A few days ago, I wrote here that Nigeria’s blue-chip companies are experiencing asymmetrical profits even as small and medium scale companies continue to struggle. We have seen BUA Foods, BUA Cement, Presco, Okomu Oil, and MTN Nigeria hit new profit records in a market many startups struggle to attract growth capital. My suggestion: instead of shutting down your startup, find ways to merge.
Yes, we need to figure out how to combine resources until the growth foreign VC investors return to Nigeria. Right now, those investors are not here as everyone is still under the waters after the recalibration of the Naira which reduced all revenue by at least 3x.
In other words, if you made N1.5 billion in Jan 2023 and recorded that as $3m, and an investor used 10X revenue multiples for a valuation of $30m, today, that revenue will give you a mere $10m since N1.5 billion is now $1m. Under that construct, most of the growth VCs have lost money, on paper, and it will take time for startups to grow to compensate for that currency loss. Think of years for that to happen, and the very reason large VCs have not been active in Nigeria.
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So, what do we do? We need to combine resources. And I am extending my call by quoting TechCabal today: “Ajua, a Kenya-based customer experience (CX) startup, has merged with Rate My Service (RMS), a local firm that develops tools for businesses to track and improve customer and staff interactions. … The deal highlights a rising trend among Kenyan tech companies to consolidate capacities and expand regionally amid growing competition from local and international customer experience platforms.”
Simply, do not shut down, find ways to merge. Not everyone must be a CEO!
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