10 Startup Incubators for Nigerian Entrepreneurs

Lagos, Nigeria, has emerged as the capital of startup culture in West Africa and as one of the primary hubs for entrepreneurship on the continent. As this entrepreneurial culture continues to develop, several incubators and accelerators have appeared in Nigeria. These organizations provide entrepreneurs with vital seed funding, connect them to people who can offer additional resources, and provide the mentorship necessary to launch more tech companies on the scene.

Many of the most notable startups in Nigeria have passed through accelerators, which tend to create self-sustaining ecosystems. The more successful these startups are, the more entrepreneurs their sponsoring accelerator can support in the future. The following are some of the most notable accelerators operating in Nigeria today.

88mph

Through a partnership with Google for Entrepreneurs, 88mph has backed several of the most notable South African startups, including Ekaya, ApexPeak, and GraphFlow. While the organization started in South Africa, it has since expanded operations to Lagos. Fellows of 88mph have had incredible success securing funding from third-party investors as well. In addition, Microsoft Ventures has partnered with the organization through its 4Afrika initiative, which will help connect participants to the best tools and industry-leading experts as they develop their products and services.

Most recently, 88mph started a sprint development initiative known as DealWeek, which connects mobile-focused startups with mentors and investors.

440.ng

Born from a partnership between 88mph and L5Lab, 440.ng is looking to invest $1.5 million in Nigerian mobile and Internet startups. The program provided support for a number of notable companies in its first round of investments, including Gingerbox and FuelVoucher.

The 440.ng program consists of 12 weeks of guided product development and customer acquisition support, as well as hands-on training and mentorship. One of the major focuses of the program is the development of market strategies for maintaining the viability of a company.

SPARK

Since its inception, this accelerator has raised millions of dollars to support a portfolio consisting of 12 startups. The accelerator offers investments ranging from $50,000 to $150,000 and has a track record of helping underdog startups come out on top. For example, SPARK supports Hotels.ng, which has secured a significant portion of the market share, despite having a more established competitor that has secured more funding.

Passion Incubator

One of the newer accelerators in Nigeria, Passion Incubator offers a three-month program for entrepreneurs. Each round allows five startups to participate in an intensive course focused on business growth and development. Despite its newness to the scene, the organization has had great success with its startups, and it has the tools, knowledge, and resources necessary to support sophisticated projects.

Wennovation Hub

Thought to be the oldest accelerator in Nigeria, Wennovation Hub offers five distinct services to both new and experienced entrepreneurs. Through the organization, individuals gain access to full office support, as well as technical and business mentors. The organization also provides funding, strategy advice, and business consulting services. Its alumni include startups such as Yarnable, e-Pump, and HutBay. What makes the organization unique is its ability to tailor its services to the particular industry and needs of each startup.

LeadPath Nigeria

A fairly new addition to the accelerator scene, LeadPath Nigeria started with $1.5 million to invest in companies focused on big data, electronic payments, software development, and mobile applications. The average seed investments range from $25,000 to $100,000, and entrepreneurs receive both hands-on support for their ideas and office space to launch their companies. Instead of asking for a fee for participation, the organization takes a stake in the equity of each company it supports.

iDEA Hub

The Information Technology Developers Entrepreneurship Accelerator (iDEA) Hub provides individuals with training in software development and focuses on developing critical business skills. When an entrepreneur has been accepted into the program, he or she receives a physical workspace, as well as access to shared technical facilities and capital to make their dreams a reality. iDEA Hub currently operates in Lagos and Calabar, but the cost of participation can be high.

Savannah Fund

Since starting operations in 2012, Savannah Fund has had three accelerator classes with nine program graduates. Co-founders Erik Hersman, Peter Bragiel, and Mbwana Alliy provide participants with $25,000 packages to launch their companies. However, the fund is valued at more than $10 million, which suggests that it has the potential to invest in a significant number of companies in the future.

Co Creation Hub

Co Creation Hub, otherwise known as CCHub, has launched several major companies, including Vacant Boards, 500Shops, and Traclist. The hub offers infrastructure for fledgling startups and programs that provide instruction in important entrepreneurial skills and concepts. Recently, the hub began making investments as a true accelerator. While its fund is small in comparison to others on this list, it offers up to $25,000 in seed-stage funding, as well as access to Silicon Valley incubation networks.

The Tony Elumelu Foundation

Recently created by Nigerian billionaire Tony Elumelu, the foundation sponsors the Tony Elumelu Entrepreneurship Programme, a three-month training course that connects people with groundbreaking ideas to the resources and networks they need to make them a reality. The new program has the lofty goal of minting 10,000 new entrepreneurs over the course of the coming decade.

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The 3 Most Exciting Cities in Africa for Entrepreneurs

Africa boasts some of the most exciting markets for entrepreneurs. Countries like Nigeria, South Africa, Kenya, Ghana, and Uganda have incredible opportunities for people interested in founding a company. While a number of cities in the continent provide access to funding, business development support, incubators, and accelerators, the following three cities are among the most advantageous for aspiring entrepreneurs.

  1. Cape Town, South Africa

Cape Town has become a magnet for entrepreneurs in South Africa and other African nations, largely due to the city’s recent increases in funding availability and general atmosphere that is supportive of risk-taking. Over the last few years, many people have moved from Johannesburg, the most populous city in South Africa, to Cape Town to take advantage of the city’s available business opportunities, and an impressive number of people have left their day jobs to pursue entrepreneurship.

Because Cape Town contains the highest number of information technology companies in the entire continent, these decisions are not unfounded. Consequently, Cape Town has become a major hub for industry and is growing quickly. According to recent estimates, the annual growth rate of the city’s IT sector stands at 8.5 percent.

Angel investors are becoming increasingly popular in Cape Town. Through the organization AngelHub, a growing network of angel investors are pooling funding and providing coaching and other forms of support to aspiring entrepreneurs. Successful entrepreneurs who live in Cape Town have also been known to personally invest in ideas they find particularly impressive. In addition, the city boasts a number of venture capital firms also exist in the city, including Knife Capital, Intel Capital, Hasso Plattner Ventures Africa, and 4Di Capital.

Once companies advance past the initial startup stages, they can approach one of several private equity firms to secure the funding needed to grow their companies. These firms also provide great advice for making a middle-stage startup more profitable. Among the key private equity firms in Cape Town are Ethos Private Equity, Horizon Equity, Sanlam Private Equity, and Acorn Equity.

  1. Nairobi, Kenya

Over the last decade, the tech sector in Nairobi has grown dramatically. This has created new revenue streams and increased the number of innovative services available to entrepreneurs. As a result of this growth, which has resulted in annual revenues in excess of $360 million, Nairobi has earned the name “Silicon Savannah.”

Previously, few Kenyans could get online, and those that did had to rely on expensive satellite services. However, Kenya’s government recently installed four major Internet cables along the coast of Kenya, thereby assisting the growth of technology firms by increasing the number of Kenyans with access to the Internet. Today, 99 percent of the Internet in Kenya is accessible via cell phones, which more than 70 percent of the population owns. The prevalence of this technology has created a tech-savvy pool of potential employees.

The growth of technology may also have been spurred by the success of M-PESA, a mobile payment system that has become widely accepted by Kenyans. This system likely inspired and motivated would-be entrepreneurs to pursue their own revolutionary ideas.

At present, six different startup hubs exist in Nairobi, and more are expected to launch in the near future. Eventually, each hub will focus on a specific niche, serving as a great resource for entrepreneurs seeking support and assistance in that particular area. The hubs will likely become even more important as they attach to local incubators and organizations such as the Savannah Fund, which generates seed funding for Nairobi entrepreneurs.

  1. Lagos, Nigeria

The rise of several notable startups, including iRokoTV—“the Netflix of Africa,” has attracted a number of innovators to Lagos, turning the West African city into significant business magnet. The region’s startup hub is actually Yaba, a Lagos suburb that many refer to as Yabacon Valley. This area houses many of the banking and financial centers of Nigeria, as well as several notable institutions of higher learning. Nigeria has the second-largest growing economy in Africa, and this has spurred the emergence of a middle class eager to adopt new technologies.

Many angel investors and venture capitalists have begun paying attention to Lagos. This past July, the city became the first African host of StartupWeek, an event that celebrated small business owners and startups in Lagos over the course of five days. The scheduled activities included meetups to boost the growing startup culture, as well as panels and keynotes speakers that addressed relevant entrepreneurial questions. StartupWeek has taken place in 75 other cities around the world, and the decision to bring the event to Lagos before any other African city points to its rapidly growing economic potential.

Some other benefits of starting a business in Lagos include the presence of Angel Fair West Africa, which helps companies secure early-stage funding, and the arrival of new incubators and accelerators, such as 88Mph, which also has offices in Nairobi and Cape Town.

5 Key Steps to Better Accounting Practices for Startups

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5 Key Steps to Better Accounting Practices for Startups

One of the biggest challenges facing startups in Africa, as well as in other parts of the world, is the issue of accounting. Without setting up proper accounting practices from the outset, companies can quickly encounter serious issues that have the potential to unravel an entire organization. Accounting can easily become a complicated and overwhelming topic, especially for entrepreneurs who have a number of other responsibilities. The following are small steps that can be taken to create a comprehensive approach toward accounting that all startups should follow in order to keep themselves solvent for the long run. Through good accounting practices, entrepreneurs will be more likely to appeal to investors and other sources of capital, including crowdfunding.

1. Track All Business Expenses

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Track All Business Expenses

In order to keep a solid financial record, companies need to clearly account for all of the money that it spends. The information can help to monitor growth, create financial statements, prepare tax returns, and identify which functions are costing the company the most money. From the very beginning, entrepreneurs should establish a system for tracking and organizing receipts, whether they use old-school filing or keep online records. Several services exist for keeping such records. Expenses include meals for business meetings; travel for business purposes; and costs for home offices, gifts, and even vehicle-related expenses. All money spent to support the business should be accounted for on a balance sheet.

2. Open a Business Bank Account

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Open a Business Bank Account

All too often, entrepreneurs try to support a business with personal bank accounts or decide to forego an account altogether. Through combined personal and business accounts, tracking a company’s performance becomes incredibly difficult. With a business account, entrepreneurs can quickly see what capital the company has and even look at the recent transactions to help in other accounting practices. Checking accounts are vital for making and accepting payments, but savings accounts can help for tax planning purposes. Business credit cards are a great way to build credit for the company for in case of an emergency.

Entrepreneurs should always do their homework before opening an account, since not all banks have the same policies or offer the same deals. By comparing the account structures at several different banks, individuals can choose a deal that works best for their needs. Typically, the fees associated with business accounts vary quite a bit from those for personal accounts, but these additional expenses should not encourage people to continue using a personal account in lieu of opening a business account.

3. Learn About Bookkeeping Systems

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Learn About Bookkeeping Systems

Bookkeeping is different from accounting. From a business perspective, accounting focuses on the progress of the business and uses compiled data to create financial statements. On the other hand, bookkeeping is the day-to-day recordkeeping that makes accounting possible. Through bookkeeping, businesses record and categorize transactions and then use this information to reconcile bank statements to ensure that no errors have been made.

Several different methods of bookkeeping exist, and entrepreneurs should choose which approach to take in the earliest days of the company. Each approach has its own pros and cons, so the decision largely depends on personal preference. For startups, the two primary options include DIY solutions and outsourced departments. Quickbooks, Wave, and other software solutions make the process slightly easier and provide tools to help people who are unfamiliar with bookkeeping. At the same time, there is still a risk of keeping books incorrectly. Individuals with a background in accounting or especially simple transactions could also use an Excel spreadsheet. In terms of outsourcing, companies can hire someone locally on a part-time basis or use cloud-based solutions like Bench Accounting.

As a company grows, it may become financially prudent to invest an in in-house, full-time bookkeeper who can also double as an accountant. In these cases, entrepreneurs should ensure that the person has the training and experience necessary to perform the job.

4. Identify Tax Obligations

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Identify Tax Obligations

Tax processes vary from one country to another and become more complicated if people intend to conduct business across international lines. While the thought of preparing taxes may seem overwhelming, entrepreneurs need to be diligent in learning about local policies. Some people may want to hire an expert to ensure that they thoroughly understand their obligations. A small oversight can have incredible financial ramification later down the line. Tax responsibilities typically depend on how the company is registered and the number of employees. Sometimes, taxes are paid annually. Other times, tax payments may need to be made at small intervals, whether quarterly or bi-annually.

Tax preparation involves implementing sales tax procedures. The policy may vary between countries or even jurisdictions in one nation, and the issue becomes more complicated with ecommerce. However, the entrepreneur is ultimately responsible for collecting this tax, and failing to do so can quickly minimize profit margins.

5. Set Up a System for Accepting Payments

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Set Up a System for Accepting Payments

When people want to pay for a product or service, a company needs a reliable method of collecting that money. A number of solutions exist for accepting credit card payments or for transferring funds digitally. These methods are typically safer and easier to track than cash transactions, but they can cost a great deal of money. Processing fees are often associated with these payment acceptance methods so entrepreneurs may need to build these fees into their pricing in order to protect their profit margins.