Many great questions and comments after I posted that Nigeria must develop a semiconductor & microelectronics roadmap. I get the point: why are startup funds in Nigeria not investing in these types of businesses? The simple response: complicated.

For Nigeria, we need a national vision on semiconductors and microelectronics, and it is time to set up something like MOSIS or Europractice. Largely, a foundry which all universities in Nigeria will key-in, making it possible for students to experience end-to-end chip design, from schematics to test chip from the foundry.

I am a semiconductor veteran.  Since Prof Nwachukwu introduced us to Semiconductor Physics in Federal University of Technology Owerri and Prof Ejimanya explained Transistors (Prof Chukwudebe and Prof Ndinechi took the Microelectronics part), my interest in the area has remained unalloyed. FASMICRO, my business, is Africa’s only programmable microprocessor knowledge partner of Intel; see at Intel.com website ).

In Carnegie Mellon, I taught electronics and in Analog Devices, I built and shipped products. This photo was my test system for a photonic system which can enable information to move in circuits, not as electrons, but light [Tekedia Capital just invested in a quantum computing startup which makes qubits, the basic information unit in quantum computers, analogous to bits in classical computers]. My book in this space received the IGI Global Book of the Year award. So, I understand this industry.

You can make a lot of money from this, but it is one of the most challenging domains in technology. Semiconductors & Microelectronics is not like software where you can launch in the morning and provide an update in the evening if things go wrong. In other words, developing that industry does not happen by chance. Good People, you require a national vision to make it work in a developing country like Nigeria because the human element is critical. Yes, you need well-trained students as feeders.

So, I welcome your comments and be open to support. But so far, I do not see how to put money on this without a talent pipeline. But if we do, economic glory awaits as most things they do in Aba, Ibadan, Kano, etc will improve as electronics makes them better.

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“I am tempted to suggesting that this Professor may wish to collaborate with NUC and the 274 Nigerian Universities plus Polytechnics to possibly mass produce Nigerian undergraduates in this field” – not really. Please, the talent pipeline is not just having many universities offering courses in electronics. Note that even the US has a shortage of these skills. TSMC has been importing people from Taiwan to help with its business in the US. You may have more than 3,000 colleges and universities, but only about 50 produce these graduates at a decent level of quality. If you run the numbers, that is about 5000 students which is way short of the industry needs. https://finance.yahoo.com/news/tsmc-complains-t-enough-skilled-100125351.html

In 2015, the McKinsey Global Institute published a report highlighting a significant shift in business profits. This shift predicted a move from heavy-duty, capital-intensive industries, such as manufacturing and heavy industries, towards idea-intensive businesses that thrive on innovation and intellectual property. If you think about it, you will realize that between 2015 when the prediction was made, and 2024, this is now the reality. In the past, one needed to have big capital, get heavy-duty machines and be involved in mass production to make a lot of money. But now, someone somewhere simply comes up with an innovation, spending very little to make it, with huge profit margins, and ends up making lots of profit.

For entrepreneurs, understanding this trend is crucial for positioning their ventures in a rapidly evolving market. The most evident reason for this shift is the changing nature of value creation. Traditionally, capital-intensive businesses relied heavily on physical assets—think factories, machinery, and large-scale infrastructure. While these businesses can generate substantial revenues, they often come with high fixed costs and lower profit margins. In contrast, idea-intensive businesses, which include sectors like R&D, brands, software, algorithms, technology, consulting, finance, information technology, media, and creative industries, rely on intellectual capital. These businesses often have lower overhead costs and can scale quickly, leading to higher profit margins.

Consider tech startups, which have disrupted established industries by leveraging innovative ideas and technologies. Companies like Airbnb and Uber have built billion-dollar valuations with minimal physical assets. Their profitability stems from smart ideas and efficient business models rather than large-scale capital investments.

Next, look at business operations costs in both idea-intensive and capital-intensive businesses. According to various studies, knowledge-based firms can enjoy profit margins significantly above their capital-intensive counterparts. This is so because they can charge premium prices for their unique offerings, driven by innovation, creativity, and brand value.

Operational efficiency also plays a crucial role. Idea-intensive businesses often rely on agile methodologies and lean operations, enabling them to pivot quickly in response to market demands. This flexibility is vital in today’s fast-paced business environment, where consumer preferences can shift overnight. Entrepreneurs who understand this can not only reduce costs but also adapt their strategies to capitalize on emerging trends.

For entrepreneurs, the competitive landscape has transformed. In the past, barriers to entry in capital-intensive sectors were high due to the significant investment required. Today, the barriers are lower in many sectors, allowing new entrants to disrupt established players. This democratization of business opportunities means that anyone with a great idea and the right execution can find success, and there are so many platforms out there that give small players a chance to compete with the big guys. Take Amazon for instance. With Amazon, a small business in a small town somewhere can have its products reaching several countries, without having to invest in any logistics or transportation system.

Does this mean that we should all move to the ideas or knowledge-driven sector? Certainly not.

But knowing this can help you understand that there has been a change in the business scene. So, if you are about to become an entrepreneur, you will understand better that a higher capital may not necessarily translate to higher profits. You must then focus on building a strong competitive strategy that emphasizes differentiation. This can be achieved through innovative product development, exceptional customer service, or creating unique brand experiences. The key is to leverage the intellectual assets of the business—be it through talent, technology, or proprietary processes.

Emphasizing Innovation and Intellectual Property

Innovation is the lifeblood of idea-intensive businesses. Entrepreneurs must foster a culture that encourages creativity and experimentation. This can involve investing in research and development or creating environments where employees feel empowered to share ideas. Intellectual property (IP) also becomes a vital asset. Protecting innovations through patents, trademarks, or copyrights can provide a significant competitive edge. For instance, tech companies often rely on IP to safeguard their innovations, creating barriers for competitors and allowing for greater profit retention.

This shift may have been gradual, but it is here to stay. The change in how businesses operate and create values is fundamental, and with this understanding, entrepreneurs in capital-intensive businesses can also focus on innovation, optimizing operations for agility, and crafting effective competitive strategies to improve their profit margins. Keep in mind that it is not just about ideas. It is about having the right ideas and the ability to execute them effectively. So, as you embark on your entrepreneurial journey, remember: the future belongs to the innovators.

Tekedia Capital has unveiled 15 startups for the current investment cycle of Tekedia Capital Syndicate. The companies cover different industries, including chemical manufacturing tech, construction tech, payment, cross-border, quantum computing, microelectronics, insurance, investing, AI, property management, B2B ecommerce, medical software and more. Geographically, we have India, Southeast Asia, Latin America, US, UK, and Africa represented.

Tekedia Capital makes it easier for citizens, groups, investment clubs, companies, organizations, etc, to own a piece of early-stage, high-growth technology startups operating across the world.

Good People, out of these 15 companies, a tech unicorn could be born. We invite you to join our Syndicate here and co-invest with our members.

Note: by joining Tekedia Capital Syndicate, you attend Tekedia Institute’s Venture Investing and Portfolio Management program at no additional cost (a $400 saving). There is a current edition which you can join immediately. A membership payment of $1,000 (or N1,000,000) is required to join Tekedia Capital Syndicate.

Overview of the 15 startups for Tekedia Capital Oct 2024 investment cycle. Join Tekedia Capital syndicate here and participate.

Message below was sent to members of our Syndicate.

15 Startups Posted for Investment; Demo Day Scheduled Oct 19

Dear Sir/Madam,

Greetings! We are very happy to update that the deal flow is now live for Tekedia Capital H2 2024 investment cycle at https://capital.tekedia.com/. Once logged in with the membership email, the direct link is https://capital.tekedia.com/lesson/active/. We have 15 great startups in this cycle, and they cover different industries, including chemical manufacturing tech, construction tech, payment, cross-border, quantum computing, microelectronics, insurance, investing, AI, property management, B2B ecommerce, medical software and more. Geographically, we have India, Southeast Asia, Latin America, US, UK, and Africa represented.

We made a special video for each startup and provided their respective pitch decks. Please keep all the startups confidential until we have completed the round. You can make payment and begin investing immediately. More so, the Demo Day is scheduled on Saturday, Oct 19; Zoom link is already in the Board when you login. All the startups will be live to present and take your questions.

• Event: Tekedia Capital Demo Day
• Date: Saturday, Oct 19, 2023
• Time: 4 – 6pm WAT
• Zoom Link: login here for it

The proceeding will be recorded and available in the Board afterwards.

Have a great moment checking the startups and if you have any questions, please contact us. (If you have forgotten your password, email us for a temporary one or just go here to request a new one https://capital.tekedia.com/setup/.)

Regards,

Tekedia Capital Team

capital@tekedia.com