Surefire Ways to Raise Funds for Business in Nigeria

How to Raise Fund for Business in Nigeria

“How can I raise fund for my business in Nigeria?”

Have you been asking this question since you started your business?

Do you have a business idea that requires funding?

Do you feel it is too difficult if not absolutely impossible to raise funds for any business in Nigeria?

If these are your concerns, you are not alone.

Many entrepreneurs running their businesses in Nigeria often ask this same question.

They hardly know where to look for funds, no matter how small.

For example, getting a bank loan may come to the mind of a new entrepreneur in Nigeria when scouting for business capital.

But we all know that in a country like ours, getting a bank loan is almost like a mirage.

(I’m not saying that a few businesses with huge potential don’t get bank loans though.)

But what are the more feasible and practical options for small business owners in Nigeria looking to raise money for their business?

That’s our focus in this piece. We will provide answers to this question in this article.

But before we go further, I’ll like to say that when starting your business, it is always better to look inwards and see how you can get your business running with or without any external support.

You may want to see this previous post on 20 Trusted Venture Capital firms in Nigeria today.

Here are other important resources for new business owners in Nigeria that you should see:

25 Businesses to start in Nigeria with little capital

71 Most Lucrative Blog Niches of all Time

7 Digital Marketing Trends for Small Businesses in Nigeria in 2019 

You may go for the option of working from home or sharing office space with another entrepreneur instead of renting a new place.

What about marketing strictly through digital platforms instead of the traditional media.

These are some little decisions that will help you save some capital and then you can divert those funds into growing your business proper.

If you endeavour to grow your business using available resources and skills at your disposal, you will realize that you may not even need as much funding from outside to get your business running.

We will now explore 10 tested and trusted ways you can raise capital for your business in Nigeria.

So if you are ready to find answers to the question “How can I raise fund for my small business?” below are 10 Practical, tested and trusted ways to raise funds for any business in Nigeria.

How to Raise Fund for a Small Business in Nigeria

  1. Bootstrapping

Bootstrapping is a process of self-starting one’s business with one’s own funds without any significant external fundraising.

how to raise funds for business in Nigeria.jpeg

To bootstrap a business, you need to have some personal savings that you can use to get your business running even before reaching out to investors.

If you have paid employment by the side, you can save a portion of your monthly income to raise funds for your business.

Student entrepreneurs can also set apart some money from their allowance and those monies from uncles and aunties.

Personally, I believe that bootstrapping is the best way to start one’s business.

For one thing, when bootstrapping, there can only be limited fund. So if you don’t put in a lot of hard work and prudence into every kobo you inject into your business, you risk folding up.

This, in turn, helps you become more disciplined – a quality you need to be successful in business.

Another beautiful thing about bootstrapping is that you do not have to stress yourself convincing anyone how great your idea is so they can invest in it.

You have absolute control over your business.

So if you are about starting a business in Nigeria and you are thinking of raising some funds, ill advice that you start saving some money now.

Many successful companies in the world today started with bootstrapping.

These 10 tips by Alyssa Gregory will help you learn how to bootstrap your business ground up.

Closely related to bootstrapping is obtaining funds from cooperative societies.

  1. Cooperative Societies

Similar to bootstrapping is saving some of your personal money with a trusted cooperative society.

how to get money for a new business in Nigeria.jpeg

Cooperatives societies are very common in Nigeria.

Many entrepreneurs have grown their small businesses into big organizations with cooperative money.

The only challenge is finding a trusted one.

But that’s usually not a big problem.

You could initiate a cooperative with some trusted friends or trusted members of your religious organization whereby, each one of you saves a certain amount of money monthly or weekly.

Each cooperative member then takes a turn to collect a total sum of all member’s contributions at different periods of time while the contributions last.

Some cooperatives are big organizations i.e. University staff cooperative society.

Whereas most cooperative societies are small with members of about 10 – 15.

You should always try to remit your contributions as at when due – weekly/monthly – if you want the cooperative to pay you as at when due too.

You must also follow all other the conditions of the cooperative.

When you follow these rules, it earns you a good reputation and even has a positive influence on your business.

Before you take a loan from a cooperative society, you need to have a plan for it based on the most important need of your business.

For example, assuming you are starting a wedding photography business, and you get a loan, from a cooperative society, let’s say N500,000.

You may want to get a good camera for N300k or less. With that, you can have the most important tool you need to start work, then invest the rest in affordable online marketing.

But you could also decide to rent a beautiful shop in Ikeja Lagos for the same amount and then furnish your office with the rest of the money.

A serious entrepreneur would know that going for the second option is not a good investment decision.

So when you get a cooperative loan, use it wisely.

Remember, you will always have to pay back your loan so that others can have the same opportunity.

Another option you may want to explore next is family and friends.

  1. Family and Friends

raising money from family and friends for business.jpg

Once you’ve explored the option of bootstrapping, you may want to talk to your family and close friends.

Our parents and close family members always want the best for us and so do our true friends.

When looking for funds to grow your small business, family and close friends are a reliable option you should explore.

Of course, you must have set a track record of trustworthiness and hard work in your previous endeavours.

Even though our family and friends are not banks, they equally require collateral in terms of our trust and they should earn it.

You must be dedicated, committed and focused on your business to earn your family and friends’ trust.

They will like to see that you have committed your own resources, time and energy to the business before they would support you.

Your family and friends will like to be assured that your business is profitable too.

They may want to understand how you plan to make sales, market your products or services and make profits.

Endeavour to explain patiently to them or show them your business plan if need be.

Let them know how you intend to spend every kobo given!

Once you’ve received some funding from your family or friends, put every Naira and kobo to very wise use as there may not always be a second chance.

  1. Partnerships

When you are looking for a partner to join your business, you have to look for a value-added type of partnership.

making money through my business partners.jpeg

Your partner should be able to contribute financially to your business.

From the start of your business, you must have been investing heavily in your business. So your partner should be able to do the same too.

It would not be a bad idea to look for that guy who can bring something to the table as funds for the business among other things.

Your potential partner’s passion for the business and knowledge should not be overlooked either.

Apart from money, your partner may have other valuable assets for your business.

For example, he or she might be willing to offer office space for the business.

That will help you save some money and divert the capital into other important things.

In any case, you both must agree on equity and clearly state your terms and conditions.

At this stage, if you still need some more funds injected into your business, you could consider grants.

  1. Grants

grants for business in Nigeria.jpg

A grant is an amount of money or financial assistance that a government or an organization provides for a person for some specific purposes.

Unlike loans, you do not have to pay back a grant, it’s yours forever.

And it’s your responsibility to use your grant well too.

There are different types of grants channelled for different purposes.

For example, there is a grant for students, grants for women, business grants, grants for the physically challenged, etc.

There are some governmental and non-governmental organizations providing grants for small businesses in Nigeria.

You should try applying for some of them and who knows, you could be the next Tony Elumelu Foundation beneficiary.

If you are unable to get grants for your business, an angel investor might just be right at the corner.

  1. Angel investors

looking for funds for your business in Nigeira.png

Angel investors are not angels.

They are ordinary people like you and me who have some money and are particularly interested in investing in start-ups for ownership shares or equity.

Angel investors are everywhere. But not all rich people in your street or community are angel investors.

Basically, angel investors target small businesses, finance them and make some gains for themselves in the process.

Financing your business is business for an angel investor, not charity.

If your business requires a huge capital or is not at the start-up phase, you may look elsewhere because most angel investors don’t give huge capital to entrepreneurs.

You don’t have to look too far to find an angel investor.

Think of your dad’s friend or that uncle of yours who has the financial muscle, approach them with your well-written business plan and hopefully, they may want to invest in your business.

If an angel investor finds your business marketable and profitable enough, they will surely invest in it.

So you have to approach an angel investor prepared.

Here are some tips to help you gain over an angel investor when you approach them:

Have a mature team:

Your team must include mature minds who are able to manage the finances of your business.

You could add one or two older and more experienced advisor to your board to remove the fear that your company may not be able to meet its profit goals.

Have a good knowledge of your market:

You’ll need to have knowledge in market assessments, competitive analysis, marketing and sales plans and strategies if you expect an angel investor key into your business.

They may ask you questions around these areas and you cannot afford to fail.

Though your business is new, you are expected to have a knowledge of the market you are about to enter. So have a basic understanding and knowledge of not just your product, but your market.

Don’t lose touch:

There is a possibility that an angel investor may not show interest in your business on the spot, especially if you are starting out newly.

All you need do is keep in touch with potential angel investors and let them see your business growth hoping they’ll want to reach out to you sometime in the future.

Closely related with angel investors are venture capitalists.

  1. Venture capitalists

raisinf money from venture capitalists.jpg

Here is where you can land big funding gigs. But it’s a lot more demanding exercise.

Venture capitalists mostly target businesses that have passed the start-up stage and are already generating tangible revenue.

They provide needed expertise and mentorship, evaluating the scalability and sustainability of your business in exchange for a huge business share.

See the list of 20 Trusted Venture Capitalist Firms in Nigeria today

Venture capitalists often like to get their ROI (return on investment) within three to five years.

So if your product will take longer than that, you may look elsewhere for investment.

Venture capitalists look for companies with a strong team and impressive traction that will translate into larger opportunities for them.

You should also be willing to give up some control of your business if you are interested in raising venture capital. A lot of them actually love being in control of your business once they have invested in it.

Getting venture capital requires some efforts but this guide to Venture Capital Financing for Startups by Mike Sullivan will guide you all the way through.

  1. Crowdfunding

Crowdfunding is a new but effective funding option that a lot of tech startups are tapping into in Nigeria now.

raising money through crowdfunding.jpg

Crowdfunding is opened to all.  Whether or not your business is a tech platform, you could raise some funds with crowdfunding.

How does crowdfunding work?

An entrepreneur simply puts up a description of his new business, how he plans to make profits; what amount of funding he needs and how he plans to utilize the fund if getting.

Then, interested customers or donors on the platform can read about the business.

If they really like the idea, they can either pre-order the products or contribute money for the entrepreneur to build the idea into a tangible product or services.

Crowdfunding can help you test your products even before launching them into the market.

Another advantage of crowdfunding is that it helps with the marketing of your products while you source for funding.

If you can successfully raise your desired amount of money, you would attract the attention of other investors like venture capitalists who may also love to support a new business like yours.

But you should know that crowdfunding is quite competitive and unless your idea is very compelling and unique, it may not work for you.

If you believe your idea is compelling enough though, you should give it a trial.

Here are some crowdfunding sites to fund your business in Nigeria and abroad.

  1. Startup Accelerators and Incubators

incubators for entreprenuers in Nigeria.jpg

Another viable funding option for businesses in Nigeria is accelerator and incubator programs.

As more people are embracing entrepreneurship in Nigeria, accelerators and incubators are getting very popular.

We now have many incubators and accelerators in major cities in Nigeria providing assistance to thousands of entrepreneurs.

As the name implies, incubator programs or startup hubs help nurture businesses from the early stage to a point where they can stand on their own.

Asides seed funding, incubators provide office space, legal counsel and other bonuses. They help their fellows learn how to write a billion-dollar business plan and pitch like a pro.

They provide these resources and funding opportunities in exchange for small equity of your company.

Incubator programs provide network and exposure to angel investors and venture capitalists.

Incubator programs may last for 3-4 months culminating in a Demo Day where participants get to pitch their startups.

Accelerator programs serve almost the same purpose except that they target rapid growth startups.

They primarily connect startups with mentors; help them get funding and provide guidance that will help their businesses scale, achieve their profit goals and expand.

So accelerators want you to have minimum viable products so that resources raised will be channelled into other important aspects of a business i.e. operations and strategy.

With these little explanations, can you identify if your business needs an accelerator or incubator program?

If you are still in any doubt, then you should see Incubators versus Accelerators – what’s the difference by Ashleigh Harris.

  1. Funding Contests and Competitions


Fundraising contests and competitions for entrepreneurs are becoming increasingly popular in Nigeria and Africa at large.

To win such competitions your products have to stand out and your business proposal must to compelling.

Most funding contests require that you pitch your business idea or at the very least that you present your proposal. But if you are looking to raise fund through most of the processes we have discussed, you have to master the art of pitching your business idea almost perfectly.

Here are 12 competitions African tech startups can enter in 2019

In conclusion, there are a handful tested and trusted avenues through which entrepreneurs can get funding for their business in Nigeria.

You’ll agree with me that doing business today is much easier with access to the internet and improved technology.

If you find any of these funding opportunities good enough for you, go ahead and shoot your shot. And as you do, we wish you the very best of results.

Should you have any challenges in the process, feel free to reach us and we will hook you up with readily available help.

Kindly share this article with your friends who will find it useful, sharing they say is caring.



Please enter your comment!
Please enter your name here