By JONAH NWOKPOKU

Access to capital is one of the greatest challenges that confront entrepreneurs. In the technology space, capital is even more critical because the extent of skills and other technology investment considerations required are enormous, and fundamental.

For tech startups to attract seed funding, experts advocate a strategic and creative approach including an ability to independently operate as a business. They advocate that start-ups must first of all see themselves first as businesses that are competing for the same source of funding with other regular businesses; because there may not be room for preferential treatment because one is a tech start-up.

They also said that a start-up owner should possess enough power of conviction and then try to run the business first to certain successful level.

“For start-ups to be able to access funding opportunities, they need to be able to take the start-up quite a far distance before looking. I use this as my benchmark – a founder should reach the point of generating at least N100, 000 per month before he goes looking for funding. It will make the search much easier. Also, it’s not every start-up that is designed for funding. Some ideas are just too limited in scope to attract funding,” said Mark Essien who is the founder of an online hotel booking agency, www.hotels.ng.

He added, “There are a lot of people who have enough money and are looking to invest that money. However, there are easy investment opportunities available like land or houses. Start-ups need to compete against those for the same money. The capital is available, but I believe it’s most available to very compelling start-ups that can tell a very good story about their potential.”

According to Essien, the investment dollars are excessive for the start-ups that have traction, hence leading to the perception that there is too much. The investment dollars are very, very scarce for start-ups that are only an idea without any traction or demonstration that the idea will work; hence the perception that there is no funding.

“And this can be explained also,” he noted. “Most people looking to invest will rarely announce that they are investing. Rather, they wait for someone to recommend a good investment opportunity. When a start-up is doing great, a lot of people recommend it to the investors, so it gets a lot of offers. When the start-up is just a guy with an idea, nobody will put their reputation on the line to recommend it; hence it looks like there is no funding available.”

Having grown his start-up to a profitable level within one year of operations, he said his advice to a start-up looking for funding is to first find traction; and to have a number that is growing rapidly, and then show that number to people in the investor scene. Soon enough, the offers will come.

Also, the founder of www.drinks.ng, Lanre Akinlagun tell start-ups that investors will invest but not at seed fund stage.

According to him, investors will only react when start-ups begin to show a healthy balance sheet or at least prospects.

“This is just the nature of the business environment. We have found it extremely difficult raising money but once we started showing healthy revenue potential, we got a lot more enquires,” he said.

On his part, the Chief Operating Officer of Nigeria’s online marketplace, SpacePointe, Osato Osayande said, “The issue to deal with is connecting the start-up with investors. Investors need access to the start-ups and the start-ups on the other hand need training on how to present them in a way that is compelling to the investors.”