In April, startup accelerator Techstars, in partnership with ARM Labs, a Lagos-based innovation program targeting fintech startups, announced the launch of ARM Labs Lagos Techstars Accelerator Program.
As Techstars’ newest accelerator program in Africa, the announcement re-emphasized the expansion plans Techstars had touted when it Maelle Gavet as CEO last January. The Lagos accelerator adds to the long list of dedicated generalist and specialist programs the company has managed to create globally in recent years.
Companies admitted to one of these quarterly programs will receive $20,000 plus a $100,000 convertible note in exchange for 6% common stock, access to the Techstars networks, and other resources. In 2021, the Colorado-based accelerator conducted up to 50 accelerator programs in 18 countries, most of which were located in North America and Europe.
In Africa, the accelerator test conducted an accelerator program in Cape Town between 2016 and 2017. Techstars has invested in more than a dozen African startups through other programs. So it was only a matter of time before one of them made it to Africa – and where better to start than in Nigeria. Most of the startups supported by the accelerator on the continent are based in the country, including Farmcrowdy, Healthtracka, TalentQL, OurPass, Rentsmallsmall, and Treepz.
The Nigerian tech ecosystem has grown tremendously over the past five years, with venture capital inflows exceeding $1.8 billion in 2021. Lagos is the epicenter of this growth. According to this data, the city is one of the fastest growing ecosystems in the world and the number one African startup city since last year. By partnering with ARM Labs, Techstars hopes to capitalize on the huge opportunity created by its startups. The first lesson of the program starts in December and culminates in a demo day in March.
sure naira spoke to Gavet during her trip to Lagos and spoke at length about how the program would work, opportunities for founders and why the accelerator is positive about Africa.
TC: There are a lot of Techstars programs, from London to Seattle to Riyadh to Oak Ridge-Knoxville, and sometimes it’s hard to keep count. But before it kicked off in Lagos, it seemed that only the Toronto program really paid attention to Africa, as evidenced by the 15 startups from the region represented in the program. Why is this the case?
MG: Techstars has been operating in Africa since 2011. We have hosted 350 local ecosystem building events, mainly in Kenya, Nigeria, Ghana and South Africa. We also ran a Barclays Accelerator program in South Africa for two years and made nearly 100 investments in African founders. But you’re right. The most recent Toronto cohort has been heavily focused on Africa, frankly, more because I think Canada has a very welcoming visa system for African founders and so just makes it a lot easier for them to get into the Toronto program than it is for many other western programs. But Techstars has been very active looking at Africa in general and the discussion last year was that given how vibrant the tech ecosystem is here, we should have accelerators here in Africa.
I’m in Nigeria this week — I’m also going to Kenya — because I’m here to find the right way to do it, where we’ll open them, and so on. We decided last year to open one in Lagos and we sincerely hope we can double down and explore other options in terms of different hubs in Africa.
Why partner with ARM for this program in Lagos, and can you describe the structure?
We have pretty high standards regarding the type of business we work with and the quarterly program we’ve put in place. And that model has worked for the last 15 years, so I’m pretty confident in it. Any founder who will apply for this and then be admitted to this program here in Lagos will benefit from the experience we have gained over the years, from the roadmap we have to run this program, from the international network we have .
Soon we will be announcing the new director of Lagos, some with local entrepreneurial experience and also experience working with the regulators. Now we decided to partner with ARM because we wanted someone who was embedded in Nigeria and understands the country better than us from a business perspective.
We wanted a business partner who understands Africa and understands what it means to do business across Africa. And I think we are realistic enough to realize that we don’t know everything and can provide the founders much better service if we combine each other’s strengths – the global network of experts, or playbook, all the infrastructure we have and the knowledge and experience and local network of a partner like ARM.
Can international founders apply for this program and how should they come to Lagos to participate?
All our programs are international, we usually have between 20% and 40% of the local founders and the rest are international founders. With the Lagos programme, we expect this ratio to be approximately equal.
While there is so much knowledge and energy of founders in Nigeria, we also expect that there will be many African founders. It would be easier and more appropriate for them because they mainly focus on the African market and so it is better for them to actually come to the Lagos accelerator. That’s one of the reasons I’m going to Kenya next, because I think there are quite a few Kenyan founders who would rather come to Lagos than to Europe or North America.
And then quite a few founders in Europe and the US see Africa as a great market for their business. And so I expect that we will get applications from them and those who come in should come. At the end of the day, we select the best.
As an African founder, why should I sign up for Techstars Lagos instead of Toronto, New York or other western programs?
We have 60 programs and accept founders from all over the world. So if you are a Nigerian founder and want to sign up for a Techstars accelerator, you can do that from anywhere in the world.
Now, the way we recommend people do it is to first think about an industry you’re interested in and go with that. So, for example, if you’re in the music industry, we have a music accelerator in LA that you might want to sign up for. If you’re much more on the agriculture and food technology side, we have an accelerator in Minnesota for that. You may also decide that for whatever reason you want to experience North America and have a different experience of how business is done elsewhere, so you may want to apply for Toronto or New York; these are generalists program.
You may also decide that you want to go to a market near Africa with a local connection, for example the UK and European markets. And so you can sign up for the London or the Paris. If you look at the 20+ investments we’ve made in African founders, they came from all over. You know Toronto very well, but then again we have Nigerian founders who have been through New York, London and Bangalore, so that’s not going to change.
Now you can also decide that you want to stay in Africa. And for you, either for a personal reason or a business reason, as really, Lagos is the place you want to be because you can’t leave your family for three months, or because as you really want to focus on the Nigerian market, and then you need to sign up for the Lagos accelerator.
Is the Lagos Accelerator Sector Agnostic?
The one we’re doing with ARM is focused on fintech and prop technology. A robust industry is growing in Nigeria around these two topics. So we expect there will be a lot of founders.
If you look at ARM, they are also great partners for founders. And so I would recommend the founders who sign up for this accelerator to see how ARM can help them. And as a result, if you’re not sure if they can help you, you may need to look into another accelerator program. But if you think they can do that, you should absolutely apply. If you don’t know, you should contact us and talk to us.
Will the Lagos accelerator startups be able to assess follow-on capital?
After going through the gas, we support some to raise money from other investors depending on where they are in their development, their fundraising stage, etc. We have a fund called Techstars Ventures, the fund we use to do follow-up checks in seed, Series A and some Series B.
Is now the best time to launch a program in a new region, given the slowdown in venture capital and the economic downturn? And how do you advise founders to deal with this current situation?
I think the program is even more relevant now that there is a downturn and the economy is slowing down than ever before. So what we do at Techstars is help founders build real, healthy, sustainable businesses. This is all the more important during a recession because you need support, network and capital more than ever during this period. So no worries from that perspective.
I think when it comes to the advice I give founders in general, remember that no one succeeds alone. It is even more true during a crisis. And that could be another reason to sign up with Techstars, as you’ll need the capital program and mentorship more than ever to succeed during the economic downturn.
One of the ostensible objectives behind Techstars starting a Lagos accelerator is to create unicorns of the continent. Lagos is also home to some of Africa’s unicorns such as Flutterwave and Interswitch, but how do you hope to achieve that, given that the accelerator has yet to hit one after years of investment?
We are what we call universal investors. We try to have a portfolio that represents all sectors and all types of people in the world. The reason why I am convinced that there will be a lot of unicorns in the future is that you just look at the African market. You can even take Nigeria as an example: huge population, growing consumption and various problems and challenges faced by entrepreneurs.
This is like a recipe for creating the next generation of very wealthy entrepreneurs and legacy companies. Now, will it be a bunch of unicorns, or will it be a bunch of $100 million companies? We will see. But I see so much potential, both in terms of the quality of entrepreneurs and the magnitude of the problem they are trying to solve, that I can only imagine in the future many very wealthy entrepreneurs and important companies for Nigeria and Africa in in general.