What if you had a little money to spare? What would you do with it?
Here’s some sound advice: consider investing it in something that’ll yield you even more value. That’s how you multiply wealth.
But how do you go about this without getting your fingers burned? And how do you guarantee the best possible returns for all the funds you put in?
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This article looks at the answers provided by some of Nigeria’s most successful investors. They share from their experience working in the Nigerian environment– a context that’s a bit unlike you’ll find anywhere else in the world.
These are the tips we’ve gleaned from them:
Don’t Go With the Crowd
“What you want to do is something that doesn’t go with the crowd,” says Victor Asemota, a serial investor and board advisor at several leading tech companies.
Mr. Asemota knows his way around these things. After building businesses for decades, he’s now a mentor at both the Google Launchpad and IBM HyperProtect Accelerators and a partner at various international organizations.
“The biggest mistake many people make is going with the herd. When everybody is doing it, it’s probably a bad idea.”
He says it’s smarter to look for barely explored opportunities. It’s harder to do this, but it’s an approach that yields better results. And when that space begins to get crowded, it might be a good time to cash out.
“When everybody is going in, the people who bought in earlier are exiting.”
Think About Growing Collective Wealth
After co-founding two of Nigeria’s most successful startups– Andela and Flutterwave –Iyinoluwa Aboyeji has launched Future Africa, a Venture Capital company that invests in innovative African startups.
He believes the real investment opportunities in developing countries like Nigeria lie in creating wealth for a greater, not-very-wealthy segment of the population.
“The real business opportunity in Nigeria is making people richer,” he says.
He notes that if an investor finds a way to convert these people’s time to money, he could build a successful business around it.
“If you want to make money making people richer, convert their time to money, and take a cut.”
Take the Long View
Sticking to an investment for the long haul is probably the hardest part of the journey. But it’s also the important part– at least for most types of investments.
Victor Asemota recommends that investors assess the risks of their investments over the medium-to-long term before jumping in. They should ask questions like:
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“Is it going to get worse than this? Or is it going to get better?”
He advises Nigerians to think about their investments in the country as a ten-year plan (he’s optimistic that its economy will have improved in about a decade).
“If I’m making a bet on Nigeria now, I’m making a ten-year bet. Things are going to be better in Nigeria.”
Learn About the Operating Environment
Eghosa Omoigui, founder and Managing Partner at Echo VC, has a lot to say about investing in Nigeria. His company has experience supporting local startups, having backed ventures like LifeBank, SystemOne, and two-dozen others.
He advises that people get on the ground in the places where they want to put their money. This would allow them to gain insights into the operating environment that they wouldn’t get from the web, for instance.
“There’s something to be said for being able to do appropriate diligence– formal and informal diligence,” Omoigui says.
“There’s a lot of information you pick up very casually when you are available locally, that won’t get passed on in an internet article.”
Invest in Teams You Can Trust
It’s risky to put your money into a business that’s run by people you don’t really know. You should be able to trust them to do a good job with the support you’re giving them.
Afolabi Oladele, the Executive Partner at African Capital Alliance, has this to say:
“I think it’s good sense to know about the character of the person or people you are backing; what’s their track record in terms of the way they have partnered with people in the past.”
He notes that not every business partner is trustworthy. Background checks have to be conducted to identify character flaws where they exist (he admits that this is difficult to do). Without this knowledge, investors may be walking straight into a substantial loss.
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