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  Starting a business requires capital investment, whether it’s for expenses like equipment, inventory, marketing or hiring employees. However, securing funding can be one of the biggest challenges entrepreneurs face in Nigeria. With limited options from banks and investors, you need to get creative about raising the funds your business needs. Here are the top 10 ways to raise capital in Nigeria:
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  1. Personal Savings

One of the most common sources of startup funding is using your savings or assets. Taking out a loan against a home or car you own could provide capital without going into debt. The downside is putting your personal property at risk.
  1. Friends and Family

Reach out to friends and family members who may be willing to invest smaller amounts of money into your business idea. Be sure to make it a formal agreement by drafting legal documents outlining the terms and expectations.
  1. Angel Investors

An angel investor is a wealthy individual who provides business capital in exchange for ownership equity or convertible debt. Join angel investor networks and groups to pitch your business idea.
  1. Crowdfunding

Crowdfunding platforms allow you to raise smaller amounts of money from a large pool of people online through donation-based or reward-based models. It can validate demand but is better for one-off projects than long-term funding.
  1. Microfinance Loans

Various microfinance institutions in Nigeria offer small business loans, often targeting women entrepreneurs, those with low income or in rural areas. Interest rates are typically lower than banks.
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  1. Cooperative Society Loans

Cooperative societies that pool members’ money together may provide business loans using more flexible requirements than traditional lenders. The loan amounts tend to be relatively small.
  1. Government Grant and Loan Programs

Both the federal and state governments in Nigeria have various grant, loan and financing assistance programs available for entrepreneurs, particularly for priority sectors like agriculture.
  1. Local Investment Clubs

There are local investor clubs and funds that allow pooling of capital from members to invest in small businesses within their community. It provides financing while keeping money within the local economy.
  1. Corporate Venture Capital

Larger corporations in industries like banking, telecom and energy sometimes have their corporate venture capital funds that invest in promising startups that could become future partners or acquisitions.
  1. Private Equity Firms

For more established, high-growth businesses, private equity investment firms may provide bigger investments in exchange for majority ownership stakes. The process is highly competitive.
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Final Thoughts

Each option for securing funding as an entrepreneur in Nigeria has its pros and cons in terms of ownership stakes, interest rates, requirements, and conditions that must be weighed carefully. The key is to get started as early as possible, do your research, and explore all the available funding sources that could be a fit for your business’s specific needs and growth stage. Having a solid business plan, financial projections and exit strategy will go a long way in convincing potential investors or lenders as well.
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This article was first published on 6th June 2024


Chidiogo Shalom Akaelu holds a degree in English and Literary Studies, from the University of Nigeria. She is a freelance writer, editor and founder of Loana Press, a budding online publishing outlet.

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