As contemporary technologies are increasingly applied to Nigeria’s real estate sector, we’re seeing an emergence of PropTech startups that take on challenges in varying niches. But these ventures, novel and bold in their approach, still need to secure funding to scale their operations and make a real impact.
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In an environment like ours, convincing traditional financiers to support your project might be difficult. If you’re really serious about funding your startup’s moves, you’ll have to consider non-traditional alternatives.
This article walks you through various funding sources that may work for your nascent PropTech enterprise (or startup idea). Hopefully, you’ll find a few of them appealing enough to pursue.
Angel Investors and High-Net-Worth Individuals
Angel investors tend to be wealthy individuals with disposable income who invest in promising early-stage startups. Many Nigerian angels are interested in PropTech because of the country’s housing deficit and growing urbanisation.
If you want to attract angel investors, here’s how to go about it:
- Prepare a clear business plan with strong revenue projections.
- Demonstrate your unique value proposition (e.g., solving land verification issues or simplifying property payments).
- Engage local angel networks like Lagos Angel Network (LAN) or platforms such as VC4A.
Venture Capital (VC) and Private Equity (PE)
Compared to angel investing, venture capital funding is more competitive. But it can provide significant capital if your startup has traction. For one thing, the scope of opportunities is broader because you can reach out to VCs across the world.
These days, Venture Capital firms are looking for PropTech startups utilising technologies like AI, data analytics, and blockchain to solve the biggest problems in real estate. You can pitch to any number of VCs. Just be sure that they’re PropTech-friendly or have supported PropTech startups in the past.
Some notable VCs and Private Equity firms to explore are:
- Ingressive Capital
- TLCom Capital
- Alitheia Capital
- Ventures Platform
When pitching to VCs, make sure to explain things like your startup’s scalability, compliance with NDPR (Nigeria Data Protection Regulation) and land-related legal frameworks. These things will help to build investor confidence.
Government and Regulatory Initiatives
The Nigerian government and state governments appear to be hungry for solutions to the country’s housing problems. So, if they deem your solution relevant to local needs, they might help with some financing.
You can seek funding such as grants, low-interest loans, and innovation challenges through agencies like the Bank of Industry (BOI), Lagos State Employment Trust Fund (LSETF), and various pro-innovation funds launched by government bodies.
These programs may favour startups that align with affordable housing, digital land registry, and smart city development. You have a better chance of securing help from government MDAs if your work is in any of these areas.
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Pooled Funding
Another path to obtaining the funds your PropTech needs is via pooled funding or crowdfunding. The risk with this is that you may not get as much as you hope from the general public. But on the flipside, a significant inflow of funds from crowdfunding or pooled funding platforms may signify that there’s a real need for, and appreciation of, the solution your PropTech is selling.
One place to generate funds from the public is GetEquity. This app allows investors to fund very early-stage startups, in exchange for a share of company equity (as the name implies). Alternatively, you could appeal to international audiences through global crowdfunding platforms if you have access to those.
We would advise that you build trust by explaining your startup plans and being transparent with fund utilisation. Also, use social proof; early backers and testimonials will boost confidence amongst people looking to give to your business.
Partnerships with Real Estate Developers
Partnerships with established developers can lead to funding and access to property portfolios. Developers are often willing to invest in technology that helps them sell faster or manage properties efficiently.
One idea for strategic partnerships would be a revenue-sharing agreement. This would apply when the real estate company you’ve partnered with makes sales with the help of your solutions. Another is a joint venture where your platform handles sales, and the partner company provides inventory.
Accelerators and Incubators
Incubators and accelerators are programs that help startups gain clarity with MVPs, achieve product-market fit, and figure out scalability, among other things. These programs will sometimes offer funding as well, so they are good places to look for that.
On the global stage, you can apply to ventures like YCombinator, Techstars, and 500 Global. And on the local front, there’s Co-Creation Hub, Greenhouse Capital, and MEST Africa, among others.
Debt Financing and Revenue-Based Financing
If you have a predictable cash flow and are looking to plug short-term financing shortfalls, you can explore funding options that don’t dilute your equity stake. We’re referring to things like revenue-based financing, for instance. While traditional banks could help with this, you may also seek it from robust digital lenders such as Carbon and FairMoney.
This type of funding ensures that you keep full equity while getting the growth capital you need.
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Final Words
Regardless of which funding source or model you choose, the questions from potential lenders or investors will be very similar: Are you trustworthy? Is your startup solving truly pressing problems? Is it able to recoup investments or repay loans, plus duration-tied benefits (interest or ROI)?
Your startup should at least have strong potential that lenders, grant makers, or investors can bank on. Communication about the potential wins for all parties involved must be compelling, too. Get all these things right, and you’ll have the funding you seek soon enough.
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