IyinOluwa Aboyeji

Lack of talent is killing Nigerian businesses – CEO of Future Africa

In this interview, Flutterwave and Andela Co-Founder and Future Africa Founder/CEO Iyinoluwa Aboyeji talks to Temitayo Jaiyeola on the Nigeria Startup Act, Funding Issues, Challenges of Running a Startup and Other Issues

The Startups Bill was recently signed into law by the President, Major General Muhammadu Buhari (Retired). Do you see the Startup Act having a positive impact on the country’s startup ecosystem?

I think it’s really the “end of the beginning”. The Nigerian startup ecosystem has been around for a very long time, but it has only been in the past 10 years that we have started to attract the attention of Silicon Valley and global investors. It’s a good step in the right direction that we’ve done a good job of committing the government to creating legislation that ensures the ecosystem and its interests are well taken care of and that there’s a launch pad for industry growth.

It’s a good development. It is not a perfect law, but it is a step in the right direction which will evolve over time, in particular because of its very innovative structure with the National Council for Innovation and Entrepreneurship.

This probably paved the way for more inclusive policies in the future as well. Because according to the law, there is this council which is democratically elected by all the labeled startups, and which is supposed to elect four representatives to the National Council for Innovation and Entrepreneurship. I feel that if this kind of structure does not work, it must be a question of participation. It would have nothing to do with whether or not the government provided the opportunity to engage.

Now it is up to the ecosystem to maturely engage with the government, because there is an opportunity to do so now.

How has the national payments scene transformed over the years?

It has become more sophisticated, and this is a great attraction for investments. We have one of the best payment infrastructures in the world, which is reflected, among other things, in processing times. We are the world leader in instant payment terms. The space has also produced a number of billion-dollar companies.

How do you think payment service banks will further transform the payment system in the country?

Payment service banks will provide widespread access to more people. This is the baseline. Everything else remains to be seen. But at the very least, more people will have access to financial services products where they engage with brands they trust.

What stage of growth is the country’s startup scene at today?

We are maturing. It is difficult to define the stage of growth. We are definitely maturing. The next step is to do more, which is the most important thing.

The space has changed a lot from what it was when I started. When I started, online payments were around 80 million in total volume, but now Flutterwave alone generates almost that much revenue. This means that the volume of payments has increased by several billions, because the revenue model is to take only one slice of each payment transaction, which also gives an idea of ​​​​the increase in space.

Funding for the Nigerian tech ecosystem has slowed, showing consistency with what is happening on the global stage. How would startups get through this period?

Startups should focus more on products and grow their business. It is very important and it is the starting point. There was an industry before the funding came, so I don’t think the lack of funding will stop the industry. Yes, we have had a lot of funding over the past two years.

It’s important for startups to focus on products and their customers during this time, rather than chasing after funding. I don’t think that’s the right approach at this time, given the funding environment.

During COVID, we had a capital pullback and things continued. I don’t think it’s as dark as people make it out to be.

I expect the challenges of the global market to worsen, so we could still have significant participation in labor action, as we have seen with some startups. This is one of the reasons to focus on the real business that is sustainable, has the potential to make a decent profit, etc. Without it, there is no business.

Can you explain to us how startup financing works on the continent?

I’ll be honest, there’s no one-size-fits-all process, and it works differently for everyone depending on what they’re lifting and who they’re lifting from. It’s not like applying for funding, it’s very different. But the consistent part is usually having a clear problem you’re trying to solve and a good story to tell about why it’s important for the investor to invest and how they’ll make a return by funding the solution to that problem.

In addition, one must have a good mind and be able to relate to those who have money and impress them. Ultimately, it takes proper governance and financial controls to deploy capital appropriately. There are a number of things that won’t change, but the process is different for everyone. There is not just one process.

Much of the funding on the continent comes from foreign investors. How can local investors start to fill more of the void?

With what is happening globally, local investors now have the opportunity to step in and fund more companies because we have a better idea of ​​what is real and what is not. We have a better idea of ​​what is happening on the ground. I think that equation will change.

Can you share some of the things the Future Africa Fund has been able to achieve and its challenges?

We have invested in over a hundred companies and deployed around $10 million. More than 40% of our team has women in its founding team. We have returned quite a bit of capital to our investors, and our IRR is in triple digits, hovering above 100%. We actually returned real money to our investors.

Generally speaking, we had to build a local capital base. A large portion of our funds come from Africans living in Africa and Nigerians living in Nigeria. But the structures and the investment system are not very easy to navigate. So we have to build them. More products need to be built in this regard. Some of the other challenges have been resolved by the Nigeria Startup Act. Before that, there was no incentive for angel investors to invest, but now there is a tax credit for investing in startups. There are a lot of things that can be done now that weren’t possible before.

There’s an argument that female-led startups aren’t getting enough funding. How can we bridge the gap?

I think we need to find and train more female managers. I think that’s the best way to bridge the gap. If we empower women fund managers, we would be able to find more women entrepreneurs because they can build relationships. It is easy for people of the same sex to build a relationship. And that’s where it starts. If you have more women fund managers, you will create more women entrepreneurs.

There have been a lot of issues around corporate governance as it relates to Nigerian start-ups. How can startups do better?

Previously, there was a shortage of professionals who indeed had the ability to provide the right advice to startups. People were in positions but didn’t understand the business, and these businesses are operating differently than they were used to.

But with more success and more maturity in the market, that is changing. Thus, there are now very experienced people that startups can put on their boards. They understand the business and have the experience to guide these businesses properly.

These experienced people will improve corporate governance in the country. It’s hard for people who don’t understand a business to govern it. It used to be that you couldn’t get good boards or people who understood your business. But now that there are more and more successful entrepreneurs who have left, who have more experience when it comes to running the tech business, we would start to have more qualified candidates for the boards of administration and things will eventually get better.

Andela and Flutterwave, two companies of which you were CEO, are now unicorns. Can you tell us how to build a unicorn? And how can we build more unicorns in the ecosystem?

There is no manual for building a unicorn. The idea is to start a business and try as much as possible to keep growing it until it flourishes. Also, it’s not you who will value your business like a unicorn, it’s the strangers who will. The best bet for unicorn status is to build a big business that solves a big problem.

What are some of the challenges of running a startup in Nigeria?

The biggest is the talent, the people who have already done it. You really have to invest in talent. The other really important thing is infrastructure. It is very difficult to find the right infrastructure, especially as one grows and the speed of growth.

It can be difficult. These are the biggest challenges. Again, we are constantly looking for ways to overcome them. And of course the political environment which the Nigeria Startup Act again solves.

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