Nigeria is set to launch a $40 million startup seed fund, with half from Japan’s development agency, aiming to support early-stage technology ventures under the 2022 Startup Act. The fund will be managed by the Nigeria Sovereign Investment Authority, which is tasked with fostering the local entrepreneurial landscape, amidst an existing thriving ecosystem that attracted over $2 billion in investments from 2015 to 2022.
The Nigerian government plans to launch a $40 million seed fund aimed at supporting early-stage technology startups. This initiative is designed to enhance the entrepreneurial landscape in Nigeria, where many startups have previously depended on private funding. The fund will be financed with half of the amount from the Japan International Cooperation Agency, while the Nigeria Sovereign Investment Authority will match this contribution, as reported by Kashifu Inuwa Abdullahi, head of the National Information Technology Development Agency (NITDA).
“We are going to sign the final agreement next month,” Abdullahi stated in an interview. The establishment of this fund aligns with the Nigerian government’s strategy to invest in its startup ecosystem under the 2022 Nigeria Startup Act. The Nigeria Sovereign Investment Authority will manage the fund, which is required under the startup legislation.
Nigeria’s startup ecosystem has exhibited remarkable growth, attracting over $2 billion in investments from 2015 to 2022—more than any other nation in Africa during that timeframe. Notable companies such as Paystack and Flutterwave have achieved significant valuations, largely based on their Nigerian operations. The startup law, coupled with this new fund, aims to institutionalize successful practices from the past decade, aiding newcomers in replicating such successes.
The proposed fund marks a pivotal step toward the full execution of the startup law, crafted with input from local stakeholders and international experts. Already, around 13,000 businesses have been registered as startups under NITDA’s criteria, benefiting from a three-year income tax exemption, alongside potential tax credits for their investors. Abdullahi mentioned that raising awareness about the law’s advantages is an ongoing challenge, indicating that outreach efforts are planned for all 36 states plus the Federal Capital Territory by year’s end.
Overall, government venture capital is highlighted as a crucial element in fostering startup ecosystems, as it provides necessary long-term investment support and valuable feedback on products without an immediate focus on financial returns.
In summary, Nigeria’s initiative to establish a $40 million startup seed fund represents a strategic move to bolster the country’s burgeoning technology sector through government-backed support. This fund, in conjunction with the 2022 Nigeria Startup Act, aims to facilitate growth among entrepreneurs and enhance awareness of available benefits. As such, it is anticipated that this initiative will foster a more vibrant and sustainable startup ecosystem in Nigeria.
Original Source: www.semafor.com
