Eghosa Omoigui
The Managing Partner of EchoVC, a Nigeria-based Information Technology company, Eghosa Omoigui, tells OZIOMA UBABUKOH that investing $50m on technology start-ups will reduce Nigeria’s dependency on oil
What is your take on Nigeria’s potential for bridging the digital gap in Africa?
Given the enthusiastic, intellectually
curious and ambitious nature of most Nigerians, including their rapid
adoption of new technology, we absolutely believe Nigeria and Nigerians
have a tremendous opportunity to bridge the digital gap in Africa.
Can you name any strategic tech solution that could leverage the nation’s leap to the technological future?
We see a few turbocharged engines of
growth that can power the nation’s leap. Immediate solutions that come
to mind include accessibly priced connected devices and broadband
Internet connectivity to accelerate access to education, e-commerce and
global information sharing. We believe the fundamental needs must be
addressed first.
Apart from funding
challenges, what would you consider as constraints on the path of
Nigerian companies to maximise the potential and latent advantages?
Uneven electricity supply and a lack of
cheap reliable Internet, the expensive rents and service charges for
office space, difficulties of recruiting, hiring and retaining qualified
talent, burdensome incorporation, licensing, tax and regulatory
processes, etc., put significant strain on the already challenging life
of an entrepreneur. They face friction every day. We find it remarkable
that, despite all these, many are still able to succeed and create
opportunities and jobs.
So, what do you make of the recent National Software Development and Incubation Programme mooted by the Federal Government?
We are very excited about this
programme. As you are aware, the Federal Government’s objective here was
to create appropriate policy and guiding framework to enable what we
believe to be the next-generation strategic pillar of the economy, i.e.
technology. In setting these guidelines, the Ministry of Communications,
in partnership with the private sector, introduced an initial set of
technology incubators (IDEAHub), which would offer free/cheap working
space, Internet access, training and mentorship to budding software
entrepreneurs and developers. This first leg seeks to address some of
the friction points that our tech Small and Medium Enterprises face.
Another leg of the programme was to create a pioneering Information and
Communications Technology Innovation Fund (also to be funded by the
Ministry of Communications through its agency – the National Information
Technology Development Agency), which would help fill some of the
financing gaps that these entrepreneurs face when seeking seed finance.
Following a public procurement process, EchoVC was selected to be the
exclusive manager for the ICT Innovation Fund, in recognition of our
broad experience in funding and supporting ICT entrepreneurs at their
earliest stages of development. These two legs of the programme are
incredibly important drivers of the Public-Private Partnership-supported
innovation and significant job creation and we are deeply appreciative
of the public sector support so far. We call on the Federal Government
and the Ministry of Communications to ensure that IDEAHub and the ICT
Fund continue to get funded and expanded, as the demand for the value
the two vehicles bring is almost insatiable. We feel the Ministry of
Industry, Trade and Investment as well as the NSIA and CBN should
consider investing funds into these efforts as well.
Do you envisage a possible policy somersault to undermine the ICT entrepreneurial projection for the country?
No, we don’t believe that will ever be
the case. We are extremely confident that policy makers are increasingly
more understanding of the value that technology brings. There will be
no sector of the economy that technology will not disrupt through the
application of tech-powered innovation, none whatsoever – from
agriculture to hospitality, media to retail, health, transportation and
education. This is a Gross Domestic Product-sized opportunity. While
technology adoption tends to happen at a faster pace with the younger
demographic, no one will be left behind. So, we can expect more
favourable policy frameworks that recognise the power that technology
will bring to improving efficiency, making our people more
knowledgeable, creating high-quality jobs, and delivering happiness.
Deal sourcing,
implementation and valuation represent the core-areas of concern for
venture capitalists, how can the process be smoothened out?
With an increase in the quantity of
quality venture capital investors in the ecosystem, it is our belief
that many of these issues will be smoothened out organically. In our
experience, the best deal sourcing comes about through word of mouth
referrals (or peer to peer sharing) or through leads from other
investors. The issue around valuation will slowly be solved by educating
fellow investors who are new to technology start-up investing. In the
meantime, we spend a great deal of time helping entrepreneurs identify
the appropriate type of investor, educating them on the processes
involved in securing venture capital for their start-ups and explaining
potential alternative sources for funding dependent upon their needs. On
valuation and entrepreneurs, education is key. Entrepreneurs are very
optimistic and so their valuation expectations tend to mirror their
level of optimism. But company building is a very hard work and many
successful companies didn’t succeed on a straight line – so recognising
that it is a long road to hoe and being smart about pricing the
opportunity for investors is an important skill of great entrepreneurs.
We feel that as part of our role to develop a healthy, vibrant and
sustainable ecosystem, we can share our experiences and mistakes, both
in this market and the United States and Asia, so that they can learn
and not hope to repeat. As we like to say, we want to fund entrepreneurs
that make (and learn from) new mistakes, not repeat the same old ones.
What places EchoVC partners on the pedestal for excellence?
We have a uniquely qualified and
experienced team of investors from Silicon Valley with global knowledge
and understanding of technology start-ups. Our founding teams come from
top tier venture capital firms in the Valley (Intel Capital &
Founders Fund) and have seen hundreds of successful (and failed)
entrepreneurs and companies over the past two decades. There is
currently no other venture capital firm with the background we have
working on the ground and investing in Nigeria. In addition to our
differentiated experience, we are also strong believers in the ability
of Nigerians to create innovative ICT solutions and companies that can
meet local and global demand. We fund and we mentor.
You are proposing to invest
about $50m on tech start-ups in the country at a time when there is so
much uncertainty surrounding the economy, what is inspiring this
decision? Is this really the best time to invest in the country,
especially in the tech sector?
As Nigeria seeks to lessen its
dependency on oil, we feel this is a critical time to invest and support
the Federal Government’s initiatives to cultivate and develop the ICT
ecosystem in Nigeria and broaden the composition of economic drivers
within the country. As we have seen in Silicon Valley over the past 40
years, the ICT sector has the unique capability to revolutionise a
country and create innovation in areas previously undiscovered. The
introduction of mobile phone technology to Nigeria is a classic example
of the gigantic shift ICT can instigate in an economy.
Nigerians are some of the cleverest and
hardworking entrepreneurs we’ve seen. They want to create a brighter
future for themselves and generations to come. Technology can help them
do just that. We have also seen that the very best time to invest in
high quality ICT entrepreneurs is in the context of fear and
uncertainty. We are very committed to seeing this happen in Nigeria. For
now, what we see is a mismatch of conviction between entrepreneurs and
investors. We share the same levels of conviction that our local
entrepreneurs have, and are here to stay. Make no mistake; we are not in
the business of giving grants. Our model is designed to invest in
successful companies that can generate positive returns to our
investors, the company founders and employees and the ecosystem at
large.
Access to funding is one of
the greatest challenges of most tech start-ups in Nigeria. As an
investor, what do you look out for before committing your funds and what
can start-ups seeking investment learn from this?
Generally, we look for entrepreneurs
that share similar characteristics to entrepreneurs we have seen grow
successful companies in the United States and other markets. They tend
to share a similar DNA. We look for intellectually curious entrepreneurs
who are committed to the problem (but not necessarily the solution)
they are solving, innovative and creative in their approach and humble
enough to understand there is always more to learn; especially when
starting a new company in a difficult environment like Nigeria. We
believe that these entrepreneurs exhibit conviction that outpaces their
humility and humility that outpaces their execution. But all these
elements are exhibited 24/7.
copyright by Lerato Lee
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