Lack of talent killing Nigerian businesses – Future Africa CEO

This interview features Iyinoluwa Abodeji, co-founders of Flutterwave, Andela and founder/CEO at Future Africa. Temitayo Jaiyeola The Nigeria Startup Act, funding issues and challenges in running a startup, as well as other issues

Major General Muhammadu Buhari (retd) signed the Startup Bill into law. Do you see the Startup Act impacting the nation’s startup ecosystem positively?

I think it is really the ‘end of the beginning’. Although the Nigerian startup ecosystem is well-established for many years, Silicon Valley and other global investors have only started to pay attention in the past 10 years. We have made a positive step in the right direction by engaging the government to create an Act that will ensure that the ecosystem and its interests are protected and that there is a platform for the industry’s growth.

It is a positive development. Although it’s not perfect, it is a good step in the right direction.

This may have helped to create more inclusive policies in the future. By law, all labelled startups can elect to a council, which will then elect four representatives to National Council on Innovation and Entrepreneurship. My sense is that if this kind of structure doesn’t end up working, then it must be a question of participation. It doesn’t have to do with whether or not the government provides an avenue for engagement.

It is time to get to know the government and to be mature.

How has the nation’s payment scene transformed over the years?

It is becoming more sophisticated and a major draw for investors. Our payment infrastructure is among the most advanced in the world, as evidenced by processing times and other metrics. Our instant payment times are the best in the world.  This space has also seen the rise of several billion-dollar businesses.

Do you believe Payment Service Banks will transform the payment system of the country?

Payment Service Banks provide generalised access to more individuals. This is the base. The rest is up to you. At the very minimum, people will be able to access financial services products if they choose brands they trust.

What growth stage is the nation’s startup scene today?

We are maturing. It’s difficult to identify the growth stage. We are maturing. Next is to do even more. That is the most important.

It has evolved a lot since I first started. Online payments had a total volume of around 80 million when I started. Flutterwave now has almost that many in revenue. This is because you only take a portion of each transaction. It also gives an idea of how large the market has grown.

According to what is happening globally, funding for the Nigerian tech sector has slowed. What is the best way for startups to navigate this period?

Startups should focus more on their products and building their businesses. It is essential and the beginning point. Funding was not available before the industry existed. Yes, there has been a lot funding in the last few years.

It is crucial that startups do not chase funding and instead focus on their products. Given the current funding environment, I don’t think this is the best approach.

There was a pullback of capital in COVID. But things went on. I don’t think it is as doomy-like as people are making it seem.

As I anticipate the challenges in the global market will get worse, there might still be a significant uptake of labour action, as we’ve seen with some startups. This is why it is important to concentrate on the business that is viable, can make a decent profit and is profitable. Without it, there is no business.

Could you please show us how European startup funding works?

Truth be told, there is no standard process. Each person’s fundraising goals and sources will vary. It isn’t like applying to fund funding. However, the common thread is having a clearly defined problem and a compelling story to share about why funding is necessary and how it will benefit the investor.

A good mind is essential, as well as the ability to communicate with and impress those with money. The right governance and financial controls are essential to ensure that capital is properly deployed. There are quite a number of things that won’t change, but the process is different for everyone. There is no one way.

Many of the funds on the continent are provided by foreign investors. What can local investors do to help fill this gap?

Because we are better informed about what is happening worldwide, local investors can now step up to invest in more companies. We have a better understanding of what is actually happening on the ground. That equation is likely to change, I believe.

Please share the successes and challenges of the Future Africa Fund.

We have invested over 100 times in companies and spent approximately $10m. Over 40% of our founding team members are women. We have returned substantial capital to our investors. Our IRR is in the three digits and hovering around 100 per cent. Our investors actually received cash.

We have generally had to establish a local capital base. Our fund is largely made up of Nigerians and Africans who live in Africa. The investment system and structures are complex. These structures and the system for investment are difficult to navigate. In this regard, we need to build more products. The Nigeria Startup Act has solved some of these problems. Before it, there wasn’t any incentive for angel investors to invest, but now, there is a tax credit for investing in startups. There are a bunch of things that can be done now, that weren’t possible to do before.

Arguments abound about the insufficient funding for female-led startups. How can we close the gap?

I believe we should train more female managers. That is what I believe will bridge the gap. We can find more female entrepreneurs if we empower female fund managers. They are able to build relationships. It’s simple for two people of the same sex type to have a relationship. This is where it all begins. You will see more female entrepreneurs if you have more female fund managers.

Nigerian start ups have had many issues with corporate governance. How can startups improve their corporate governance?

There was a shortage of professionals capable of providing the right guidance for startups before now. People were in positions but didn’t understand the business, and these businesses work differently from what they were used to.

This is changing as the market matures and has more success. Startups can now bring in highly experienced people to their boards. They are familiar with the business and have the ability to lead these businesses effectively.

These people are going to improve the governance of corporate affairs in the country. It can be difficult for someone who doesn’t know a business to run it. Before, you couldn’t get proper boards or people who understood your business. Now that we have more experienced entrepreneurs in the technology industry, and are more successful, we will have more qualified candidates to fill our boards.

Andela (the company you founded) and Flutterwave (the company you served as CEO of) are now considered unicorns. Could you please show us how to make a unicorn? What can we do to create more unicorns in our ecosystem?

A guideline is not required to build a unicorn. It is important to start a business and keep it growing until it blossoms. Your business is not going to be deemed a unicorn by you, but outsiders will. A great business that solves big problems is the best way to achieve unicorn status.

What are the challenges faced by a startup in Nigeria,

The greatest asset is talent. People who have done this before are the best. It is important to invest in talent. Infrastructure is another important aspect. It is difficult to find the right kind of infrastructure, especially when one grows rapidly and needs it.

This can be difficult. These are the most difficult. These are the biggest challenges. We continue to work on ways to overcome them. The policy environment is also addressed by the Nigeria Startup Act.