As an entrepreneur, raising capital for your business can be a daunting task, especially in Nigeria where access to funding can be challenging. However, with the right strategies, it is possible to secure the financing you need to start or grow your business. In this article, we will explore some effective ways to raise capital for your business.
5 Ways to Raise Capital for Your Business
- Bootstrapping
One of the most common ways to raise capital is through bootstrapping. This involves using your own savings or personal funds (or funds from family and friends) to finance your business. According to Mr. Dennis Ezaga, Head, Business Banking FSDH Merchant Bank, bootstrapping is common with early-stage startups. Examples of some Nigerian entrepreneurs who bootstrapped at the inception of their business include Akin Alabi, founder of Nairabet, Damilola Olokesusi, founder of Shuttlers, Mark Essien, CEO of Hotels.ng, and many others.
- Crowdfunding
Crowdfunding is another option for raising capital, and it has become increasingly popular in Nigeria in recent years. Crowdfunding involves using online platforms to raise funds from a large number of people. Some crowdfunding platforms for Nigerian entrepreneurs include Kickstarter, GoFundMe, Indiegogo, etc.
- Angel investors
Angel investors are high net worth individuals who invest their own money in early-stage businesses in exchange for equity. They often provide mentorship and guidance to help the business succeed. A few years ago, leading Nigerian entrepreneur, Jason Njoku, the founder of iROKOtv, raised $21 million in funding from a group of angel investors, including Tiger Global, Kinnevik,Groupon and Rise Capital. Other angel investors in Nigeria include African Business Angel Network, Lagos Angel Network, etc.
- Venture capital
Venture capital firms provide funding to early-stage businesses in exchange for equity. They typically invest in businesses with high growth potential and a strong management team.
The current Nigerian tech ecosystem is built on the strength of venture capital funds. Some of these venture capital firms in Nigeria include: Future Africa, Ingressive Capital, EchoVC Partners, Greentree Investment Africa, Knight Ventures, amongst others.
An instance of how venture capital firms have benefited the tech ecosystem can be drawn from Nigerian fintech company, Paystack. In 2018, Paystack raised $8 million in a Series A funding round led by Stripe, a US-based payment processing company, and joined by Visa, Tencent, and YCombinator.
- Bank loans
Bank loans are a traditional way to raise capital, although they can be difficult to obtain in Nigeria. Usually, a business with revenue can approach a financial institution and get a collateralized loan facility from a bank. As a business grows and achieves scale, there is a need for capital injection and bank loans are a sure way to get the required funds.
As a supporter of growing businesses, FSDH Merchant Bank prioritizes your business, and we are ready to assist you through the step-by-step process involved in acquiring such loans.
FSDH Merchant Bank offers a range of innovative services, tailored to help you raise capital for your business- whether you’re looking for seed capital, growth capital, or project financing, we can help you find the right investors and secure the funds you need to take your business to the next level.
In conclusion, raising capital is essential for any business to grow and succeed. Whether you’re just starting out or looking to expand, there are many options available to you, FSDH can help you navigate the complex world of fundraising and find the right investors to help you achieve your goals.
To contact us, please visit https://fsdhmerchantbank.com or call 234-1-2702880.
