InfoGraphics chief urges investment in tech start-ups
By Kokumo Goodie, Lagos, Nigeria
The Managing Director of InfoGraphics Nigeria, Chinenye Mba-Uzoukwu, has urged wealthy Nigerians to invest in tech start-ups.
He dismissed as baseless, the fear about poor return on investment because, according to him, studies have shown that rapid growth start-ups generate the most new jobs in the economy and require the highest amount of equity risk capital. He quoted Craig Mullett from the Branison Group as stating that a 2005 study of 37 countries showed that out of various sources of funding including debt, private equity, venture capital and angel investor capital, “only angel investor capital significantly positively influenced the propensity to be entrepreneurs”.
Mba-Uzoukwu who is also the vice chairman of Demo Africa 2015 edition, said while all successful entrepreneurial hubs such as Silicon Valley, Boston, New York, Tel Aiv, Bangalore and Warsaw all have developed angel investor networks, which incubated start-ups rely on for financing, contacts and strategic advice, rich Nigerians are slow in stepping up to create the platforms and enterprises of tomorrow.
He said: “Interestingly Nigeria HNIs (high networth individuals) appear unaware of, disbelieving of, and/or uninterested in the latent potential of local technopreneurs despite the relatively low entry barriers to investors and a burgeoning start-up community. We recognize that the tech industry is still in early stage development.
“We must be intentional and aggressively so in looking inwards if we are to find sustainable and uniquely suited solutions to the challenges facing our country in the context of a 21st century global economy. Demo Africa is a great step and a new class of indigenous Nigerian investors must rise up and be counted because technology offers the most realistic stairway to a brighter future for Africa.”
He said Demo Africa connects African startups to the global ecosystem, adding that the initiative “is the place where the most innovative companies from African countries get a platform to launch their products and announce to Africa and the world what they have developed.”
A successful entrepreneur with proven capability, Mba-Uzoukwu explained that several options are available to potential investors under engagement models, which range from business angels to venture capital and private equity, for funding technology startups.
“Whether it is purely a financial investment or a business decision to diversify business portfolio or an eagerness to join the next big game-changer, it seems pretty obvious that every savvy investor should have a technology company in his portfolio. Local investors who shun technology businesses today will definitely see the earliest pickings taken by their Western counterparts at ridiculously low valuations despite the apparent high risk,” he warned.
While describing technology as the fourth wave that should not be missed if Africa would hope for economic transformation, he said Konga and Paga are signposts of things to come with Nigerian entrepreneurs requiring an infusion of foreign blood in order to scale in the absence of local HNI interest.
He explained that investing in start-ups would soon be an investment option from banks to corporate organisations and individual investors. “By simple logic, if you have cash and have already made investments in real-estate, shares, other financial instruments, gold and possibly your own enterprise too, what can you do with any residual cash that you have? Invest in a start-up stands out as a good option – given that Nigeria is now a fertile ground for ideas and innovation, and being an entrepreneur is cool. And if you are wondering if any have been successful, just look at Interswitch, Hotelsng, M-Tech, IrokoTV, and Jobberman.”
According to him, the technology start-up industry has never been more vibrant with ideas and willingness to tread the uncharted waters and a burning desire to bring change to the communities in which they exist.
He said: “There is a smoldering fire in the eyes of Nigerian youths that view technology as a means of self-expression, actualisation and a driver for creating the Nigeria of their dreams “Nigerian youths are socially-committed, deeply convicted and determined to see the fullest expression of their values and ideas in the markets they have in focus. They want the double-impact – to make it big and to make it happen. High net worth Nigerians should support them. Look around you – there will be an entrepreneur near you and that is the exciting thing about Nigeria. Therefore, if you don’t have the next big idea or experience or inclination to start your own venture, you can play a part in the start-up community by funding them.”