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The startup boom that we’ve witnessed in Nigeria has been powered by the ingenuity of smart young people. Their tech-savvy, innovation, and eyes for opportunities is fueling an ongoing transformation of the country’s economy. But there have been other contributors to this growth, including venture capital firms. If you would like to support startup growth, you may want to know how to set up a venture capital firm.

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However, establishing a VC firm is no walk in the park. Anyone (or group of persons) who intends to create such an organization must be prepared to take on the costs, regulatory demands, and risks associated with it. However, we are making the journey easier by laying out the steps to founding a VC firm in Nigeria. But first, let’s run through what a venture capital company is, and how it operates.

What is a Venture Capital Firm?

A venture capital firm is an organization that invests in early-stage startups with high growth potential, in exchange for equity or part ownership.

How Does Venture Capital Work?

Venture Capital firms pool capital from various investors (called Limited Partners) and invest it in startups. This gives them an ownership stake in those startups, which they may share with the founder(s) and any other invested parties. VCs may invest at various stages of startups, usually seed, series A, series B, and so on. VC investing is high risk, high return. Quite often, the hope is that the ROI from a few successes will far outweigh the losses of failed investments. Venture capital organizations typically support the development of their portfolio startups by offering expertise, mentorship, and networking opportunities. VCs could sell their stakes in an exit, as may happen if the startup lists on the stock market or gets bought by another company.

Steps to Set up a Venture Capital Firm

The following are the steps you should take to set up a venture capital firm in Nigeria:

Get the Basics in Order

There are a number of things you should have in place at the start (or in the early phase) of your journey into the world of venture capital. They include a deep knowledge of the space, its players, and how it all works; valuable contacts, such as potential cofounders and investors; and some investing experience. The last bit is especially important. Not many people are willing to commit their money to a person who doesn’t have a track record in delivering ROI.

Rack Up Some Wins

This is a follow-up on the last point we made. If you realize that you don’t have enough experience to convince Limited Partners (investors), you could try to achieve investment successes of your own first. For example, you could become an angel investor and participate in deals. Or you may utilize a Special Purpose Vehicle (SPV), which means pooling funds from others to invest in a single company.

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Find a Partner

You may want to go solo with founding a VC. However, you’ll raise your chance of succeeding if you partner with someone else whose skills complement yours. For example, if you have a background in finance, you could team up with a person with experience in operations. Your role as founding General Partner (if you choose to take it) will involve drawing up an investment thesis, putting a portfolio together, attracting founders, and engaging Limited Partners.

Register with the CAC

The Corporate Affairs Commission (CAC) is the official body responsible for business registrations in Nigeria. Note that your VC firm should have a minimum share capital of ₦20 million in order to register with the CAC. Actual incorporation costs will depend on the amount of share capital your firm has. Those costs are largely composed of filing fees and stamp duties.

Register with the SEC

The Securities and Exchange Commission (SEC) is the regulatory body that oversees investment organizations and activities in Nigeria. VCs, being investment firms, are expected to register with the SEC. The cost of doing this currently stands at about ₦11,250,000. The registration fee (₦10 million) forms the bulk of this cost, with the application and processing fees making up the remainder. Note that you’ll have to submit audited accounts, bank statements, and the CVs and IDs of directors, among other things.

Embark on Fundraising

Having set up your VC firm, your next step would be to raise funds for investments. You will have to solicit those funds from external investors. Those investors, if they commit, will become your Limited Partners. They won’t be actively involved in managing and administering funds—those duties will be yours as a General Partner. Be sure to sign a legally binding agreement with Limited Partners that stipulates the terms and conditions of your working relationship.

Solidify Operational Framework

Your VC firm should have a structure to it. And its operations and procedures must be well defined to ensure efficiency. Steps you can take in this direction include opening bank accounts for your fund, hiring an audit firm to audit the fund (if need be), and getting a lawyer to help with negotiations.

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Final Words

This article has walked you through how to set up a venture capital firm in Nigeria. It might seem like a daunting task, one that demands a lot of resources. But if you’re passionate about making a difference through finance, you can navigate the tough path to establishing and running a VC.

Did you find this article useful? Contact us: editor@connectnigeria.com

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This article was first published on 5th April 2025
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ikenna-nwachukwu

Ikenna Nwachukwu holds a bachelor's degree in Economics from the University of Nigeria, Nsukka. He loves to look at the world through multiple lenses- economic, political, religious and philosophical- and to write about what he observes in a witty, yet reflective style.