In 2013, at the inception of Spark, I wrote the below manifesto.

We are not a fund and we are not an incubator; we are a company that builds companies. We focus on Lagos, Nigeria as the gateway to Africa. We focus on well defined and scalable revenue models. We are a collection of internet people. We are Spark.

Shortly thereafter, we deployed $2m in a bunch of companies. We lost some. We won some. The value of our current portfolio is definitely worth more than the capital invested so for that I think we are definitely in a good place moving forward. But the terrain was significantly more challenging than I ever imagined. More challenging than any of the individual entrepreneurs thought possible. Myself included. The lack of follow-on funding would have killed product-only led businesses. The challenges around monetization would have destroyed the dreams of weaker men or women. But those who were able to bridge through the valley of death are building real companies based on real values.

In that period $600m+ of capital has gone into ecommerce-related ventures in Nigeria. And even the first ‘unicorn’ of Africa had a pretty terrible year in 2015.

It’s unfortunate that my friends at Konga are seeing equally traumatic times. This genuinely makes me sad. But considering the turmoil post-election, and the fact we are very much in a recession, I am surprised people are surprised by their numbers. But that’s another post. I think it’s a mere question of communication and understanding. Anything consumer-related is brutally difficult and expensive. And that’s in the real world. Throw on the newness of the internet and you have an education problem. The market has grown for internet in Nigeria. But look what people are actually doing on it. Entertainment. Music. Gossip. Social Media. The MNOs have built the internet to be all about frivolous things. That’s a shame, that natural evolution has yet to really enable large, non-entertainment brands to be built. Jobs people think internet first. It’s way more efficient. But after speaking with Mark and Fikayo recently, when it comes to hotel booking or renting an apartment in Lagos, people still ask for an agent’s number. They are building long term value by improving efficiency of offline activities. But they are all facing an uphill battle. The wind is definitely not on their backs.

1. We still focus on Lagos first

If you look at any report around data usage in Nigeria, it’s quickly apparent that Lagos is the gateway to build services. Abuja and PH are somehow relevant, but not really. Lagos always comes first, second and third for attempting to solve problems at scale. The internet usage is here. The population is here. The talent is here. The community is here. For the zero to one, it’s more than enough for you to validate your product and reason for being. Spark is about getting people from zero to one. This requires A LOT of experimentation.

2. We still focus on linear revenue models

SV can build product-first because they have abundant capital to encourage and enable that. In Lagos, one still needs to think of paying one’s bills. Startups need customers, not capital. Customers. They need to be lean at first and focus on understanding their base unit economics. On creating REAL value. My #1 issue with startups are when they believe ‘aggressive marketing’ can solve their problems. I always, always, always recommend zero marketing until they have a certified product market fit. And in this market, that usually takes 2-3 years. We stopped all paid marketing at iROKO 11 months ago, and we are still growing subscribers and getting creative about optimising the funnel, not just filling it. That decision was borne out of necessity, but was a deeply concerning and unpopular one. I anticipate zero marketing for the next 18 months. We are targeted DAU/MAU ratio of 30% before we crank on that thing again. Marketing budgets make folks fat, lazy and stupid. Get your money up, costs down and prepare for the long haul. Because those ‘interested investors’ will waste years of your life before they actually go ahead to fund anything.

3. Local champions.

I have a bias against foreign-educated entrepreneurs. You heard that right. I now have a bias against myself. But I am tough, totally reckless and had nothing to lose. If you are not prepared to spend the next 10 years toiling over your oft-called stupid startup, then you have no business pretending to found one. I have seen too many daddy funded wantrepreneurs who play at being a founder, whilst maintaining a lifestyle even I would envy. I believe Lagos founders need to be forged in fire. You need to be ready to snatch the souls of your competition. It’s literally do or die. For every foreign educated founder – Mark there are x1,000 local founders like Fikayo. People who just have an innate understanding of Lagos and her problems. Who would / could build real value for people. I feel the next wave of internet startups will be local folks building things really peculiar to Lagos. The obvious western startups have been attempted. Most failed or had to be mutated to Lagos. The next wave who will emerge in these brutal climes will be scary tough, resilient and more street smart than the returnees who defined the last wave.

4. Capital efficiency.

The manifesto hasn’t really changed that much. It’s still the same as before. The one thing I know is that a lot can be achieved with less capital. Originally, we funded companies up to $250k. I am still interested in being first money in, but with enough experience, I feel most companies can reach the same level with $20-50k. So that is where the focus will be. $20-50k first money in to support the first phase of experimentation. Also $20k is the new $50k as the Naira has devalued from N165 to N380-400. So now is the time to deploy capital efficiently. I would prefer to invest in more experimentation, than not.

5. No batches.

This time we will be more opportunistic. When deals appear, we lock them down and hunt for new ones. Great companies are being built in all climates. These hardcore founders are toiling away breaking rocks and bleeding the stone to demonstrate that the ‘consumer internet market is shit’ is just noise of the weak.

6. Embracing failure.

We made a ton of mistakes at Spark. Nothing fatal. But at the minimum, we learned from them, mistakes which I believe others will join in making as they try to deploy capital locally. The person I was in January 2013 is completely different from who I am today (father of 2 just to name #1 milestone – that puts everything into perspective). Oh how time flies. Nigeria was a different place also. The Africa rising story is now dead. Many ‘interested investors’ have come and gone. Many millions in losses and lessons learned have been institutionalised across the Nigerian tech space. We are in recessionary times, no doubt. Things are hard for the entire country. I was super negative for the last 18 months. Everything collapsing. Nigeria is shit. Nigerian business class is a bunch of delinquent indebtors and had optimised the best business model ever. Get an outsized loan. Default. Do big bwoys. Nigeria is shit. Then I realised that now was the best time to be active. I feel more alive than I ever have been.

iROKO is doing just fine. We are on track to grow 100% y-o-y. Hotels is doing just fine. YTD revenue is up 123%. ToLet are pretty much breaking all their prior revenue records qtr-o-qtr. So all the Doomsday scenarios are overblown. Lagos will still be the largest internet market in Africa. Amazing, real value built companies will be created here, and after a little time off from doing deals, Spark is back in the game. We actually completed our second deal this year.

Last week, Spark funded a 23 year old. A truly amazing 23 year old who I believe captures the true essence of Spark 2.0 and whose journey I am excited to join.

---

The article was first published HERE