How to get Free Funding for your Startup in Nigeria

Starting a new business can be an exciting, yet challenging venture. One of the biggest obstacles entrepreneurs face is securing funding to get their businesses off the ground.

While many funding options are available, equity-based funding is one of the most popular choices. Investopedia defines equity funding as the process of raising capital through the sale of shares.

For some businesses, offering equity might not be a viable option due to varying reasons like the nature of the business, the preference of the founder and the scope of their operation.

There are other financing options that don’t require you to let go of ownership of your startup. This article will consider how you can use grants and debt (loans) financing to fund your startup.

Grants are non-repayable funds given to startups and businesses by governments, foundations and other organisations to support specific projects or initiatives. Debt financing on the other hand is where a business borrows money from a lender and pays back the loan over time with interest.

These kinds of financing can be a great option for those who do not want to give up ownership of their businesses. These five organisations give equity-free funding to startups in Nigeria - Tony Elumelu Foundation, Lagos State Employment Trust Fund, Bill and Melinda Gates Foundation, Ford Foundation, and Bank of Industry.

Tony Elumelu Foundation (TEF)

The Tony Elumelu Foundation is an organisation that is dedicated to empowering African entrepreneurs. The Foundation provides a 12-week training program for entrepreneurs, which includes mentorship and seed capital of $5,000 for each selected startup.

Since its inception in 2010, the Foundation has empowered over 15,847 young African entrepreneurs across all 54 African countries. TEF targets businesses with scalable ideas or a business that has been operational for no more than 5 years. Startups that have benefited from the initiative include CcHub, Chekkit, BudgIT, and Trove.

Lagos State Employment Trust Fund (LSETF)

The Lagos State Employment Trust Fund is a government agency that provides funding to entrepreneurs and small business owners in Lagos State. The part of the scheme specifically targeted at startups is Lagos innovates.

Lagos Innovates is designed to help the very best founders and startups by facilitating access to four things - high-quality workspaces and infrastructure, training, early-stage investment capital and peer networks. Startups that have benefited from the Lagos Innovates interventions include GetEquity, Onehealthng.com, DataLeum, and Scholar X.

Bill and Melinda Gates Foundation

Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy and productive lives. The foundation supports initiatives in education, world health and population, and community giving.

In June 2022, the foundation announced a Pan-African “Investing in Innovation” program that will provide grants and commercialisation support to 60 health tech companies over two years.

The first 30 startups were selected in 2022, the next 30 startups are expected to be selected in 2023. Some startups that have benefited from the Bill and Melinda Gates foundation are CcHub, Helium Health, Chekkit and BudgIT.

Ford Foundation

The Ford Foundation is an American private foundation with the goal of advancing human welfare. The organisation’s mission is to reduce poverty and injustice, strengthen democratic values, promote international cooperation, and advance human achievement across the globe.

The New York City-based foundation supports leaders and organisations driving social change worldwide by focusing on these nine areas - Civic engagement and government, creativity and free expression, disability inclusion, future of work, international cooperation, gender, racial and ethnic justice, missions and investments, technology and society, natural resources and climate change. CcHub and BudgIT are some of the Nigerian businesses to have won grants from Ford foundation.

Bank of Industry (BOI)

The Bank of Industry is a government-owned development finance institution that provides financing to Nigerian businesses. BOI offers several financing options, including equity-free loans, for startups and SMEs in Nigeria. The loan facilities have tenors that range from 1 to 5 years.

Under the Youth Entrepreneurship Support (YES) scheme, BOI provides entrepreneurs between the ages of 18 and 35 years access to up to N5 million loan investments. The scheme organises 8 weeks of online and 5 days of physical training consecutively for participants who qualify for the grant.

Final thoughts

These are some of the organisations in Nigeria that offer equity-free funding to startups. They provide an opportunity for entrepreneurs who want to start a business without giving up ownership. With the right funding and support, Nigerian founders can build successful and sustainable businesses that contribute to the country's economic growth.

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