- Title: NIGERIA: Spark, a company with a $1m fund for tech startups
- Date: 10th July 2013
- Summary: NEW YORK CITY, NEW YORK, USA (FILE) (REUTERS) IROKO TV WEBSITE ON COMPUTER SCREEN
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- Topics: General
- Reuters ID: LVAAVK6MRTLKOPE1B2XQWP7Y1CJR
- Story Text: Back in 2011, when internet penetration in Nigeria was estimated at 11 percent, industry experts predicted access would triple by 2013, thanks to an explosion in mobile phone usage in the country of more than 160 million people.
Today, about 60 million Nigerians have access to the web but poor infrastructure and high costs of doing business are still a major challenge.
Spark - a company that funds Nigerian entrepreneurs who have unique ideas but little resources, hopes to change the space of business using the internet.
With 1 million US dollars to invest, Spark Co-founder Bastian Gotter says the company will help tech entrepreneurs get started in Nigeria's harsh business environment.
"Spark was established because there was an opportunity, it was also established because we thought there was a lack of people exploiting that opportunity so there was a lot of young entrepreneurs who were trying but Nigeria is not an easy place to do business, it's difficult to establish a company; talking to CAC (Corporate Affairs Commission) takes three months, opening a bank account, running a gen (generator), getting an internet connection, paying two years upfront on your rent like all that stuff, it's not very easy," said Gotter.
Spark was set up by Gotter, web entrepreneur Jason Njoku, who is the founder of IrokoTV - a multi-million-dollar web distribution platform for Nollywood productions, and his wife, Nigerian actress, Mary Remmy-Njoku.
Established in February 2013 with an initial investment of 2.5 million US dollars, Spark has been able to successfully fund 10 companies.
"Spark will put some money to work, we'll find great young entrepreneurs and we will fund them with money to explore all the opportunity that the internet is giving us," said Gotter.
One of the beneficiaries of the fund is Kuluya, an online gaming company set up last year.
Kuluya's games are designed to appeal to a Nigerian audience with experiences that residents can relate to. It has over 100,000 people playing games on the website on a monthly basis.
Kuluya initially received 250,000 US dollars from iROKOtv's Njoku and then was integrated into SPARK when the investor began operations.
Olakunle Ogunbamila, chief executive officer for Kuluya says being part of Spark has helped the company put innovation in a business perspective that had been lacking before.
"We have become a bit more focused in terms of what we want to achieve, there is now a careful cause on revenue generation which is what SPARK has been able to help us align, you know, the important thing for them is to be able to generate funds from whatever business that is on the SPARK so as a CEO, we are told to focus on how to generate revenue as against just innovating for the sake of innovation and that has really helped us in streamlining our business plan," said Ogunbamila.
Another Spark beneficiary is Hotels.ng, a company that provides a platform for customers to make hotel bookings online.
Hotels.ng works with over 4,000 hotels across the West African nation and get commissions for each booking made on its website.
"In the space of three months, we have gone basically from one employee to twenty, the number of bookings that we have done has tripled, our site traffic has more than tripled so basically, a lot has changed," Mark Essien, Hotels.ng director.
Experts say Nigeria's e-commerce industry is young but moving rapidly, with millions of US dollars already invested by venture capitalists in various companies.
Bolaji Okusaga, a business analyst and entrepreneur says companies like iROKOtv, online shopping platforms like Konga and Jumia are setting a fast pace for e-commerce growth in Nigeria.
"I can tell you for a fact that if you see the level of competition at play even in the e-commerce sphere, what with Jumia, Konga and all of the people who are just coming on board right now, that industry... you know, will not be less than a billion dollars as we speak and then you can then begin to look at it, when you begin to look at it in terms of geometric growth in the next five, in the next 10, in the next 15 years, you may have an industry that will be one of the largest generators of employment and you know creating possibilities that will also enhance the nation's GDP," he said.
Recent data shows poverty in Nigeria is rising with almost 100 million people living on less than 1 US dollar a day, despite strong growth in Africa's second largest economy.
Developers and investors in tech businesses face the challenge to build solutions that can benefit not just Nigeria's rich and middle class but also penetrate the day to day lives of people with less disposable income.
Spark founders plan to invest in 10 more companies and hope that within five years, the start ups they have funded will be making enough profits to generate returns on their investment so they can take on more entrepreneurs. - Copyright Holder: REUTERS
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