Few months ago, our firm was engaged by a client in the UK to conduct due diligence on a startup in Nigeria. The latter was considering investing in it. Here are a few lessons from my experience I believe startup founders and investors should consider when raising funds from investors;

1. Make it easy for future investors to find you.

A major part of our task on this brief involved digging up information about the company, what they do, their track record, etc. We also had to do some digging on the founder(s) and thankfully, they made it easy for us to conduct our due diligence seamlessly.

Dear business owner or startup founder, can you and your business easily be found?

2. The quality of your team matters.

 The startup we were hired to investigate, was set up as a “family business” consisting of close relatives who were barely “occupying space”. They made no form of contribution (technical or otherwise) towards the company. This was a red flag for our client.

Who are the members of your team?

3. Compliance! Compliance! Compliance!

It doesn’t matter how innovative your ideas are, if the laws of the land where your company is set up doesn’t recognize your startup, it’s very unlikely an investor would. Every investor knows that investing their money into businesses that operate illegally is a risky venture.

Dear business owner, does your business adhere to laws, regulations, guidelines or policies relevant to its operations within its sector? Have you invested in a compliance team or are you trying to save costs?

Get more information on the importance of compliance and how you can set up a compliance team here.

As for the startup, the deal didn’t pull through. Our client was satisfied and has peace of mind which was paramount to us.

If you are looking to invest in a business or startup, please ensure you get a qualified lawyer to assist you with due diligence, as much as investments involve taking risks, there is nothing as valuable as your peace of mind knowing that your money is safely tucked up in the right place.

Are you a foreign investor looking to invest in businesses in Nigeria, our law firm can assist you with necessary investigations on the company you wish to invest in. Are you actively looking for investors for your business? Our firm can provide the guidance you need to ensure your business is properly positioned for investment opportunities as well as ensure to ensure a seamless process during the transaction.

You may reach out to us HERE or HERE, and we would be delighted to assist you.


Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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