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Amid COVID-19, Nigerian start-ups secure big-ticket private equity investments


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IN spite of COVID-19 disruptions and economic downturn in the last one year, Nigerian start-ups have been able to secure big private equity (PE) investments and venture capital (VC) that are redefining their operations.

The PEs and VCs consist mainly of funds and investors that directly invest in private companies, or engage in buyouts of public companies, resulting in the delisting of public equity, Investopedia says.

On the other hand, angel investors are high-net-worth individuals who pump their money into start-ups or newly-established businesses.

According to The ICIR findings, these funds secured by Nigerian start-ups are focused majorly on expansion of operations, engagement of highly skilled manpower and investment in new ventures.

In November 2020, auto technology company, Autocheck, secured 3.4 million Dollars in a pre-seed funding round to support its growth.

The funding round was led by TLcom Capital and 4DX Ventures, two PE firms. The funding was also supported by Golden Palm Investments, Lateral Capital, Kepple Africa Ventures, MSA Capital and some local angel and seed investors.

Etop Ikpe, founder and chief executive officer of Autochek, said after the deal that the firm would use the investment to grow its Nigerian and Ghanaian markets while further investing in technology and in its team.

Autocheck helps buyers to secure used vehicles and to find exactly the cars they are looking for.

“This early stage investment allows us to get started with the work of developing technology products and services that will transform automotive trade on the continent, whereby we significantly improve transactions and after care support for car owners, dealers and other stakeholders across the African automotive industry,” said Ikpe said, in a statement last November.

In April  2020, Okra, a fintech firm, raised 1 million Dollars from TL.com Capital, a venture capitalist.

Okra was founded in June 2019 by Fara Ashiru Jituboh and David Peterside, two Nigerian entrepreneurs.

Okra said after the deal that it would continue to build a super-connector API that allowed individuals to connect their bank accounts directly to third party applications.

Also in April, 54gene, an African genomics research and development company, raised 15 million Dollars in a Series A round of funding, in addition to 4.5 million Dollars earlier secured.

“I am pleased to announce @weare54gene’s Series A round of funding closed at $15m. The fund raise was led by @adjcap,” Abasi Ene-Obong, CEO of 54gene, Tweeted on April 14, 2020.

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“With previous participation from YCombinator, KdT Ventures and Better Ventures, this brings our company’s total VC investment thus far to $19.5M,” he further said.

This month, uLesson, a Nigerian edtech start-up, secured 7.5 million Dollars in a Series A round led by Owl Ventures, according to Sim Shagaya, founder of the firm.

Apart from Owl Ventures, other investors involved in the deal were TL.com Capital, Founder Collective and LocalGlobe.

The funding is expected to enable the start-up, founded in early 2020, to expand its online education to Eastern and Southern Africa.

“At uLesson, we know we have a critical role to play in this ‘new normal’ and this funding will be crucial in our dive to fill the major gaps in Africa’s education system through tech,” Shagaya said on Tuesday, after the deal.

David Frankel, managing director of Founder Collective, one of the investors, said Sagaya was assembling a world-class team to help realise his vision of a modernised education system for one of the highest potential places in the world today.

Sagaya had, in November 2020, secured 3.1 million Dollars in a round led by TL.com, according to the edtech company.

Read Also: Forex scarcity in Nigeria paints grim picture for investors, manufacturers as recession looms

More so, Nigeria-based API fintech start-up, OnePipe, said it raised almost 1million Dollars in December 2020, in a pre-seed funding led by Techstars and Atlantica Ventures.

Within the COVID-19 period, health start-ups have performed considerably well in terms of raising PEs and VCs.

“Health and food companies have done considerably well because they are two most essential sectors within the COVID-19 period,” Ambrose Oruche, former acting director-general, Manufacturers Association of Nigeria (MAN), said in November 2020.

Apart from 54gene, a Lagos-based e-health startup, Helium Health, raised 10 million Dollars in May 2020 to expand operations and capture new markets.

 Helium Health is a healthtech company founded in 2016.

Its funding round fund was led by Global Ventures and Asia Africa Investment & Consulting (AAIC), including  Tencent, Ohara Pharmaceutical Co, HOF Capital, Y Combinator, VentureSouq, Chrysalis Capital, among others.

Nigerian startups contributed more than 17 percent of the over 1 billion Dollars secured by African start-ups in 2020, according to a recent report by Startuplist Africa on the African Startup Ecosystem.

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The report said that the funds were secured by over 280 startups in more than 350 deals across the continent in 2020.

COVID-19 and Nigerian economy

COVID-19 has disrupted global supply chains and plunged economies, into Nigeria’s, into recession. The virus, which began to spread from December 2019, has infected 96.64 million people across the world, killing 2.066 million as of Wednesday.

The Nigerian economy fell by 3.6 percent in the third quarter (Q3) of 2020, after slumping 6.1 percent earlier in the second quarter (Q2), according to the National Bureau of Statistics (NBS).

But this has not stopped PE or VC investors from betting on Nigerian start-ups where they see demography and virgin market as opportunities.

 

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