Lagos State government wants to own its VC


Lagos State government wants to own its VC

The Lagos State government is making moves to own a venture capital platform to support technology startups in various sectors of the economy. This is coming up in the just concluded GITEX 2022 event held in Dubai. The VC may be established in a few weeks from now according to Olatunbosun Alake, the special adviser to the Lagos State governor on innovation and technology and as reported by TechCabal media. 

During the event, the adviser and its crew pitched the State's plan for a smart city to investors. And one of its equity-free investment-backed agro-tech startups, Farmz2u, was among the companies that pitched their product in Dubai. Farmz2u is also backed by TechStar. The equity funding is from the Lagos State Science Research and Innovation Council (LASRIC).

For the proposed venture capital platform, the adviser says that it will provide funding for startups in Fintech, agrotech, healthcare and most importantly, research and innovation. The funds will be for within 5 to 10 years and shall be higher in value than those received by tech companies in Nigeria from privately owned VCs. The Lagos State government will manage the fund making them general partners while interested investors becomes limited partners

To me, this is a big move on the part of the Lagos State government. Most VC funds come as an inflow from other countries. They expect a huge outflow of funds higher than the funds that were provided to the startups. These make technology companies source for dollars to pay back the funding when they are due. Resulting in a hike in the dollar rate in exchange for the Naira.

Although Lagos State plans to encourage foreign investors to partner with their VC platform, the bulk of the fund will be paid locally and not internationally. Which will help strengthen the Naira. 

Lagos State has been the hope of Unicorn startups like Flutterwave, Jumia, Chipper Cash, OPay and Andela. Therefore, the support from the Lagos State government in funding will encourage the growth of more small businesses in the country.

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