Lagos Angel Network seeks to make local investors the first backers of Nigerian startups

Lagos Angel Network is pushing to make Nigerian investors the first source of capital for the country’s early-stage startups, as tighter global funding conditions force founders to compete harder for venture capital.

The network wants more Nigerian entrepreneurs, executives and professionals to move from building companies to backing them, creating a local layer of capital that can support startups before they become attractive to larger institutional or foreign investors.

Solomon King, executive director of Lagos Angel Network, said the goal is not to replace foreign venture capital but to ensure Nigerian startups do not have to wait for overseas investors before receiving their first meaningful backing.

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“Ultimately, our ecosystem cannot depend entirely on foreign capital to finance its earliest-stage companies. We need a stronger local first layer of capital,” King told BusinessDay.

The push comes as investors become more selective about African startups, with early-stage companies bearing much of the pressure. Venture-backed companies across Africa raised $158.9 million in the second quarter of 2026 across 143 deals, according to KPMG’s Venture Pulse report. KPMG described investment as soft and said investors were focusing primarily on more proven startups rather than companies at earlier conceptual stages.

The squeeze is more visible at the seed stage. An analysis of Q2 funding data from AU-Startups found that seed-stage deals fell 60 percent in the quarter, raising concerns about the pipeline of companies that would otherwise progress to larger Series A rounds.

Africa: The Big Deal has also highlighted a thinner market for smaller funding rounds. Its analysis shows that the $100,000 to $1 million segment has contracted in deal volume from the funding boom years, even though the decline has not been limited to smaller deals.

That shift is important for Nigeria because angel investors typically operate at the stage where institutional investors are becoming more cautious. A deeper pool of local angels could therefore provide the first capital that allows promising founders to develop products, prove demand and build the track record needed to attract larger investors.

For Lagos Angel Network, that is the gap it wants to address: not replacing venture capital, but building a stronger domestic layer of investors willing to take informed risks before institutional capital arrives.

King said Nigeria still attracts capital and that startups continue to raise money, but investors are now more cautious about where they put their money.

Foreign exchange volatility, inflation, insecurity and the wider operating environment have made Nigeria a more difficult market for international investors, he said, adding that, “Currency risk is a very serious consideration.”

The change in investor behaviour means founders are increasingly being judged on the quality of their businesses, rather than solely on the size of the market or the ambition of their growth plans.

That shift could make local angel investors more important because they can invest at an earlier stage, when startups may not yet have the revenue, scale or performance metrics required by institutional venture funds. An angel investor can back a founder with an idea, an early product or an emerging business before it becomes sufficiently developed for a venture capital fund.

King said this early cheque can help move a company from an idea or early product into a business that is ready to attract larger pools of capital. But he cautioned against treating angel investors as a substitute for venture capital.

“Angels can fill some of that gap. But the goal shouldn’t be to say angels will replace VCs,” he posited.

Instead, Nigeria needs what King described as a stronger continuum of capital, where local angels provide early funding and support, followed by institutional investors as startups mature.

That could change the dynamics of Nigeria’s startup market. Rather than founders having to secure foreign interest at the earliest stage, local investors could provide the initial capital and connections needed to build companies capable of attracting international funding later.

Lagos Angel Network is now trying to expand that pool of investors. Its third Lagos Angel Fellowship cohort is designed to attract seasoned entrepreneurs, business leaders, senior executives, emerging investors and professionals with industry expertise who want to begin investing in startups.

Applications for the third cohort of the Lagos Angel Fellowship are open, with the deadline set for September 7, 2026. The six-week programme is aimed at building a wider pool of informed and active angel investors who can provide capital and strategic support to Nigerian startups at the earliest stages of development.

The fellowship offers participants practical training in startup evaluation, due diligence, valuation, deal terms and portfolio support, rather than focusing only on the theory of angel investing. Participants will also have opportunities to engage with experienced angel investors through live question-and-answer sessions and gain exposure to startups moving through the early-stage investment process.

The programme is designed to help participants understand how experienced investors assess founders and businesses, identify risks and make decisions when information is incomplete. Fellows will also have access to a wider community of entrepreneurs, investors and professionals involved in Africa’s startup ecosystem.

LAN has created two pathways for Cohort III. The Learning Track is for professionals, executives, entrepreneurs, investors and ecosystem participants who want to develop or deepen their understanding of early-stage investing. The LAN Induction Track is aimed at people with investment capacity who are ready to formally join the network and participate more actively in its investment community.

The fellowship is not limited to people who already describe themselves as angel investors. LAN is seeking successful entrepreneurs, senior executives, experienced professionals, business leaders and other individuals with capital, industry knowledge or networks who are willing to learn how to invest in early-stage companies and contribute more than money to the businesses they back.

Participants who successfully complete the LAN Induction Track will be formally inducted into the network, giving them access to LAN’s curated deal flow and Investment Committee processes. The broader objective is to create more Nigerians capable of making informed early-stage investment decisions and, ultimately, increase the amount of local capital available to startups before they become large enough to attract institutional or foreign investors.

The network previously launched its fellowship with the African Angel Academy, with the programme designed to equip professionals with practical skills for early-stage investing.

For King, increasing the number of people willing to write startup cheques is only part of the challenge. The quality of those investment decisions matters just as much. “Not every business should be funded, frankly,” he said.

LAN therefore wants to reduce what King sees as a major weakness in Nigeria’s startup market: the information and trust gap between founders and investors.

Founders may believe they have built a business that deserves funding, while investors must assess hundreds of opportunities and determine which ones can survive and grow. “A lot of what people describe as a funding gap is actually an information and trust gap,” King added.

The network is attempting to address that through screening, due diligence, investor education and founder engagement. The aim is to give investors better information while helping founders understand what makes a company ready for external capital.That distinction is becoming more important as investors demand stronger business fundamentals.

A report Payble founder Roosevelt Elias, said investors were increasingly prioritising revenue, sustainability and governance over growth promises. It also reported that only 162 unique investors participated in African startup deals between January and April 2026, a 26 percent decline from the same period in 2025.

For Nigerian founders, a deeper domestic angel market could therefore provide a buffer against swings in international capital. It could also create a different kind of investor relationship.

King said the best angel investors do more than provide money. They can help startups win customers, recruit staff, improve governance, understand an industry and avoid costly mistakes. “Sometimes, the smartest money a founder receives is not the largest cheque,” he asserted.

That model requires investors to bring experience and networks alongside capital. It also requires investors to understand that startup investing is fundamentally different from lending.

King said some prospective angels expect guaranteed returns or precise repayment timelines. But early-stage investing carries a high probability of failure, with the expectation that a small number of successful investments can generate enough returns to offset companies that fail. That makes investor education central to LAN’s strategy.

Over the next five years, King expects Nigeria to develop a deeper pool of local angels, particularly as successful founders, executives and professionals begin to recycle their wealth and experience into the next generation of businesses.

The cycle could become self-reinforcing: successful entrepreneurs become investors, investors support new companies, and successful exits create more investors.

But King said Nigeria needs more than capital to make that happen, adding that, “The ecosystem needs stronger investor networks, better syndication, investor protections and successful exits that demonstrate that angel investing can work. LAN’s ambition ultimately goes beyond increasing membership.”

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King wants to see more Nigerians write their first startup cheques, even if those cheques are relatively small, and more capital available at the earliest stages of company building.

“The measure of success would be a Nigerian founder receiving meaningful backing locally without first having to wait for a foreign investor to discover the company. We should be able to identify, support and back promising Nigerian businesses here at home,” King said.

That would mark a significant shift in Nigeria’s startup financing model: foreign capital would remain welcome, but local investors would increasingly have the opportunity to take the first risk. For Lagos Angel Network, that is the market it is trying to build.