Last year, after almost two decades of investing in and mentoring early-stage startups, Techstars launched its accelerator program in Nigeria in partnership with ARM, the biggest non-banking financial institution in the country.
The premise of the Lagos-based program, ARM Labs Lagos Techstars Accelerator Program, is similar to its other programs in Dubai, Canada etc.; participants undergo rigorous training sessions and meet fleets of established business people and titans of industry. They learn how to raise funds, build great products, and scale their businesses.
For its inaugural cohort in Lagos, its focus was fintech and property tech companies. In March, it had its Demo Day, which became one of the biggest gatherings of members of the Nigerian ecosystem, rivalled only so far by OpenAI CEO Sam Altman’s visit to Lagos just a few weeks ago.
It’s currently accepting applications for a new class, its 2023 cohort, with its tentacles expanded. This year, it focuses on early-stage Africa-based startups with a defined MVP. Application closes on the 9th of August.
“We are a universal investor and what that means is that we invest in companies regardless of gender, race, ethnicity, or sexual preference, not just because it’s the right thing to do, but because that is where the ROI is,” Oyin Solebo, the Managing Director of the program said. She and the team have been scouting for applicants in London, Accra, Nairobi, and now back in Lagos.
She had been the co-founder and COO of Move Me Back, a startup that connects the world to African opportunities, including jobs and investment opportunities.
At the time, Techstars had been seeing an influx of Nigerian startups apply for its accelerator programs and was looking to put its money where its mouth was. Solebo decided to move back and help it settle into one of the biggest economies on the continent.
But the dynamics of the Nigerian market are very different from the one-size-fits-all strategy that would have worked in an economy more friendly to startups.
“Of course, we had to make certain changes given the nuance of the market,” Oluwadunni Fanibe, the program manager at Techstars Lagos, said of launching Techstars in Nigeria.
She had been working at another accelerator program where she focused on Francophone, East African and Nigerian startups before joining the Techstars team with Managing Director Oyin Solebo.
“We’ve learnt a lot from what we did last year,” Fanibe said, referencing the inaugural cohort. “We did an excellent job. And we’ve taken all we learnt from last year and we’re implementing it for this next cohort. We also have a bigger presence. We are more known than we were. The success shows that this is something that works.”
In the past few years, a stream of startups has been making waves in Nigeria from various Techstars programs. The list includes Klasha, Payday, and CDcare Africa, the buy-now-pay-later company that benefitted from Techstars Lagos.
“We have seen an increase in our customer base, revenue, and overall market presence. We have also refined our business model, enhanced our product offerings, and strengthened our partnerships, all of which have contributed to our growth and success,” Tobi Odukoya, the CEO CDcare Africa, said.
The decision to cast its net wider this year came from a need to want to meet the immediate needs of the market.
Africa’s booming youth population and penetration of financial services make it desperately in need of startups that fall into its four focus areas.
“Fintech still makes sense, obviously it’s where most of the capital is going from the VC perspective. But also there is a lot of impact and benefits that we are still seeing out of fintech,” Solebo said.
Just after fintech, is e-commerce sucking up VC funding as a new frontier on the continent. There has been a steady rise of digital storefronts and social commerce platforms popping on in recent years.
“There are still huge opportunities for local models that refocus on the African customer,” Solebo said of e-commerce. Then mobility comes in to help the thriving e-commerce sector.
“The increase in smartphone penetration, and a middle class which is still nascent but has tripled in the last few years,” for Solebo, points to the need to invest in startups that cater to talent.
However, mobility is a relatively new field that has struggled to break even at the highest and the lowest levels. Startups in the ecosystem have also been inundated with strikes and protests by their partners, the residue of a wonky gig economy. Solebo is thinking of mobility and logistics from a broader perspective.
“When we talk about mobility and logistics we are not just talking about last-mile delivery, but we are also talking about things like warehousing and fulfilment, logistics as a service, mom-and-pop shops, order and inventory management and smaller e-commerce companies that just can’t fulfil their own logistics,” she said.
“You cannot continue to have e-commerce companies pop up without this solution. We need to make sure we have a wider lens when we are talking about this,” she added.
TechCrunch has named Techstars, for two quarters, the biggest pre-seed investor in the world. For Fanibe, this is a testament to the unique work that goes into the program and its selection process.
“What that says is Techstars is writing checks, and actively writing checks to Africa. The continent is important to us,” she said.
The success brewing from the Lagos program, she said, ties into the hard work of the team but also the two heavyweight brands that came together to create it; Techstars and ARM.
“When you take ARM, which is home to about six other businesses, they have the resources. They have the connections. They’ve done it for years. They’ve been around for a long time,” Fanibe said. “When you take those two powerhouses and you bring them into one program, and all of that energy is dedicated to just 12 startups, that is something.”
“There have been a handful of distribution opportunities that have come through our partnership with ARM for our startups. The fact that we are on the ground working with the founders and can bring to them local partnerships, investors and mentors is super powerful,” the MD Solebo added.
So far, some 20 startups from the Techstars programs globally have gone on to unicorn status, including SendGrid and Uber. Its famous “Mentor Magic” period, two weeks in which participants meet 120 founders who give them feedback about their businesses and product, is also partly responsible for this success.
“It has helped us develop a more holistic and strategic mindset, enabling us to make informed decisions and lead our team effectively,” Odukoya said of the mentorship sessions.
“From those conversations, some founders realise that they are looking at their business the wrong way,” Fanibe said. “We’re a mentorship-driven accelerator. We believe in the power of the network.”
But even after the program, founders can still access Techstars and its resources forever. “We say to founders, Techstars is for life. We’ve invested in you, so we actively care about your business and we will continue to support you,” Fanibe said. Already proving its lifelong commitment to participants, ARM offered them office spaces for the inaugural Lagos cohort.
Techstars alumni startups also have a track record of raising at least a minimum of a million dollars post the program. For Fanibe, its the Techstars magic.
“The credibility and reputation of Techstars have helped in attracting investors’ interest and building trust in our venture,” Odukoya of CDcare Africa said.
While Techstars will focus this year on FinTech, Mobility, E-commerce and TalentTech, it’s not adverse to startups in other tech fields. Last year, when it focused on fintech and property tech, it also had health tech and data startups in the program.
“We have focus areas, but we are an investor. We want to make returns. If your company is great we are going to invest in you,” Fanibe said.
In the selection process this year, the Techstars Lagos team will consider market size, traction, the product and the team in deciding what startups are accepted. However, Fanibe said that the panellists will be laser-focused on the team’s strength.
“The strength of a startup is very directly proportional to the strength of the team. In terms of strength, we are thinking about how well they understand the startup they are building, the relevant experience in that sector, the team cohesion,” she said.
Solebo is particularly interested in the success of not just the program but also the startups because, having lived years in the UK, she sees the opportunities that abound in an economy that encourages innovations.
“As diasporans, we often look at the African continent with rose-tinted glasses because we haven’t lived through the struggles. And I think what that gives me is a certain level of privilege because I have seen what can happen when innovation thrives. But it also gives me this drive to want to come to a region that I didn’t grow up in,” she said. “I believe there is so much potential here and I want to be part of that.”
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