How did GetEquity get people to invest in startups when startup investing was still unfamiliar in Nigeria?
We started GetEquity in 2019, just before COVID. At the time, the Web3 ecosystem was really kicking off globally, but Africa was largely left out of the conversation. My co-founder, Jude, had this vision of capturing that market. He was about six years early with that vision because a lot of what we were thinking about then is what people are talking about now.
The hard part wasn’t the technology. It was asking people to do something they had no reference point for. Nigerians already understand investment. People invest in real estate, land, shops and businesses. What was new was saying, “You can buy a piece of a company you’ve never visited, whose founders you’ve never met.”
With traditional investments, you can see the asset. You know who owns the land. You can visit the shop. With startup investing, you don’t have any of that. So we had to ask: if you can’t see the asset, what information do you need to be comfortable? If you don’t know the founders, what kind of diligence would make you comfortable? And if you can’t exit immediately, what about this company gives you confidence that it can scale, and over what period?
The first thing we did was make the minimum investment low enough for people to participate. But we were also very clear that startup investing can go to zero. If you’re looking for a quick return, don’t invest. If it’s money you need to eat or survive, don’t invest.
We even used what I call reverse-psychology marketing. We would essentially say, “Please don’t come.”
We didn’t want people coming back later saying, “You told me about this business.” We also de-risked the process by hiring people who were investors and research analysts. Then we created an investment committee, similar to what you would see in a VC firm.
The checks behind every listing
“Experienced business owners who had scaled companies from zero to 100 or 1,000. Wealthy investors who were investing billions. People who understood venture and risk capital, lawyers, and operators at the CMO and CRO level.”
“It was a strongman test. You put four people in a room, and if the collective wisdom says this is a bad business, then it’s probably a bad business.”
“We checked the founders’ backgrounds. We called former employers. We used their products. We called their users multiple times. Sometimes we used the products for months.”
“We would even verify things like where they lived. Sometimes we’d sit down with them face-to-face. We wanted to make sure people weren’t using the platform to launder money or do something fraudulent.”
But even after all of that, a business can still fail. Markets change. Regulations change. The economy changes. Look at bike-hailing in Lagos. At some point, bikes could come to you, and then the government restricted bikes from major roads. The market essentially died.
The best founders are the ones who can co-evolve with the market. They can look at what is happening and pivot.
We were also very clear about liquidity. Startup investments are long-term investments. You’re looking at anywhere from zero to ten years in some cases. So the returns aren’t immediate, and we were direct about that.
We also showed our work. Every company listed on the platform had an explanation of why we were listing it, the thinking behind it, and the investment committee’s review and recommendation. It was radical honesty. We wanted people to have enough information to make their own decisions and do their own research.
We also spent a lot of time educating people. We hosted webinars, Twitter Spaces and Clubhouse sessions. The timing helped us. Clubhouse had just launched, everybody was at home, and the macro environment was conducive to people exploring new things.
“Our first waitlist was around 2,000 people.”
“I personally spoke to at least 60% of that waitlist.”
I was very active on Twitter, and people were also sending me DMs. That allowed us to understand what people were asking for and what they needed. So yes, startup investing was novel, but I think the timing was also right.
GetEquity has since expanded beyond startup investing. What changed, particularly around the Dangote commercial paper, and how did you bring your early investors along?
We have grown with our investors, and we keep growing with them. Our thesis was always around young companies that wanted to scale, grow and become leaders. But around 2023, the global macro environment changed significantly. You had inflation. Venture capital investors and LPs became much more cautious. They weren’t putting money into risky ventures the way they had before.
Then you had the Nigerian situation. The FX crisis made it difficult to source dollars. Card limits became very low. So the startup equity environment wasn’t making as much sense anymore. Luckily, we had started sensing this ahead of time. Because we had already built something and proven the model, we had goodwill. That opened conversations with a new class of investors.
Our first conversation with ARM was interesting. They basically said, “Why are you playing in this tiny ocean or river when there’s a massive ocean?”
That conversation made us realise there was a gap in the private capital markets. We were funding small companies, but there were also larger companies that needed the same type of capital and could pay investors returns. If we could fund startups, why couldn’t we fund mid-sized and large businesses? So we expanded the model. We didn’t abandon what we were doing.
We started with a commercial paper experiment with a company that was providing capital for bike and dispatch riders to own bikes. It worked, and we learned the fundamentals of that market. Then came Dangote commercial paper. That was the first day we posted that kind of investment on GetEquity. We positioned it as a new type of investment opportunity and asked them, essentially, “Would you try a fixed-income opportunity?”
And the response was insane. Dangote was a company everybody knew, so there was much less education required. In fact, the response was so strong that we were even considering whether we should downlist it because we thought, “Dangote is known, but who knows?” Within an hour, the response was crazy.
That taught us something important: people were waiting for recognised companies.
These were mature businesses that had already passed product-market fit. It was also easier to explain because people could see what they were buying. There were audited statements and financials covering several years. ARM’s credibility as a household name also opened the door. From there, it was up and up. And our investors came along with us because, ultimately, their decisions and feedback helped drive the move.
What are the biggest lessons you’ve learned from building and investing in companies? What mistakes should founders avoid?
The first thing is understanding that your customers may be answering a completely different question from the one you’re asking. As a founder, you have to be able to step outside your business and analyse it from a third-party perspective. You have to be able to tell yourself the truth.
With GetEquity, we thought customers wanted “a way to invest in young companies and startups.” But what they were actually asking was, “What do I do with the money I’ve worked hard for in an economy that is eroding the value of that money, without losing that money?” We didn’t fully understand that until we launched the new model.
Don’t just ask people, “Would you use this?” Go deeper. You need to understand the emotion behind the problem.
The second thing is that, particularly in finance and fintech, the product is trust, not your app. When you’re building a financial product, you’re asking people to trust you with their money. That trust comes from education, transparency, having the right processes, continuously improving, listening to feedback and showing genuine concern for the people using your product.
Trust is critical in every industry, but in fintech, trust is the product.
The third thing is understanding the difference between what people say and what they actually do. People will tell you what they want in research, but their behaviour can be completely different. There’s a whole culture of filling forms where people will say yes, yes, yes, but internally they’re saying no. What they say is what they say. What they do is the truth.
Another thing founders need to understand is unit economics. You need to know how much you’re making and how much it costs you to make it.
“If I sell a shoe for ₦2,000 and it costs me ₦1,000 to produce, I have ₦1,000 gross profit. But that isn’t my actual profit.”
“I still have to pay for internet, phone bills, salaries, fuel, machine repairs and all the other expenses. If that gross profit can’t sustain those recurring expenses, then you have a problem.”
“In fintech, transaction volume alone doesn’t mean anything. If your take rate is 0.05% or 0.1%, and you’re processing ₦100 million, you’re making ₦50,000 or ₦100,000. Is that enough to pay for your servers, engineers and salaries?”
Six million users transacting ₦10 each is not the same as six million users transacting ₦1,000, ₦10,000, ₦1 million or ₦1 billion.
Keep your costs low and be strategic about where you spend. Don’t spend ₦20 million or ₦30 million on an event if you can’t see the return. Test other channels. Try WhatsApp marketing. Try television. You need to experiment. Growth operators should always be experimenting because your model can achieve product-market fit and then stop growing. You can ride the current wave, but you need to be building the next wave at the same time.
Look at Paystack. They came in with a novel approach to merchant acquisition and collections. Now you have over a thousand fintech companies offering similar collection and payment-request propositions. Collections has become commoditised. So if collections is your unique selling point, you have a problem differentiating yourself.
There’s an old saying: once you stop innovating, you will die. I’m not saying that literally, but you have to keep innovating.
Finally, founders need to understand team dynamics and the transition from founder to CEO. Startup life isn’t necessarily fun. You need a particular type of person who is passionate about the product, believes in the vision and believes they can turn an untested idea into a profitable business. As a founder, you have to communicate the vision constantly. And when you pivot, you have to give people context.
Imagine you’re in a car travelling at 60 kilometres per hour and the driver suddenly accelerates. Everybody in the car feels it.
The same thing happens in a company when you suddenly change direction without explaining why. You can slow the company down or accelerate it, but if you don’t give people context, you create chaos and people start to break. Even if your company is just two people, start thinking about leadership structure.
And you need to know when to step out. Don’t micromanage people you’ve hired to lead. Let them lead. Your job as a founder is to build structures that allow you to delegate, so you can think, strategise and look at the bigger picture while the business continues to scale. That transition from founder to CEO is important. You start as the person with the idea, and eventually you become the person leading an organisation.