I was delighted to read recently that Safermom, a Nigerian health tech startup, was one of the winners of the inaugural internet.org innovation challenge. This win saw them receive a $50,000 grant. A tidy sum that’s anywhere from 17–20 million Naira, depending on what day you look at the exchange rate. These funds will undoubtedly help Safermom grow, affect more lives and become more ‘profitable’. Profit used in both a financial and social sense.
Funding for startups in general across Nigeria is in a dire state. This is particularly true in health tech. In my time working in the sector, I’ve boiled down the greatest needs for startups to two things:
‘M&M’ not the chocolate, it stands for — mentoring and money.
Currently the health tech sector lacks mentors who’ve done it before and who can advise. It also lacks investors who understand digital health and fill the following important criteria.
– Be willing to take a giant leap of faith,
– Be patient and
– Not be paralyzed by the thought of losing all their invested money.
This is why grant funding like that won by Safermom is helpful. It allows startups the necessary breathing room to experiment. With a view to arriving at a workable model, without the pressure of a traditional investor. Several grants for health startups are available, apply for them if you’re a startup seeking funding. I’ll detail some of these in a future post. These are however not nearly enough to meet the financial demands of the many emerging health tech startups. Moreover they often don’t come with much mentoring or guidance to help.
There is a tested and trusted way to increase the M&M available to startups to experiment? It is called angel funding.
“Business angels also known as “informal private investors”, are private individuals who invest capital in companies during their early stage of development. In addition, they contribute their know-how or experience in company management and can offer valuable expertise and guidance”
Because of the deep interest angels often have in the area they invest, they often are willing to fill the aforementioned criteria. They willingly take that giant leap of faith, are patient and don’t get paralyzed by the thought of losing all their invested money.
In more developed ecosystems, angels are key people that provide M&M, do introductions to new partners, customers and investors. They turbo-charge the startup’s chance for success. An instance is that of Sean parker (depicted in the movie, ‘the social network’) who provided instrumental M&M that enabled Facebook become a billion dollar company. This is the upside, the possibility of tremendous gains when a startup becomes successful. In an example closer to home, iROKO’s angels made 3000% ROI.
Recently ‘Arise’, an angel group based in Lagos, came up with quite an interesting way to spur local angel investing. They’ve put together a syndicate where investors commit N30,000 over 18 months to create a pool of funds. This is then invested in a deserving startup selected from a pitch event.
Health tech in Nigeria needs something like this. A platform where angel investments can be made in viable ventures. Not just cash investments but advice, introductions to partners and practical connections. This would enable the ventures burst into life.
I’m working on creating a platform to spur digital health angel investing, particularly from health care professionals who intimately understand the problems and nuances of healthcare. If you want to contribute financially, intellectually or in kind please do get in touch. We have the opportunity to do something special in Nigerian health tech. Don’t be left out.
Meanwhile if you’re in Abuja and want to learn more about angel investing. Ventures platform in is holding an information session on the 3rd of November. Learn more here