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SMEs: Seek angel investors, not banks for funding – Expert warns

Budding entrepreneurs who attended the first edition of the Nigerian Small Business Summit on the 24th August at the Landmark event centre were warned to stay away from bank loans at the start of their businesses. Mr. Kushal Dutta, Managing Director of Africa’s number one hotel booking portal Jumia Travel Nigeria, gave the warning during a panel discussion on the science of SME’s success in Nigeria.

Dutta said seeking for Angel investors to sponsor start-up businesses and provide needed capital is a better alternative to approaching banks for loans, in view of the usual banks’ high interest rate and short repayment period which might kill the business at birth. He also mentioned that approaching companies that might be interested in investing in scalable businesses is also plausible, citing MTN’s investment in the Jumia group’s business as an example.

On the viability of copying a successful business model, Dutta was of the opinion that it is absolutely not wrong to do so but the new business must ensure it is offering a proposition that the existing businesses are not already offering. This way, he said, “you can stay on top of your game and only expect that customers will come chasing after you.”

Amongst other practical business advices the Jumia Travel Nigeria MD gave, was a reiteration on the danger of expanding a business when customers’ demands cannot be met. “If you know you cannot meet customers’ demand, do not expand because one happy customer will tell three people about your great product and customer service. But one unhappy customer will tell 50 other people about his dissatisfaction,” he added.

Other discussants on the panel included Rajiv Das, Category Global Marketing Director, Africa Region for Unilever; Chizor Malize, Managing Partner, Brandzone Consulting; and Abasiama Idaresit, CEO of Wildfusion.

The Nigerian Small Business Summit is a gathering of business experts sharing successful examples (mostly from India and local examples), to set up learnings and energize Nigerian SMEs to create the needed jobs and provide stability at this period of economic downturn. The event is put together by Gemciti, a brainchild of David Okeme, President of Advertisers Association of Nigeria.

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  • Hi there! This is my first visit to your blog! We are a group of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a marvellous job!

  • Incredible! This blog looks exactly like my old one! It’s on a totally different subject but it has pretty much the same page layout and design. Great choice of colors!

  • Hey would you mind stating which blog platform you’re using? I’m going to start my own blog in the near future but I’m having a difficult time choosing between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design and style seems different then most blogs and I’m looking for something completely unique. P