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Nigeria's startups face tough competition

Nigeria , 28 Jul 2015

Nigeria's startups face tough competition

Despite growth within Nigeria's startup ecosystem, a regional representative of Switzerland-based global startup competition Seedstar believes the ecosystem is incomplete and lacks a support system for startups.

Speaking to ITWeb Africa in Lagos, Marcello Schermer, Seedstar World's regional manager for Africa, said while ideas from the startups are world-class, the absence of this and other critical components of the ecosystem threaten its survival.

"What characterises Nigeria is hustler mentality. Entrepreneurs are incredibly hungry and driven, they are very aggressive in a positive way in building a business, but what I think is lacking is the support system for the startups," he said.

According to Schermer startups in Nigeria need support to get from one stage to another. He also raised some concerns that stakeholders should figure out in order for the industry to survive.

He asked: "How do they get from bootstrapping to raising the first round, raising the second round of investment and building a really big company? There is a lot of hustle and bustle in the early stages but how do you take that and structure it into a pipeline of growing startups?"

Schermer added that the startup ecosystem in Nigeria needs angel investors, venture capitalists and others. "I think the later stages of the ecosystem are still missing," he said.

Silver lining

On the bright side, he said Nigeria has very motivated entrepreneurs, very good ideas and a large local market, even though access to funding, education and talents are major drawbacks.

He believes the Nigerian government can play active roles to support the ecosystem. One role is to reduce friction. Schermer said by reducing friction, the government will make it easier to start companies - making tax laws easier, offering tax incentives to companies and removing obstacles.

"The other one is a more proactive role, which is very debatable, but I think it is an important role, it is to actively support entrepreneurs – launching structures for them to grow, funding them, and giving subsidy," he said.

He believes the government can help in facilitating money flow into the country – "making it easier for investors to invest, giving tax relief to individuals when they invest in entrepreneurs. The government has a very big role in incentivising people to do things."

He added that ten Nigerian startups will this week participate in the Seedstars World event and the winner will travel to Switzerland to represent Nigeria in the final round and compete for US$500,000 equity investment.

The group of participating startups include MyQ, Hello Tractor, Bazar-NG, Food-I-Like, Skarabrand, CowriePay, Talentbase, NerveFlo, MBills and Intellectric.

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