Angel investing is one of the best sources for startups to attract funding for their business ideas. They are usually the first formal investors in a business and provide the seed money to get the business up and running. Unfortunately, most people have no idea where to find and how to connect with angel investors in Nigeria. A lot of people don’t even know that angel investors exist. In this article, we will look at who they are and 5 best, surest places to find angel investors who are willing to fund your startup idea.
First, what is an angel investor? In simple language, an angel investor is someone who has enough money and is willing to invest in your business idea in exchange for some ownership equity (they own part of the business). It sounds very simple but before you rush off to the next rich person you see and toss your business plan at them, you need to understand what angel investors care about so that you know how to make your pitch. Here 5 major things angel investors look out for in any business:
- The quality, passion, commitment, and integrity of the founders.
- A very clear plan of how the money will be used, what equity you are willing to part with or how the money will be paid back.
- The market opportunity being addressed and the potential for the company to grow
- An appropriate valuation with reasonable terms.
- The viability of raising additional rounds of financing if progress is made.
To approach angel investors for funding, you need to make sure you have a few things in place:
- A registered business name: you need to show that you are serious about what you want to do. Having a registered business name lets people take you and your business seriously. It might cost you a little to get registered but it is a worthy investment in building your business.
- Read also: How to register your business name with the CAC
- Read also: How to write a winning business proposal
- Have a detailed business plan: You need to show an overall long term viability of the business you are asking someone to invest in. The more detailed your business plan is, the better. Read this article if you are not sure how to write a business plan
- A winning business proposal: in an earlier article, I outlined the difference between a business proposal and a business plan. When you locate an angel investor, the time might be insufficient for you to stand and make your pitch. So you create a stunning business proposal and forward to them. Your business proposal should do enough to get the person interested and willing to meet you. Here is a detailed guide on how to write a winning business proposal.
- Protect yourself: angel investors are not angels; they are simply investors – business people. You need to keep this in mind and protect yourself. Consult a legal practitioner and find out the best ways to keep your idea from getting stolen.
- Be clear about your terms: A lot of Nigerians want to answer Okeke & Sons Ltd. The idea of someone else owning a part of their business makes them feel uncomfortable. Angel investing is actually a win-win for both parties because no matter how amazing your business idea is, you need the money to make it fly. Yet, the mind thinks what the mind thinks, right? So, make sure that your terms are spelled out right off the bat. If you are not willing to part with some equity, be clear about it and opt for repayment.
5 best places to find angel investors in Nigeria
Here are 5 best places to find angel in investors in Nigeria who would be willing to invest in your idea.
1. Family and friends
While family and friends are the best angel investors on the planet, they have some major downsides as well. The good thing is, they already know you enough to determine if you are worth investing in without any references or bottlenecks. The major downside is that it is very difficult to mix business and personal relationships.
As we know, only one in 10 startups is successful. So, there are very high odds you lose all the money invested by your closest friends and family, which will make for VERY awkward Thanksgiving dinners from that point on. So, if you decide to ultimately go down this road (which for many startups are their only option), make sure your friends and family know this investment is HIGHLY risky, and they should not invest the funds unless they are prepared to lose 100% of their investment (e.g., like money they would gamble in a casino) – George Debb writing for Forbes
2. Religious/Social organizations
You could meet someone in your religious or social organization and make your pitch. For instance, as a Rotarian, I could approach any fellow Rotarian who has enough money and make my pitch to them. It does not mean they must give me money but, as part of their family, they will give me a good hearing and offer me any assistance they are able to.If they are involved in the same market sector I am interested in, it makes things a lot easier.
You must remember, while this is one of the best places to find angel investors, joining a religious/social network just to take advantage of their good spirit for your selfish purpose is wrong. Don’t start going to church because you hear that VP Osibanjo attends RCCG and you want to exploit that. These organizations are avenues for genuine selfless service not for selfish exploitation. You will ultimately by found out anyway.
3. Social media/forums
The internet has made the world one big global village. The business section of Nairaland.com is a good place to post your business idea and call for investors. Many people have gotten a level of success this way. There are other forums like it. Social media networks like Twitter and LinkedIn are also good avenues to meet people, get to know them and tell them about your business idea. Remember not to be spammy about it. You must act like a professional if you want to be treated as one. Everyone on social media is a real person, not a friendly robot. You must treat them as real people, with all courtesy and professionalism.
4. Angel networks
Unfortunately, there are little to none angel networks in Nigeria so this option might be a little out of reach. However, I did come across this website and they look very OK to me. So, check them out and see if anything comes up. Remember to be a professional. Here is the link: https://angel.co/nigeria. Recently, other angel networks have come up all across Africa. Here is another article on 5 Angel Investor and VC networks willing to invest in African startups. Freddie Achom is Nigerian Investor based in the UK. You can read about him and how to approach him with your startup idea in this interview.
5. Seminars and workshops
Seminars and workshops are held from time to time with industry experts in attendance. These gatherings discuss tips on how to leverage latest trends and technology or how to exploit new business opportunities.
While some seminars and workshops are targeted at players in specific industries, others are relevant to a large, mixed audience. If you think a seminar will most likely attract angel investors, chances are high that it really will. So, try to attending such seminars (even if you don’t meet an investor, you still would have learned some important things). Source
Conclusion: When building your business, angel investors are among the best sources for business capital sourcing. There are other places to find angel investors – I only listed the surest among them. Be creative. Take every opportunity and remember that victory loves preparation. Cheers!