Another funding option
We continue to shine the spotlight on one of the main provisions of the Nigeria Startup Act - Startup Investment Seed Fund. Seed fund is a type of early capital investment in a startup that is meant to provide support in the company until it can generate steady cash flows or ready for subsequent investment.
The startup investment seed fund, as encapsulated in Section 19 of the Act, shall be applied to finance labelled startups, provide early-stage finance for labelled startups, and to provide relief to technology laboratories, accelerators, hubs and incubators.
According to Section 19(2) of the Act, “there shall be paid into the Fund on an annual basis, a sum not less than N10,000,000,000 from sources to be approved by the Council”. Managed by The Nigeria Sovereign Investment Authority (NSIA), the Fund aims to help get startup ideas off the ground quickly.
Every year, at least 10 billion naira will go into financing startups, made possible by the Act. It gives startup founders another option when seeking funding, especially in locations where there are fewer private investors. Institutions that support the growth of startups such as tech labs, accelerators, etc., are not exempted from the seed fund.
The Fund Manager (NSIA) will develop and manage the framework for the modalities to fund, oversee and access the fund.
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Armed with best practices
Representatives of the Nigeria Startup Act (NSA) program team, Japan International Cooperation Agency (JICA), and National Information Technology Development Agency (NITDA) arrived back in Nigeria after a successful time in Tunisia. As the only African nation to have successfully implemented a Startup Act, the goal of the trip to Tunisia was to pick the brains of those behind its success with the view to replicating the same in Nigeria.
We all look forward to putting resources and processes in place to aid in the actualisation of the Nigeria Startup Act.
'We have already kickstarted the process of implementation'
The Project Manager of Nigeria Startup, Victor Famubode, sat down with Technext to discuss a wide range of topics about the Act.
He answered questions on areas including the significance of the Act to the startup ecosystem, progress in the Act’s implementation, how government change could affect the implementation of the Act, and other topics.
"We have already kickstarted the process of implementation", he declared. Catch up on the full interview here
Mondaq’s key legal considerations when raising capital
Raising additional capital to finance business operations is often a “tedious process that requires a considerably high level of preparedness” according to Mondaq. They suggest seven (7) important legal factors startup founders are to consider when seeking to raise capital. They include: the startup's business structure; ownership of intellectual property; share structure of the company, among others. Mondaq advises founders to also “seek professional legal counsel as they are more thorough with due diligence”.
Training, capacity building and talent development is one of the core components of the Nigeria Startup Act. This will enable startup founders to build their capacity further, especially in areas where they have identified gaps, e.g, raising capital.
NITDA strengthening ties with the Startup ecosystem
The Nigeria Startup Act’s Secretariat, National Information Technology Development Agency (NITDA), recently flagged off the Technology Innovation and Entrepreneurship Support (TIES) scheme. “TIES aims to harness the innovative talent of Nigerian youths and provide them with the necessary support to build the required digital skills and viable tech businesses in a way that could significantly contribute to job creation and economic prosperity for millions of young people'', writes Voice of Nigeria.
With its main objective to create an ecosystem where startups can thrive in Nigeria, TIES owes its success partly to widespread adoption of the Act across the country. Supported by a Startup Act, the potential for TIES participants to achieve success may depend on the ecosystem they are situated in. State governments and its stakeholders must ensure these entrepreneurs remain in their states after the scheme. Implementing the provisions in the Act is a good place to start.