Do Nigerians Support Nigerian Startups?
I recently spoke with two entrepreneurs about the lack of support they’re seeing Nigerian startups receive from potential Nigerian investors, as well as Africans in general. While Boyede Sobitan - founder of Oja Express - hails
I recently spoke with two entrepreneurs about the lack of support they’re seeing Nigerian startups receive from potential Nigerian investors, as well as Africans in general. While Boyede Sobitan – founder of Oja Express – hails from Chicago, Abolade Lawal is the co-founder of Scholar X and he commutes regularly between Lagos, Nigeria and Houston, Texas. Jump into the convo below:
M: Hi Boyede, longtime no speak! Thanks for taking time to continue our conversation from the other day.
B: No problem…there are so many problems in the Africans diaspora and not a lot of Africans are addressing those problems.
M: Right. For instance, Rebtel is being used by many Africans in order to connect with family members back home, but it’s not an African company…
B: I only used them as an example because obviously they’re doing good, but the question are: Why aren’t more Africans addressing more African problems? And the ones that are addressing those problems, why aren’t they getting enough support from the community to sustain those businesses?
M: So what’s making you say that? The only reason I’m asking is because I learned about African start-ups by going to conferences and there are so many startups. On the continent it seems those startups are being supported by African people with means. So, that’s an example of them being supported. When you say they’re not being supported, do you mean more so in the United States?
B: Yeah, more in the U.S., the Diaspora…
M: Ok, so what do you think is an example of that?
B: [Oja Express] just participated in Diaspora Demo Day. I know businesses that struggle and have been told that they need White people to validate their businesses.
M: Ah, I can see what you’re saying. So it’s not so much about customers not supporting African startups, but potential African business partners not supporting each other?
B: I wouldn’t say business partners, but the question probably more so would be: do African startups in the Diaspora get enough support?
M: You once brought up the example of your friends. If you’re seeing a trend where a number of your friends have startups, they’re Africans, and they don’t feel like they can get enough support from other Africans in a major metropolitan area, that’s something that is worth looking into.
B: And sometimes people will say, “I don’t feel supported…” but maybe it’s an issue of not knowing the resources that are there to get your business going.
M: Right. Can I ask what industries your friends’ startups are in?
B: Fin tech, social media,, food tech …they’re in different startup phases.
M: Do you think people have enough knowledge about these industries?
B: It’s hard to say. We all know Black people in general don’t get enough funding, so it’s more exacerbated being Black AND being from the Diaspora, especially when you trying to address a Diaspora market that’s growing. Yeah, it’s growing, but does it have enough [business] people to sustain it?
M: That’s a good question right there! Especially when everyone knows, by this point, that so many Africans are professionals. So many of them are in law, engineering, medicine, technology… So, you would think that there’s a lot of money to draw capital from right?
B: You would think so. There’s a number of Africans that are doing well.
M: You know, I’m really curious about this issue happening in the Chicago area where you’re from, because there’s such a high concentration of Nigerians there.
B: There’s a large number, but I’m not sure if those numbers would be more than New York, D.C. or Houston.
M: Probably not as much as Houston, especially with that warm climate! Within the Nigerian-Chicago community what do you see happening between Nigerian entrepreneurs and other professionals? Do you see solid connections forming?
B: I see more people starting businesses and developing. There’s more interest in professional development. Organizations like N.A.P.A. (Nigerian American Professionals Association) are helping to facilitate that by bringing people together.
M: Hmm. Now, when it comes to funding, do you think there’s competition or stinginess?
B: I think that speaks to the climate in Chicago alone…I think understanding your investor climate is important to determining the behavior of potential investors – real or perceived.
M: What experiences have you or fellow Nigerians had in making those “asks” to other Nigerian professionals for capital?
B: Nigerian professionals (or the ones that I know) have not had too much luck asking people in the Diaspora. I think their investment appetite is a lot more risk-averse.
M: That’s interesting. I’ve never heard the phrase “investment appetite”. But it’s a good one. I wonder if the risk- aversion comes from the fact that a lot of us get our wealth from owning property or working in high-income fields –
B: That’s actually a pretty good topic: “Should more well-off Africans invest in start-ups?”
B: Because I can tell you, from conversations [Chicagoans] have had, a lot of Africans are not really into that. They scrutinize African start-ups more thoroughly than they probably would another investment created by a [non-African] person. Another question is: how many investments are there for Africans?
M: I feel like it’s right under our noses, but we don’t really take advantage of them. In Nigeria, my grandfather on my Dad’s side who’s from Abeokuta, was an importer of goods from Britain. When I think about business in Nigeria and how common it is for Nigerians to be involved in business – especially women in the marketplace who trade in food and fabrics – it doesn’t make sense to me that here in America there would be so much aversion to supporting start-ups and businesses. Or…you know what? Maybe there’s more aversion because Nigerians are more used to seeing people fund their own businesses instead of asking other people to do it for them.
B: Businesses you can touch…
B: Like traditional businesses…
M: Right. But you know we tend to be like that with a lot of things. For instance, when Nigerian-Americans are growing up and parents are deciding for them what profession to study, we tend to go to the traditional subjects – engineering, medicine, law – and it’s almost like they can’t be anything else. But now, within our generation, we’re seeing more Nigerian-Americans going the nontraditional route – going into technology, art, music – even without the support of their relatives.
B: I think that’s probably the issue, but more so than anything, I think that in order for African start-ups and Africans in the Diaspora to thrive our own people have to get behind it. If [Africans] don’t invest in me, then how can I get a White person to invest in me?
M: Right. I have heard a similar question asked of non-profit founders as well as entrepreneurs: if your own family members don’t put money in, why should anyone else (a stranger) put money into what it is you’re doing?
B: Yeah, and you also have to understand, a lot of our people, don’t have legacies of wealth or trust funds because most of us are one generation removed. Many people who have multiple generations of trust funds take these risks. For example, I don’t have grandma’s will or insurance policy that I can say I’m going to use to start a business.
M: Yeah, that is important to note. You said there are other ethnic groups that have trust funds, but really it seems that multi-generational, wealthy Caucasian-Americans have those. I’ve never met a second or third-generation Chinese or Indian-American speak of a trust fund. But I’ve definitely heard of some getting the opportunity to have a business passed down to them…
B: Yeah, but then think about how they go about acquiring wealth. Usually, they have assets they can take risks with. Nigerian people, from my experience, are just more risk-averse. They want the guarantee. If they have $100,000, they’d rather get 1% interest knowing that they’re going to get that 1%, instead of taking a risk and saying “I’m going to give $50,000 to a start-up with the hopes of [getting a large return]…”, which is understandable. It usually takes multiple generations to build enough of a cushion to say, “Hey, I can let go of [even] $1,000.”
To back up his viewpoint, Boyede put me in touch with his fellow entrepreneur Abolade Lawal, co-founder of Scholar X, an online app designed to help students of Nigerian descent access college scholarships.
Abolade offered this statement, with a focus on support for technology both in the U.S. and Nigeria:
“On lack of support by Nigerians for Nigerian startups, I won’t really term it as a conscious effort not to show support. Rather like the saying goes, “You don’t know what you don’t know”. I say that with all due respect. This whole thing is fairly new, thus it is somewhat understandable that certain folks are hesitant in supporting startups [and those] who are working really hard to make things happen. This also plays into the skeptic nature of Nigerians, as it takes a certain level of persuasion and trust to adopt something new, especially technology.
Now the aspect that’s somewhat bothersome is how our people are quick to adopt externally built technologies. Ironically, locally built technologies enjoy a lot more support [from] external stakeholders. For example look at Mark [Zuckerberg]’s recent investment in Andela and his visit to Nigeria, or YC’s admission of companies like Flutterwave and Paystack into its accelerator program and then also visiting to learn more about fast growing ecosystem.
Overall, I do believe the main reason stems from Nigerians being more comfortable with what they “know”. Their inclination is to support businesses they can touch and feel like Real Estate, Oil and Gas, Transportation and Agriculture. The hope is, as these startups continue to succeed (which I hope ScholarX will), more of our people will get onboard and give us the support we need.”
Here’s my take: the entrepreneurs I spoke to are both of Nigerian descent and their views should not be a blanket overview for Africans from all over the continent. However, being that Nigeria is still the largest economy in Africa with the most means to support business ventures, it’s noteworthy to mention the viewpoints of some entrepreneurs from that nation. Just like the lack of governmental support many Nigerian intellectuals faced in the 1960s forced them to move to North America and Europe in order to further their education, the lack of support from countrymen towards budding entrepreneurs could lead to a trend of businesses meant for Nigerian communities moving to mainstream or global audiences instead. Are you from a different African nation? Do you have a different viewpoint on the issue of support? Comment below or e-mail me at firstname.lastname@example.org.