How to Get Funding for Your Crypto Startup in Nigeria.

We have recently seen a spike in the funding of crypto companies in Nigeria. The funds are so huge that several people in other business sectors begin to wonder what magic is happening. The reality is that this funding does not seem to be slowing down anytime soon.

If you also want to benefit from the funding trend in Nigeria’s crypto world, The question is, how? According to a report from one statistical agency, Nigeria garnered about 1.6 billion naira from foreign investors in 2021 alone at different stages. 

The vast majority of these startups were fintech companies. Today’s trend is on the rise, and any indication that it will slow down is not foreseeable, especially with today’s economic state of persistent rise in inflation.

It was reported that 60% of the funding raised from US investors went to Africa, with Nigeria the highest gainer. The bulk share of the shares Nigeria received went to fintech companies, and the remaining mainly to the logistics industry. 

These investors are interested in funding these new fintech startups because of their lucrative capacity to generate a considerable amount of interest. And the number of investors willing to invest is always increasing. 

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What Do You Need to Get Funding for Your Startup? 

The first thing most investors want to see is your pitch deck. It clearly shows the road map of what your crypto business stands to achieve and what they (investors) can gain from investing in it. 

According to the English dictionary, a pitch deck is a short presentation to stick your product out. In other words, it is a short presentation that can sell your business idea to prospective investors.

It must therefore be organized to capture your desired audience or investors” specific interest. 

Critical components of a Pitch Deck

If you want to secure funding for your crypto start-up in Nigeria, your pitch deck must have the following attributes;

1. High-Quality Slides
   
   You must polish it with high-level summary slides, the problem statement, the product, the market strategy, the team, financial projection/modeling, whitepaper or lite paper, among others. 

2. Executive summary

The executive summary is a component of the business plan. The purpose is clear and convincing enough to attract investors with a rundown of what the startup is about and tends to achieve. It is usually a two-page statement.

3. The problem statement 

The purpose of your startup, which cannot be different from the goal of every other profitable venture, is to solve a problem. You must clearly state the problem’s intent to solve it. 

4. The product 

The product is limited by how you intend to solve the problem identified through the crypto startup. 

5. How your Products Can Solve Problems

You must state why, among other competitors, your product is the solution to solving the identified problem. You must be convincing enough to get investors to be excited about this.

6. The market’s strategy 

Your market strategy must be realistic, viable, and workable within the timeframe you have proposed to work with. Also, you must state and explain the process mentioned so that, beyond a reasonable doubt, investors can see that it is workable. 

7. The team

You must enlist the team for the project. Their portfolios must show the level of qualification they have in the particular field of startup you are requesting funding for.

Getting funding from a pitch deck without a competent team is impossible. One of the many secrets startups use in raising funding today is to have a team respect gender equality.

8. Financial projection/modeling

Financial projections give your business idea a feasible investment qualification in that investors want to see that the startup is viable to invest in and has a very high chance to scale. You must, therefore, show the projections in terms of profit levels achievable in quarters.

To get an investor for your crypto startup in Nigeria, you must have financial projections that indicate that you can generate funds with your normal activities. Investors are more concerned about your cash flow, especially your operating cash flow. 

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What are the types of funding available for crypto startups?

Pre-seed funding

Pre-seed is the funding you can get before the business is acted upon. This funding can be from family and friends, from the founders themselves, or even from partners.

The fact is that this capital funding is small in comparison to the other kinds of financing. It will, however, help you to execute your crypto operations only on a smaller scale than you would have desired. The fund is made available for operational setup. 

However, you should understand that external investors are not likely to invest in Pre-seed funding. 

Seed funding

Having received pre-seed, operations setup completed, and business started, the seed comes in as a follow-up. At this point, your crypto startup is fully ready to launch its product. It has been established that the business is viable.

However, because of the high risk involved, it is mostly venture capitalists and angel investors that finance the business at this stage. They invest in high-risk business startups with funding ranging from $10,000 to $2 million.

Series A, B and C funding

The series funding comprises three different series: A, B, and C. Series A funding is also called development stage funding. This is the funding provided for a business to fully develop its products. It is only available to startups with a track record and an established user base.

With consistent revenue figures or other key performance indicators, investors are willing to invest in money-making businesses, not just companies with expected future gains. Funding is usually between $2 million and $15 million.

Series B funding 

This is also referred to as later-stage investing, mainly for expansion. Series B funding is available to businesses that have successfully developed their products but want to expand to a new environment or another market. 

For instance, you might want to expand to Africa after developing your crypto business in Nigeria. The funding at that stage is called Series B funding and is usually between $15m and $60m.

Series C Funding

This type of funding is usually in preparation for an Initial Public Offering and is meant for acquisition. The business has become successful and is ready to dominate the market by buying all possible competitors. 

The investment is based on complex data and not on expectations for future success. Specifically, Series funding is for businesses with proven business models and money-making companies. 

4. Upscaling

Upscaling to the blockchain is a way of getting investors to invest in your business. Specifically, it is a proven way of funding your crypto startup. This type of funding is always indicated based on the expectation of future gain. It is, therefore, possible to regard upscaling as seed funding. 

5. Incubation

This funding is made possible by a third-party merchant who incubates your business. They give you the training to make your business presentable and lucrative to potential investors. The sole aim is to help sell your startup to investors.

The downside, however, is that incubators demand a percentage of your company when it finally gets funding from investors they helped you secure.

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What crypto startups raised funding in Nigeria?

We have established that in Nigeria, cryptocurrency startups had a good year compared to other sectors in the past year and are still increasing in terms of investment and transaction rate.

According to data from Paxful and LocalBitcoins, Bitcoin’s peer-to-peer transaction rate in Nigeria would have topped $38 million in June 2021, up 8.7% from May. According to the same sources.

This number might be even higher since it excludes operations from other significant exchanges like Binance and Remitano. According to statistics from Google Trends, Nigeria was ranked as the second most enthusiastic country for bitcoin, just after El Salvador.

AFEN Group

Founded in 2021 and raised $1 million via NFT, it uses blockchain technologies, notably the Binance innovative chain network, to provide solutions in Nigeria.

The African Blockchain Lab

This is a blockchain technology firm and developer of the African crypto app VIBRA Nigeria, which was founded in 2021 and received $6 million from international blockchain investors Dragonfly Capital, Hashkey Capital, SNZ Capital, Fenbushi, Cadenza Capital, Head & Shoulder X, LeadBlock, Hash Global, Bonfire, Krypital, Despace, and others.

Bitmama

Based in Nigeria and formed in 2019, it offers a stable blockchain infrastructure that enables users from all around Africa to perform cryptocurrency transactions.

It was founded in 2019 and has raised $350k in funding from Flori Ventures, Emergence Capital, Fedha Capital, and others.

Busha

This is a crypto exchange and investment management company founded in 2018 that secured $4.2 million from Cadenza Ventures, Blockwall Capital, CMT Digital, Greenhouse Capital, Raba Capital, etc.

Lazerpay

“Stripe” for crypto payments was launched in Nigeria in 2021 and raised an undisclosed sum from Nestcoin and others.

Nestcoin

This startup was created in 2021 and raised an undisclosed amount from a secret source. It builds, operates, and invests in crypto native goods for everyday people in Nigeria.

Payourse

This Nigerian company creates user-friendly products and solutions that enable Africans to accept cryptocurrency.

Payourse was founded in 2019 and has secured $600,000 from Micheal Ugwu, one of Africa’s largest NFT collectors, Flori Ventures, Olumide Soyombo’s Voltron Capital, and Allegory Capital; CELO co-founders Marek Olszewski and Rene Reinsberg, Kola Aina of Ventures Platform.

Wicrypt

A Nigerian blockchain-based WiFi sharing network created in 2018 received $1.5 million in funding from Polygon inventor Sandeep Nailwal, Cardano’s Occam, Inclusion Capital, Outlier Ventures, Chain Capital, Pluto Digital Assets, Onega Ventures, N7 Labs, and PolkaFoundary, among others.

Xend Finance

NGC Ventures and HashKey invested $500k in decentralized finance (Defi) network for Nigerian credit unions and cooperatives created in 2020.

Yellow Card

A crypto exchange founded in 2016 secured $15m from Valar Ventures, Third Prime, Castle Island Ventures, Square, Blockchain.com Ventures, Coinbase Ventures, Polychain Capital, BlockFi, Fabric Ventures, Raba Partnership, MoonPay, GreenHouse Capital, etc.

In conclusion, getting funding for your crypto startup in Nigeria is possible and can be pretty soon too, considering the spike in interest from investors to put their money into the fintech industry.

requires you to follow any of the discussed methods of securing funding.