How to Position Your Nigerian Startup for VC Funding
Perhaps your startup business model is not necessarily based on acquisition, but hey, who doesn’t want to get acquired by a huge company? I’d be glad to get the scoop first:-)
Of course, startups can still succeed with business models such as selling advertising, affiliates programs, charging a subscription fee, launching a product, licensing software, etc, but what about startups that don’t have a revenue generating business model such as twitter and seesmic that keep getting funding?
I won’t go into all the details and specifics of the various ways that startups could get funding such as personal funding, angel investors, incubators and venture capitalists. But there are a few things to consider when positioning your startup for funding or an acquisition. (Note: I’m not suggesting acquisition as a business model that startups should build their sites around).
Here are a few suggestions:
1. If you want to start a Nigerian online job recruitment site, for instance, think about huge online recruitment companies such as CareerBuilder.com who would naturally have an interest in acquiring your site in order to expand their businesses, especially if they are keen on emerging markets.
2. Once you identify companies that may be interested in your site, you could develop products and services that have a strategic fit with the overall business line of that company. Perhaps they haven’t yet exploited opportunities and services that your site is already providing or offering. This is more reason for that company to be interested in your startup.
3. Research to learn about what kind of startups they have funded or acquired in the past and for what reasons? Although the purchase price may be undisclosed, you could understand the acquisition strategy of that company from the reasons they provide on their press release for such an acquisition or funding.
4. If you have a startup and you are waiting for sponsorship, you might wait forever. Investors would naturally want to see a “business” in a startup first before making a move. They’ll want to know what kind of return they would expect on their investments, if they must invest in your startup. So develop a revenue generating business model such as advertising and affiliates in order to jumpstart your startup.
5. Search the market industry for competitors. If your startup must be acquired or funded, look around you to see what sites might also qualify for VC funding or an acquisition and strive to be unique with your unique product or service offering. Ask yourself: Is the site be a complementary service or a competitor?
What other suggestions can you contribute to the community?
The best approach to building a sustainable enterprise that creates long-term value for its founders and investors is to identify customer needs and provide unique solutions. Companies that are built to be acquired seldom do well (as financial investments) for the following reasons:
* The target acquirer may fill the “white space” through internal development before the startup has gained traction
* A short-term focus on being acquired often results in the company not making the investments required to scale
* Companies are bought not sold. Acquirers will pay more for a company that can credibly say that it is not interested in being acquired because it has the ability to grow into a large company on its own
Has any Nigeria Startup been funded or Acquired?
@YL - Thanks for those great tips and your contribution to the community here.
@Richard - None that I know of, but if there’s any news, you’ll get the scoop here first;-)
Without putting a focus on startup internet companies. I would say HITV the new pay tv service was funded and maybe acquired by an astute venture capitalist. They fit the criteria for a startup by a standards.
Another comment is thay startups need to realise that throughout history the only thing that attracts capital is a reputation and the only way to build a reputation is through valuable work for customers, employees and stakeholders.
As infant as this ideas seems, well I think they are really great. It’s about time Nigerian 21st century entrepreneurs began to think in this line and the Big Organization too should start using this as a means to expand their businesses, I’m sure many of them can learn from Google Inc. and Yahoo Inc.
Great post!
Cheers!
@Dayo - First off, I love your site. I agree with you about building reputation for attracting capital investment. Not sure about an acquisition of HiTV, but will find out.
@Edundayo - You know what? You’re always speaking my mind…
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