Surayyah Ahmad Sani (left) and Sanusi Ismaila
Interview with Sanusi Ismaila and Surayyah Ahmad Sani
CO-FOUNDERS, ADUNA CAPITAL
Northern Nigeria, a predominantly Muslim area, is residence to about half of Nigeria’s complete inhabitants. Nevertheless, it garners only a fraction of the nation’s startup funding. Estimates recommend 85% of enterprise capital funding is allotted to startups in Lagos, situated within the southwest.
Sanusi Ismaila and Surayyah Ahmad Sani have co-founded Aduna Capital, which has lately introduced the launch of its first fund. This $20 million fund goals to co-invest with different enterprise capital entities, primarily specializing in northern Nigeria.
Sanusi Ismaila is the founding father of Colab, Kaduna’s first innovation hub and a big supply of know-how expertise in northern Nigeria. Surayyah Ahmad Sani is an entrepreneur, angel investor, and managing accomplice at UK-based TTLabs, a enterprise studio that additionally assists enterprise capital traders with on-the-ground due diligence on African corporations.
The pair spoke to How we made it in Africa about funding alternatives in northern Nigeria and why they’re bullish about backing entrepreneurs within the area. Beneath are barely edited excerpts.
Inform us about the way you based Aduna Capital. Why the give attention to northern Nigeria specifically?
Sanusi Ismaila (SI): We believed lots of the stereotypes round northern Nigeria had been mistaken, and that there have been bankable concepts and executors that weren’t getting funded.
Surayyah and I noticed that the majority traders didn’t perceive the tradition and both wrote the area off or engaged with it wrongly. And we thought we might do higher. We performed round with some concepts, and finally, it developed into the fully-fledged fund that Aduna is at present.
May you clarify the dimensions of alternatives in northern Nigeria?
Surayyah Ahmad Sani (SAS): Northern Nigeria is a large market in itself. Over 60% of Nigeria’s present inhabitants is within the north, and 69% of Nigeria’s inhabitants development is within the north.
So whenever you discuss concerning the market in Nigeria that everyone places of their pitch decks, you need to embody northern Nigeria.
There are founders who’re in a novel place to launch a product inside northern Nigeria, after which increase to Africa and globally – these are the kind of founders who we wish to again.
You talked about cultural variations. Are you able to elaborate on these and the way they’re related from an funding perspective?
SI: One of many overarching stereotypes about Nigeria is that it’s a low-trust society.
Alternatively, you stroll into any public open market in northern Nigeria, and when it’s time to wish, the merchants in any market would simply stroll out to the mosque and pray, leaving their stalls open with folks inside.
There’s an entire system, significantly in open markets, the place items get provided on credit score. And that is taking place informally. There’s no fancy accounting; in some circumstances, there aren’t any sheets of paper, which I’ve at all times discovered fascinating. That doesn’t sound like a low-trust society.
One other factor about northern Nigerian tradition is that there’s a excessive social premium on humility and honour. There are some very profitable software program engineers or startup founders from northern Nigeria, however you wouldn’t hear about them quite a bit within the information.
Alternatively, in different components of the nation, as quickly as somebody has a pitch deck, they’re making as a lot noise as they will and making an attempt to get into everyone’s faces.
In my expertise investing in startups, I discover these from northern Nigeria are far more environment friendly in utilizing capital. And that is available in half, I feel, from the cultural side.
There may be this sense of big duty, that another person has entrusted you with all this cash and it’s your fiduciary duty to ship.
SAS: There’s a belief issue that’s lacking within the wider startup house proper now.
It feels as if folks have type of cracked the system, proper? They know what to let you know to allow them to get funded. After which whenever you fund them, investor cash goes down the drain.
Whenever you begin to see the businesses [Aduna Capital] is backing, you’ll marvel “The place have these corporations been?” I at all times say, “They’ve been bootstrapping”, which isn’t essentially a nasty factor. And now that they’re able to scale, it’s extremely thrilling to again them as a result of they’re very backable founders.
What sort of companies are you trying to put money into?
SAS: We’re in a funding winter proper now and so there’s a shift in direction of extra sustainability, in direction of founders that may do extra with much less.
There may be an agritech firm we wish to again – they’ve received over $4 million in GMV (the whole worth of products bought on the platform) and are EBITDA constructive, however they’ve by no means raised any exterior funding. That’s a large alternative.
There’s additionally an edtech firm, with over 100 workers and greater than $1.2 million in income, that’s trying to increase to different markets like Australia, the US, and the Center East. However they’ve by no means raised.
So there are corporations like this, extremely sustainable corporations, with actually high-trust founders. They’re simply not screaming out in public.
Which particular industries are most fascinating to you when northern Nigeria?
SAS: Lagos is extra of a service-based economic system, whereas the north is extra manufacturing-based.
That stated, fintech is likely one of the industries that’s shining by means of.
For instance, Sudo Africa [a card issuing and payments platform] is headquartered in Abuja, and has raised $3.4 million, and processed over $30 million in transactions. And so they’re solely simply getting began.
Elements of northern Nigeria has important agricultural potential. Are you able to discuss concerning the alternatives within the agriculture sector?
SAS: I feel agriculture is certainly a low-hanging fruit by advantage of the truth that a lot of the meals in Nigeria, and far of the meals in neighbouring nations, comes from northern Nigeria.
One space is agri-financing – giving entry to finance to farmers and aggregators.
There are additionally plenty of untapped alternatives in transport and logistics across the agricultural worth chain. We’re at present in search of corporations in [B2B] fleet administration that may transcend northern Nigeria to neighbouring nations the place these merchandise are being delivered.
Northern Nigeria is strategically positioned to serve francophone Africa, one other area the place many enterprise capitalists should not trying; it’s surrounded by Cameroon, Chad and Niger.
We’re undoubtedly trying to see which merchandise you may export to those nations, and never simply Ghana and Kenya, the place everyone else is already trying.
SI: Manufacturing and meals processing are additionally huge. Tomato Jos in Kaduna are processing tomatoes into tomato paste and have raised enterprise capital funding.
A part of what we’re is the scalability as a result of we wish corporations that may scale exterior northern Nigeria to different components of Africa and by extension, globally. However there are plenty of native alternatives in meals processing.
Do you assume there are nonetheless alternatives in main agriculture?
SI: I feel there’s an enormous alternative for producing meals for export from Nigeria. There’s an organization known as Veggie Plus that ships throughout Nigeria and shares a lot of the giant supermarkets. They farm strawberries and different greens like bell peppers, in southern Kaduna and Jos. I don’t know whether or not they export now, I feel most of their enterprise is home. But when I had been to get entangled with that sort of enterprise, I feel I’d focus all their efforts on exporting. It’s a tricky downside to crack, however the upside is value pursuing.
There was somebody who used to export bell peppers from Jos to the UK, significantly for Tesco. When banditry grew to become such a giant downside, he needed to fold up the enterprise. However I feel alternatives like that do nonetheless exist.
There are additionally alternatives in agricultural extension the place IoT and AI is used to make agric sensible and cut back meals waste. We’re watching a number of corporations on this space which have began to make some progress.
There’s a giant leather-based trade in northern Nigeria. Do you see potential on this sector?
SI: A whole lot of the leather-based in Nigeria, together with the product that’s exported for Louis Vuitton, comes from Kano. There’s an entire trade there that has been constructed over generations. So I feel there’s plenty of worth there already.
However I’m unsure if they’re capturing as a lot as they will.
One of many issues that will be fascinating to me is to see some manufacturing, some worth addition, occur in Kano that may be exported.
There’s some fascinating stuff taking place in different areas corresponding to Jos, just like the Naraguta leather-based manufacturing facility, simply beside the college. It’s a enterprise that’s been constructed over two or three generations. There’s additionally an enormous leather-based market in Sokoto, although plenty of it doesn’t go into stuff like sneakers and luggage, however into mats and poofs.
So I feel there’s alternative for folks to go in there, organise it and see how far more worth they will extract.
As an example, within the case of Sokoto, the poofs and mats that they make are inventive sufficient to promote overseas as a result of they’re handmade and each set is completely different. You possibly can construct a story round these merchandise.
I consider there’s a venture that’s planning to inform the story of leather-based in Kano. I feel they’re really in Kano taking pictures proper now.
Are there another fascinating areas that you’re ?
SAS: There’s additionally plenty of alternative in edtech, merely because of the huge inhabitants and the present instructional system in Nigeria.
We might argue that edtech has received potential everywhere in the nation, however arguably extra so within the north due to its inhabitants. Everyone is making an attempt to achieve extra digital expertise on prime of no matter they’re getting from their common education.
SI: When you had been to have a look at say, casual cross-border foreign exchange or, casual capital transfers throughout sub-Saharan Africa, they’re dominated by folks from northern Nigeria. Or in the event you have a look at issues just like the second-hand vehicle market, these are additionally dominated by folks in northern Nigeria.
These are individuals who have constructed casual networks that work. They’ve discovered the right way to transfer cash throughout these nations, they discovered the right way to transfer automobiles throughout these nations.
SAS: There’s an organization known as Moonah.app, that got here out of Entrepreneur First within the UK. And that’s precisely what they’re making an attempt to do – to digitalise this cross-border funds, beginning with Kano State. One of many co-founders, Abdulhakim Bashir is from northern Nigeria.
Is it a query of digitising and formalising current fashions which can be already in place?
SI: The factor that we’re in search of shouldn’t be essentially individuals who simply go and digitise companies, as a result of I feel we now have abstracted that concept to the purpose the place it’s probably not helpful. We’re in search of individuals who can work out the right way to hyperlink this financial exercise that’s already taking place underneath the radar to the formal financial or monetary house.
Let me provide you with an instance. As a part of our work on monetary inclusion, we got here throughout this girl who lives in rural Kaduna. We had been making an attempt to know how folks get monetary savings, and she or he advised us that she saved cash by shopping for beans. It made no sense to me.
She wasn’t shopping for beans at a big scale, she was shopping for like cups at a time. So if she had, say, a spare 1,000 naira, she would go purchase beans from the market and take them residence. And if she needed cash, she would promote the beans.
I believed, you recognize, this must be one of many stupidest issues I’ve come throughout. A few days later, I checked what the inflation fee was. And that’s when it really made sense to me that she was storing her worth in beans.
She was conserving observe of meals inflation, which at the moment was round 19% (it’s larger now). The rates of interest at my financial institution at the moment had been someplace round 4%.
So then how do I persuade that individual that my product is the higher product when she’s shedding a lot worth?
The purpose is, nobody thinks about issues like that from the angle of that girl. We simply say, “Oh, she’s financially excluded. We have to get her to open a pockets or checking account.” However essentially, the product may not swimsuit her wants.
So, off of that have, my new pondering is – is it doable to go away these casual methods as they’re, or perhaps make them a bit extra environment friendly, however present visibility to structured monetary methods?
Aduna is a tech-focused fund. However would you take into account investing in startups that aren’t ‘tech’ companies?
SI: Personally I’d say sure, significantly if we see the potential of making that enterprise extra environment friendly utilizing know-how.
There’s an organization on our radar based mostly in Zaria that’s making animal feed from farm waste. The quantity they’ve been capable of develop within the house of 1 yr has been unbelievable contemplating that they nonetheless do every part manually – I imply, they’re nonetheless grinding these items with mortars.
These are companies that we might take a superb have a look at. However we’re additionally cautious that we’re not simply backing these kinds of companies with cash, however we’re bringing one thing to the desk. We type of perceive tech, so if it’s a tech enterprise, it may be simpler for us so as to add that worth.
SAS: I feel what’s necessary is to acknowledge that plenty of corporations use tech to assist their processes, with out essentially having customer-facing tech.
And if we see an organization that’s doing extremely effectively, and there’s an opportunity to, say, introduce them to a technical co-founder that may streamline their processes with tech, that’s one thing that we might do with out essentially altering its core enterprise.
Aduna Capital co-founder Surayyah Ahmad Sani’s contact data
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