Lagos, the economic centre of West Africa, is the launch-bed of several leading African startups and unicorns like Interswitch, Flutterwave, Paystack and Jumia.
According to StartupBlink, the Lagos Startup Ecosystem is number 81 globally, making a 41-place jump from number 122 in 2021. The General Manager of Techstars, Nancy Wolff, describes Lagos as a "successful startup ecosystem that merits more global exposure, investments and resources, [with] extraordinary potential."
The State's Government is fully aware about the strides of its jurisdiction and continues to make efforts to enable and regulate the space. One of such enablement plans was announced at the just-concluded GITEX 2022 summit where the Special Adviser on Innovation & Technology, Olatunbosun Alake told the audience that the Lagos State Government has plans to launch a Venture Capital fund.
In a follow-up conversation with Benjamindada.com, Mr. Alake explains that the Government wants to step-in to de-risk the ecosystem and turbocharge its growth. One of the ways they will do this is by providing capital to startups. Funding is one of the four framework pillars of the Lagos State Innovation Masterplan that is designed to catalyse the growth of the innovation ecosystem in the budding ecosystem.
The Lagos State Venture Capital fund will not only focus on fintechs, the darling of Nigeria's tech ecosystem accounting for 49% ($650 million) of every investment into the country this year. Rather, it will be a cross-sectoral fund that involves agritech, and healthtech startups which have accounted for only 1.96% and 5.88% of total 2022 VC funding in Nigeria, respectively.
Although Alake did not reveal the cheque sizes for the fund, he noted that the state government is engaging local and foreign investors that would join the fund as limited partners (LP).
"We want to help startups materialise in areas that require de-risking which some VCs might not touch, at the same time we want to help turbocharge the ecosystem. Ultimately we are looking at a fund of funds," says Olatunbosun Alake.
Mr. Alake also clarifies that reports of him saying that the Government wants to write bigger cheques than most VCs is inaccurate. "We write cheques to startups now, but we will start writing bigger than what we write now, not bigger than most VCs," he said.
Startups will have a longer timeline of 10-plus years to 'return the fund'. At the moment, no launch date has been committed to but the Special Adviser expects a pilot launch to take place before the end of this year.
Also, for posterity and continuity, the current administration will consider passing this State-backed Venture Capital fund as policy.
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Other efforts to drive tech and innovation in Lagos
Recently, the Lagos State government, through LASRIC, sponsored 15 startups to pitch their innovations to global investors at the GITEX 2022 in Dubai.
In June 2022, Alake disclosed that the state will domesticate Nigeria's Startup Bill—which is awaiting presidential assent—to create an enabling environment for tech entrepreneurs in Lagos. "Nigeria is also broadly a tough place to do business, both for established companies and startups. By creating transparency in rulemaking, taxes, and fees and by encouraging the development of essential infrastructure, the bill will attempt to make Nigeria an easier place to start and grow a business," Tomiwa Aladekomo, a member of the Presidential Advisory Strategic Group and the CEO, Big Cabal Media told Benjamindada.com.
In 2021, on the Big Tech Show hosted by Benjamin Dada, Mr. Alake explained that research is a necessary pathway to value creation. And the Lagos State Science Research and Innovation Council (LASRIC) is their governing body for that. "To create value we need experimentation and research. Lagos State Science Research and Innovation Council (LASRIC) is tasked with the responsibility to invest in research in tertiary institutions in the state".
Hence, why we saw them (LASRIC) fund seven local health-tech startups looking to curb the spread of COVID-19 in 2020. Wella Health was one of the recipients of the $2,000 equity-free fund from Lagos, through LASRIC.
Through other vehicles like the Lagos State Employment Trust Fund (LSETF), startups are getting access to workspace loans and talent development programmes. So far, GetEquity, Onehealthng.com, DataLeum and Scholar X have benefitted from this initiative.