By Ibiyemi Mathew
With at least 481 active startups as of August 2022, Nigeria is reputed as one of Africa’s largest startup ecosystems. According to a report by Disrupt Africa, between 2015 and 2022, 383 tech startups in Nigeria raised a combined US$2,068,709,445 – a higher total than any other country.
The startup ecosystem in Nigeria has become a fruitful field with many individuals looking to make investments in the sector. However, when you hear the term “startup,” what do you think of? Are they more like a new business model or an innovative idea that needs to be tested out?
If you’re looking at a startup as a business model, it’s time to take a step back. The term “startup” has been co-opted by so many people and companies that have no idea what it means.
The truth is, startups need to be innovative and creative. Startups need to make money and not just in the short term but require sustainability over time. A startup should be able to grow without being overly dependent on external funding or outside investors. For that to happen, there needs to be some sort of product or service that people want and it needs to be something that can’t be easily duplicated by another company in the industry.
So how do you know if your business qualifies as a startup? Here are five things that qualify you as a Startup in Nigeria based on the provisions of the Nigeria Startup Act.
1. Your company has been registered as a limited liability company under the Companies and Allied Matters Act.
2. Your company has been in existence for a period not more than 10 years from the date of incorporation.
3. Your objects are innovation, development, production, improvement, and commercialisation of a digital technology innovative product or process.
4. Your company is a holder or repository of a product or process of digital technology or the owner or author of a registered software.
5. Your company has at least one-third of local shareholding held by one or more Nigerians as the founder or co-founder of the startup.
In the case of a sole proprietorship or partnership, it satisfies conditions 2, 3, 4 and 5.
With these requirements where do you think your business fits? Would you say you are qualified to be labelled a startup in Nigeria?