One of the ways startups raise funds is through venture capital firms (VCs). A venture capital firm provides some form of private equity financing to start-ups and emerging companies with high growth potential or who have demonstrated high growth over a period of time.

Funds provided by VCs, are raised from a combination of financial contributions from individual or other corporate investors. Examples of Venture Capital firms based in Nigeria include; OUI CAPITAL,   INGRESSIVE CAPITAL, GREENHOUSE CAPITAL, etc.

In this article, we will consider in detail the legal requirements for setting up a Venture Capital firm in Nigeria.


Generally speaking, the Securities and Exchange Commission (SEC) is the primary regulator of investment companies in Nigeria. Under its guidelines, a company applying to the SEC for a license as a Venture Capital firm must present Sponsored individuals and directors.

Sponsored Individuals are officers of a company applying for the license who are responsible for ensuring that the applicant company they represent acts in compliance with the SEC guidelines. In the event such a company fails to comply with SEC regulations, the “sponsored individuals” will be held liable in place of the company, for failure to comply with its rules.

The 3 sponsored officers of a company applying for a Venture Capital license must consist of; Managing Director and Compliance Officer,


The SEC rules make provision for documents required to be presented by sponsored individuals in an application for a Venture Capital license;

  • The applicant company must present a minimum of three sponsored Individuals, one of whom shall be a compliance officer;
  • The Managing Director of the Company must be among the sponsored individuals;
  • Full postal addresses of immediate previous employers, bankers (with Current Account number), and nominated referees of sponsored individuals;
  • Detailed curriculum vitae of sponsored individuals and Directors which should include details of activities arranged from Secondary School to date with dates; (all gaps in employment and educational history should be explained);
  • Copies of credentials of sponsored individuals including secondary school and NYSC discharge certificates; originals will be required for sighting by the SEC;
  • Evidence from the Sponsored Individuals of having a minimum of four years post-graduation experience to perform the Function as stipulated by the Commission`s Rules and Regulations;
  • Police clearance report for each Sponsored Individual. Each sponsored individual is to report at the SEC head office in Abuja or the Lagos zonal office with two recent passport photographs to commence the process;
  • Copy of means Identification of the Directors and the Sponsored Individuals of the Company (International Passport, tax or utility payment documents);

In addition to presenting sponsored individuals and the latter satisfying the requirements above, the applicant company is required to provide the following;

  • Profile of the Company should include among others a brief history of the company, organizational and shareholding structure, and principal officers as well as details of past and current activities;
  • The name(s) and address (es) of the company’s subsidiaries/associated companies, type of business, and percentage holding;
  • A Specimen Agreement between the Venture Capital Management and the venture Capitalist;
  • Evidence of Payment of shares allotted to the shareholders;
  • The company’s intended venture capital funding sources;
  • The operational manual or organizational chart of the company
  • Business plan;
  • Bank statement of accounts operated by the Company for the last 6 months;

Corporate Documents

In addition to the requirements listed above, the applicant company is required to present a copy of each of the following documents, duly certified by the Corporate Affairs Commission;

  • Certificate of Incorporation
  • Memorandum and Articles of Association – this should include the power to perform the specified function;
  • CAC Form(s) showing Statement of Share Capital, Return of Allotment, and Particulars of Directors
  • Latest audited accounts or audited statements of affairs of the company. The cash assets ratio shall be 60% liquid assets and 40% fixed and other assets
  • Sworn undertaking to keep proper records and render returns as may be specified by the Commission from time to time signed by a director or the company secretary (to be notarized);
  • Sworn undertaking to abide by SEC Rules and Regulations and Investments and Securities Act No.29 of 2007 by a director or the company secretary (to be notarized);
  • Sworn undertaking to strictly engage in venture capital business only (to be notarized);

Obtaining an SEC license as a venture capital firm requires the services of an experienced lawyer and law firm that understands the regulatory requirements associated with obtaining licenses with the SEC. Moreso, making any form of investment involves a level of risk. However, operators of Venture Capital firms, need to put in deliberate efforts to ensure that their investments in startups to a large extent, have minimal risks because, at the end of the day, the aim of investments is to yield returns on such investments.

At LEX-PRAXIS, our credible and experienced legal team has assisted individual and corporate investors with making investment decisions, particularly as it concerns startups, by carrying out the needed due diligence on behalf of investors.

We also advise founders who wish to set up Venture Capital firms in Nigeria on how to go about doing so as well as assist them with the process.

Need help in this regard? Reach out to us here, or through the Whatsapp icon on the lower right part of this page, and we will be delighted to work with 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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