It is no longer news that tech company or start up are now taking it from oil company.
They are now the hit thing in the business world, but while there is a lot of money to be made there is also a lot of risk; risk that can cripple entrepreneur and make them run away from anything business.
I once heard a man saying “himself and his unborn kid will never try business again funny isnt it, you cant blame him, he has seen the ugly side of tech startup.
Unlike business you know what you are tuning after, there is an already business model, you just need to find it and follow it and success will be yours, this is not the same when starting tech company you will have to create a new demand, build business model and acquire new customers; all of this contributed to the high rate startup failure in the world.
I thought this article is about how to start tech company successfully in Nigeria not what causes it failure.
Don’t mind me, though it may look like discouragement I need to this to know how ready you, if all what I wrote above make you want to back out from starting a tech company, it is not to late to back out from it because you will surely experience problem that will make you want to quit but if you have solid determination you will surely excel.
How to start tech company in Nigeria
1) Idea Generation
The first step in starting your tech company is idea generation, do not be confuse, I didnt mean you need to think up idea no! Don’t even try it; you might fail if you did.
According to Paul Graham, best idea are not think up they wear discover and if you check the top tech company today, you will know that the idea behind them was simple, no one thought it could become great.
The likes of Google, Facebook, Uber and Apple all started from simple idea that everybody know, idea that many people pass.
Though some hard ideas also go on to become big company, but according to research over 80% of top tech company in the world started from small ideas.
Facebook started with idea to connect Harvard student not the world
Google started with idea of showing the best search result
Apple started with a mission to make computer a household item.
If you check these company very well there are already company doing what they are doing, they just added a twist to it
How do I find this small idea?
Like I stated earlier you should not think up the idea, soft idea will come from what you are doing right now, what annoy you, what you think could be done in a better way, what you think could be market in another way.
Small ideas are everywhere, just that people don’t think they could become a company.
Always carry jotter around to write down whatever idea that pop up
After writing the idea it is time to check if they can be follow remember startup will take at least five years of your life you don’t want to waste it on unprofitable idea
Check the ideas and thick the one that conforms with your life goal and ambition
Then go to google and look for people doing that business, the less people doing it the better.
If there is a cabal (big companies) doing it you should check yourself well do you have resource to beat them?
Your idea should be what few startup or companies are chasing
After that, check if you have resource to bring the idea to stage where angel investor or venture capitalist will come in.
2) Find cofounder
The next stage is to find cofounder, this stage is hard you need to thread carefully, usually the best cofounder are those that are friends five years back but you might not be lucky, the next thing is to do it alone but it is also not advisable.
Research conducted by venture capitalist and angel investors, make it known that 60% of tech startup founded by two or three cofounder make it to fruition while just 5% of lone founder push their startup to lasting stage.
If you have some of your friends that have interest in your startup count yourself lucky because you would have known the person well enough; how the person will react to deferent problem that may arise, the worth of the person and what they are good at.
If you can’t, you will need to pause your startup or keep working on it till you find one.
Below is where you can find cofounder for your tech company or startup in Nigeria
You can find confounder in industry gathering but don’t go there for the purpose of getting cofounder, if you do there is high chance of you taking in bad person due to desperation.
Go there to learn and associate and who know you might find the right person during dialogue.
By now you should have register to online platform (group) where your industry uses, take your time to observe, you will notice that there are some people who are knowledgeable in a particular area, interact with them to further proof your stance and from there you can bring them in.
You can also register to platform like angel list; there you can browse details of angel investors and send them message when you find one that tick your boxes.
Ask other entrepreneur in your niche, they will surely know one or two people they can refer to you and from there you can set up a meeting to confirm the person.
When looking for cofounder, I will advise you to be patient, in fact let at least 4 month of due diligence pass before you finally accept them as your cofounder.
3) Push and find customer
I know you are thinking the next step is fund raising, no! No one will back you without something to show, even if it is prototype.
Do not get carried away by the term “angel investor they are nothing like the real angel, they will only put their money in startup that is already getting traction believe me nobody like losing money.
Therefore you need to have some money to build your prototype and you must be able to get custormer or user.
Below is how to build your startup and get customers or user
Look for the core function of your startup (app, software, web app) that will determine the success of your startup.
For instance the core function of google is the search not the AdSense if they fail to return user query, user will move to other search engine. Build this core function and release it.
Haa, it is not perfect na?
What you want to test is if there will be customer at all, so that you will not waste your time.
Take what you develop to people and ask them to have a trial, after the trial ask them to pay, yes!, let them pay people hardly part with their money unless it worth it.
Or you can create an ad campaign and lead people to the solution (app, software) if at least 5% of people that click the ad make a payment you are good to go, you can start using agile method to build and ship your product.
But first you need money so let go to angel investor.
If you are at this stage congratulation because it means you now have a repeatable business model (business model is how you get money/value from your customer).
Approach angel investor but make sure they are in your niche you can know this by carrying out research on them.
To better prepare you, you can ask those companies in their portfolio on what question to prepare for.
Do not be afraid when you meet them. Once you have paying customer and cofounder (especially tech cofounder) you are good to go.
Note: The percentage of equity you will give out should not be more than 20%
5) Register your company
Because of the issue that comes with incorporating company in Nigeria many entrepreneur incorporate their company in foreign country usually Delaware, this will also earn foreign investor trust.
You need to prepare cap table, board, list of workers and investor. This is the stage you will start getting away from what you love doing especially if you are a programmer; you will be on your way to becoming a CEO.
6) Build your startup
You are still a startup but with a little fund from angel investor. By now you should have move away from prototype and start building your startup using agile method.
This is how to use build using agile method
Once you build the prototype identify other part people need most and build it. To know the part or function people will need observe how user use you software or interview then to know what function they are anticipating.
Like that you will start building your software or app bit by bit, function by function till it become whole.
This will help you reduce wastage that is characterize of tech company.
7) Find venture capitalist
By now your fund world have reduce drastically, and you can’t go back to angel investor again, your next bet is venture capitalist and luckily there are venture capitalist in Nigeria, approach them and show them what youve got.
Venture capitalist do not behave like angel investor they expect you to get everything ready; they want to see a competent CEO.
Do not also give out more than 20% equity at this stage. Your fund at this stage will be around $100,000 to $2 million
8) Go big
Now that you have venture fund the next thing is to go big, look for different advertisement medium that will enable you to showcase your product to your potential audience.
Advertisements medium like T.V, reality show, Blogs and others.
Be careful at this stage, you will have enough fund but if you are not careful you will spend it all on nonsensical things, be frugal like you are doing before.
9) Startup to large corporation
In this stage you have two choice release your company steering to professional CEO or let venture capitalist or board chase you out.
Has! The company I stated from the begin
Once you receive fund for equity there is nothing like my company again, it is now ours and the board can chase you out if you are not doing well and sometimes even if you are doing well.
The only way out of this is to control the majority vote and make sure you check the investors term paper very well before you sign it but nevertheless you should chose 20% of a big company with $100m or sole owner of$ 1 company.
In this stage you are no longer a startup, you are now a corporation, dedication should be the order of the day, the spirit of “move and break things” will be gone and things will get slower than you can imaging.
The only advice I will give you here is to not lose your general. General are people that can fit into any department, they can be everywhere, they are the backbone of startup but once startup transitioninto big company they let go of them because they can not do the work of specialist.
Do not let them go, set up a small startup they can be working one and this will make you a company that build company.
Like that, startup genome will not leave your company. And do not forget to treat your specialst well too, they are the back bone of company.
If you keep your general, they will keep churning out company for you but if you don’t you can buy company to expand to deffernt industry and country.
Tech company is hard, if you are considering startup that means you are ready to stear at failure in the face, I’m not discouraging you I’m just telling you the real fact.
Elon Musk liken startup to falling from a cliff and eating glass. Amazon founder Jeff bezoz like statup to some one making a plane on his way down.
But if you get it right you will not only made yourself wealthy, you would have solve a problem for this generation and provide a source of income for workers.
Thank you for reading
Do we miss anything, let us know in the comment below.