How To Raise Capital For An E-Commerce Startup

Raising startup capital ain't easy. In fact, many entrepreneurs who decide to fundraise say it's the most intimidating and challenging aspect of starting a business. Read more...

Nigeria’s growing internet penetration, mobile connections, its rising middle class and an exploding consumer base has made the country a prime location for tech-powered retailers, also known e-commerce firms.

These firms have been motivated by the opportunities presented by Nigeria’s largely untapped retail market. In recent months, many of the firms have trooped down to grab their share of the lucrative market, with local start-ups slugging it out with the top shots. But despite the attraction, capital raising is always a major concern for start-ups, particularly e-commerce players. The business idea may be great but business owners are always at a loss on who to approach for investment.

There are a few sure ways to get start-up capital in Nigeria today. You can pool resources from more than one of these sources if one isn’t sufficient.

Personal loan

To start your e-commerce business, you need a good website, dependable host, great software and an effective marketing plan, and this can cost you as much as N2 million. This can be easily sourced from your local bank without collateral; just ask your account officer.

Nigeria’s e-commerce market is worth over N600 billion and has the potential of growing to almost N3 trillion in the next three years. So if you do it right, you are more likely to end up without regrets.

Innovation hubs

A lot of innovation hubs have sprung up across Nigeria over the last few years. They mostly provide essential support to entrepreneurs to build software skills, solutions and businesses critical to their success. However, with the e-commerce companies increasing exponentially, the space may soon be saturated to an extent that only those with the financial muscle to compete or the very innovative ones will be able to remain profitable. If your idea is great, you may be graduating from an innovation hub with a start-up capital.

Entrepreneurship funds    

The contribution of entrepreneurship to economic growth cannot be overemphasized. This has encouraged the government, the private sector and wealthy Nigerians to set up entrepreneurship funds. One of such is Tony Elumelu’s entrepreneurship programme which has taken in its first set of entrepreneurs from across Africa. The 1,000 lucky ones will receive N2 million per year for the next five years. What more capital do you want? If you have a great business idea, this is a sure way of getting your start-up capital.

Family and Friends

If you have a family that believes in your dreams, this may be the best place to get start-up capital. However, rather than asking for funds from just one family member, spread your collections across the extended family and network of friends to lessen the burden.