capital firm that invests in African startups at the pre-seed stage. We prefer to be the first check for Africa’s most ambitious and remarkable founders, investing $100,000 for 7% in their businesses.

Microtraction was started in 2017 by Yele Bademosi and Kwamena Afful to bridge the funding gap by providing early financial support and mentorship for entrepreneurs.

The first fund (Fund I) was a proof of concept where the team invested and backed young founders during a time when no other funds were writing checks to young entrepreneurs starting companies.

Microtraction’s Community Fund (Fund II) is focused on providing a community of champions to support its portfolio companies in growing their businesses. 

This community is a mix of other venture-backed founders solving similar problems worldwide, leading investors, GPs, and LPs with subject matter expertise in different sectors backing similar companies all over the world.

  • Number of Nigerian FinTechs in portfolio: 10

Apply for funding

Novastar

VC Firms - Novastar

Novaster was founded to join and fuel an entrepreneurial revolution that is transforming markets and sectors in Africa.

Since 2014, they have aimed to create lasting value for the many, not just the few, for people and the planet – for good.

Working from the vibrant centres of Lagos, London, and Nairobi they partner with bold entrepreneurs forging solutions to the continent’s biggest problems.

  • Industries focusing on FinTech, health, energy, and food. 
  • Stages: series A, early VC, seed 
  • Number of Nigerian FinTechs in portfolio: 1

Apply for funding 

Oui Capital 

VC Firms - Oui Capital

Building a technology company in Africa requires focus, and Oui Capital reflects that in its investment approach. Founded as a firm in 2018, they make a select number of investments driven by both their conviction and their ability to add value.

  • Industries focusing on E-commerce/Logistics, Fintech, Health Tech/ Edtech 
  • Stages: seed, early VC, convertible
  • Number of Nigerian FinTechs in portfolio: 3

Apply for funding 

500 Global 

VC Firms - 500 Global

500 Global is a venture capital firm with $2.5 billion in assets under management that invests in founders building fast-growing technology companies. They focus on markets where technology, innovation, and capital can unlock long-term value and drive economic growth.

Since 2010, they have worked closely with key stakeholders and advised governments and corporations on how best to support entrepreneurial ecosystems so startups can thrive. 500 Global has backed over 5,000 founders representing more than 2,700 companies operating in 81 countries. Their portfolio includes 45+ companies valued at over $1 billion and 150+ companies valued at over $100 million. Our 180+ plus team members are located in 27 countries and bring experience as entrepreneurs, investors, and operators from some of the world’s leading technology companies.

  • Industries focus: Fintech, enterprise, software, marketing, and media
  • Stages: seed, series A
  • Number of Nigerian FinTechs in portfolio: 6

Apply for funding

Sequoia

VC Firms - Sequoia

From its start in 1972, Sequoia has ensured that when its founders win, so do great causes. Sequoia invests primarily on behalf of nonprofits and schools, with organizations such as the Ford Foundation and Boston Children’s Hospital forming most of their limited partner base.

  • Industries focus:  software, FinTech, health, media
  • Stages: series A, series B, series C
  • Number of Nigerian FinTechs in portfolio: 1

Village Capital 

VC Firms - Village Capital

At Village Capital, they fuel the growth of sustainable and impactful businesses by unlocking capital for early-stage entrepreneurs who are building emergent solutions for social, economic, and environmental challenges around the world.

Established in 2009, their mission is to reinvent the system to back the entrepreneurs of the future. Their vision is a future where business builds equity and long-term prosperity.

  • Industries focus:  Fintech, education, job recruitment and health
  • Stages: seed, grant, early VC, series A
  • Number of Nigerian FinTechs in portfolio: 1

Apply for funding 

British International Investment (BII)

VC Firms - BII

Established in 1948, BII has stood as the UK’s development finance institution.

They have been at the forefront of supporting companies that help developing and emerging countries grow for the last 70 years.

As a development finance institution and impact investor, they measure success in two ways. First, we look at whether the businesses in which they invest can make a positive economic, environmental or social impact. Second, they look at how commercially sustainable and successful a business can be.

  • Industries: Energy, FinTech, food, and health.
  • Stages: late VC, series B, debt, early VC
  • Number of Nigerian FinTechs in portfolio: 1

Apply for funding 

CoCreation Hub (Cchub)

VC Firms - CcHub

CcHUB is Nigeria’s first open living lab and pre-incubation space designed to be a multi-functional, multi-purpose space where work to catalyze creative social tech ventures take place.

The HUB is a place for technologists, social entrepreneurs, government, tech companies, impact investors and hackers in and around Lagos to co-create new solutions to the many social problems in Nigeria.

Founded in 2010, they are an innovation centre dedicated to accelerating the application of social capital and technology for economic prosperity. At CcHUB they constantly seek out individuals or teams with good ideas that can potentially solve social challenges in Nigeria and beyond.

  • Industries: FinTech, transportation, health, and job recruiting.
  • Number of Nigerian FinTechs in portfolio: 7

Apply for funding

Stages of VC Investments 

Venture capital investment plays a pivotal role in fostering the growth of fintech startups. As an aspiring entrepreneur in the financial technology sector, understanding the nuances of different investment stages is essential. Here, we’ll break down the various stages, from seed to late-stage venture capital, along with other significant investment terms.

Pre-Seed

Pre-seed funding refers to the initial investment capital provided to entrepreneurs and startup founders at the very outset of their business ventures. This stage precedes traditional seed funding and typically occurs when a business idea is still in its conceptual or embryonic stage, often before the development of a minimum viable product (MVP).

Pre-seed funding serves as the financial catalyst to help entrepreneurs transform their ideas into tangible businesses. It can be used for market research, product development, proof of concept, and other early-stage activities necessary to validate the business concept. Investors in pre-seed funding rounds may include angel investors, friends and family, or early-stage venture capitalists.

Unlike later-stage funding rounds, pre-seed funding is characterized by its focus on supporting the ideation and initial development phases. It provides startups with the financial resources required to refine their business models and create a solid foundation for future growth.

Seed

At the seed stage, your fintech concept is in its infancy. This phase involves securing initial capital to transform your idea into a tangible product or service. Seed investors, often comprising family, friends, or angel investors, provide the necessary funding to initiate development and conduct preliminary testing.

Series A

As your fintech venture gains momentum, you’ll seek further investment in the series A stage. This stage signifies the transition from concept to product development. Venture capitalists, both early-stage (early VC) and those specializing in series A funding recognize your startup’s potential and contribute substantial funding. This infusion of capital aids in refining your product, building a customer base, and gaining a foothold in the market.

Series B

With a viable product in the market, the series B stage marks a critical juncture. Here, investors inject capital to support expansion and innovation. As your fintech solution gains user traction and demonstrates value, venture capitalists step in to fuel growth. This stage often involves developing additional features, exploring new markets, and consolidating your position as a prominent player.

Late VC

As your fintech company achieves significant growth and a solid revenue stream, late-stage venture capital becomes relevant. These investors, often part of series C and beyond, recognize your startup’s scalability and sustainability. Their contributions facilitate large-scale expansion, strategic partnerships, and potential global reach.

Grant

Grants are financial allocations bestowed upon startups by institutions, governmental bodies, or foundations that align with your fintech’s objectives. Securing grants underscores the societal impact and innovation potential of your solution. These funds often serve to bolster research, development, and initiatives aligned with your fintech’s mission.

Debt financing 

Debt financing involves borrowing capital that necessitates repayment over a specified period, usually with interest. In the context of fintech, debt can be acquired from various sources, such as banks or private lenders. It offers an alternative to equity financing and is particularly useful for expansion initiatives, infrastructure investments, or other strategic pursuits.

>>> Read More: Top 10 Investment Banks in Nigeria 2024

Why should VC be interested in the Nigerian FinTech Industry

Nigeria remains a developing country brimming with untapped potential. If you’re an investor considering a startup investment, it’s prudent to reflect on Nigeria’s expansive fintech space for the following reasons:

1. Large Unbanked and Underbanked Population

Nigeria has a substantial portion of its population that remains unbanked or underbanked, meaning they lack access to traditional banking services. Fintech startups are addressing this gap by providing digital financial solutions that are accessible through smartphones. This vast untapped market represents a significant opportunity for FinTech companies to grow and make a positive impact on financial inclusion.

2. Mobile Penetration and Tech-savvy Population

Nigeria has one of the highest mobile phone penetration rates in Africa. The widespread use of smartphones, even in remote areas, creates a conducive environment for the adoption of mobile-based financial services. The population’s familiarity with technology makes it easier for FinTech startups to introduce and promote their solutions.

3. Innovative Solutions Addressing Local Needs

Nigerian FinTech startups are developing innovative solutions that cater to local needs and challenges. From mobile payment platforms like Moniepoint and digital lending (Branch) to savings platforms (Piggyvest) and insurance products, these startups are tailoring their offerings to address specific pain points within the Nigerian context. This relevancy increases the likelihood of adoption and growth.

4. Regulatory Support and Framework

Nigerian regulators have shown a willingness to collaborate with FinTech companies to develop a regulatory environment that encourages innovation while ensuring consumer protection and financial stability. The Central Bank of Nigeria, for instance, has introduced policies that support digital payments and financial inclusion, providing a conducive backdrop for FinTech growth. Read more about Nigerian Fintech Regulations here.

5. Youthful Demographics and Consumer Behavior

Nigeria has a youthful population with a high percentage of digitally savvy individuals. This demographic is more inclined to adopt new technologies and embrace digital financial services, creating a strong foundation for FinTech growth.

With these points, you can see that Nigeria’s FinTech space is a strong contender for VC interest and funding due to its large untapped market, mobile penetration, regulatory support, demonstrated successes, investor confidence, and the ability of FinTech startups to address local needs effectively. These factors collectively contribute to a dynamic and promising ecosystem that offers significant potential for innovation and investment returns.

FAQ’s

How do venture capitalists make their money?

Venture capitalists make their money through a process called “exit.” They invest in early-stage companies with the hope that these companies will grow and become successful. Once the invested companies mature, they can be sold or go public (through an IPO), providing the venture capitalists with a significant return on their investment. This profit comes from the increased value of the company over time.

Who are the largest VCs in Africa?

Some of the largest venture capital firms in Africa include Partech Africa, TLcom Capital, and Naspers Foundry. These firms focus on investing in startups across the continent and contribute significantly to the growth of the African tech ecosystem.

Who is the largest venture capital firm?

This can vary depending on different metrics like assets under management or the number of investments. However, some of the globally renowned and significant venture capital firms include Sequoia Capital, BII, and 500 Global. These firms have played a crucial role in supporting the growth of numerous successful startups worldwide.

Choosing The Right VC

As a FinTech founder aiming to attract new and promising investments, it’s crucial to clearly explain the value your venture offers. Making sure your proposal is easy to understand is equally important. For you as a founder, it’s smart to think beyond just starting up. There’s a lot of potential for growth and trying out new things, like Moniepoint and Opay did when they were starting.

Final Thoughts

In Nigeria, the world of Venture Capital is picking up speed and getting more attention. This guide has given you a glimpse into how to start a venture capital firm here and shows you some startups that got help from venture capitalists. Making a venture capital firm work means following the rules set by groups like the Securities and Exchange Commission (SEC) and meeting their requirements.

If you want things to go smoothly with your startup and investment plans, it’s a good idea to get help from a trustworthy law firm. They can guide you through the process and make sure you’re doing things the right way.

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