Why Foreign-Educated Nigerian Founders Get Funded More

David Lanre Messan made an observation that “startups in Africa raised over $4 billion of VC money in 2021. Of this amount, 73% raised was by CEOs that studied abroad.” He felt that VCs favor foreign-educated founders over founders who are educated in Africa. In Nigeria, the percentage of foreign-educated founders is as high as 92%.

This really got me thinking. What is it about foreign education that makes VCs trust those founders with their money than those who are trained in African Universities? As I thought about this, I came up with a number of factors that may be at play.

Firstly, Foreign-education develops in the founders the importance of running their business on data. That is contrary to what education in Nigeria teaches. Almost everything is operated on assumptions rather than data. That means Nigerian-educated founders will turn their businesses on assumptions rather than try to test and validate those assumptions to get data.

While working with Chevron, and being mentored by Bob Chapman (Chairman & CEO of Barry-Wehmiller), I learned how important it is to do everything based on the data. One is able to predict how things will turn out. We can’t create the future based on assumption but on data. Bob always has data to back whatever point he wants to make. That is amazing.

When running a business based on assumptions, rather than sharing the numbers, you will tell stories. Numbers don’t lie; they reveal the true state of things. Our school system trains everyone to assume things. Both foreign-educated founders and Nigerian-educated founders may start with assumptions and hypotheses, but the foreign-educated will do everything until they validated their assumptions with data. The Nigerian-educated will want to cut corners and believe that things will change of their own.

Secondly, foreign-educated founders understand the power of knowledge. When they have an issue in business, they get books to study, get consultants, recruit coaches and get into programs to learn so as to solve the problems. The Nigerian-educated may end up reading motivational books rather than topical. And in most instances will prefer to pray than seek knowledge.

I did these years back. The business was going under as a result of my ignorance. Instead of seeking knowledge, training, and coaching, I decided we needed to pray to get the business back on track. Our team comes to the workplace on Friday night and we pray till morning. Despite all that the business still didn’t work. Knowledge is what would have made it work. I got this from someone I worked for. His business also went under.

Thirdly, foreign-educated CEOs understand that they have to grow for their startup to grow. They develop a growth mindset. Growth to them means to expand their capacity and increase their capability. Whatever opportunity they are able to see with their capacity, they use their capability to capture it. As such they are constantly investing in the expansion of their capacity and increase of their capability.

Their Nigerian-educated counter may read books but don’t do that to expand their capacity and increase their capability. They love the status that comes from owning a business and being treated as the boss. They are more focused on the status and the money the business brings than the growth they need to invest in.

Fourthly, Foreign-educated founders can defer their harvest so the business can grow. The business is their asset. They continually nurture it to grow and produce. They build it to sell it and cash out or to increase their net worth.

Their Nigerian-educated counterpart is after the money. They want to take out the money the moment the business begins to produce income. They begin to charter flights and stay in expensive restaurants and clubs. They have become the big boys. Gradually their attention moves away from running the business. When they stop focusing on growing the business but extracting from it, the end of the business begins.

Fifthly, foreign-educated founders go after validating a business model that works, is repeatable, and scalable. They understand that the business model is what keeps the business working. Without a business model, they are done with. Their focus is to ensure they have a working and robust business model that will fund their vision.

Their Nigerian-Educated counterparts prefer to have a business plan than a business model. While a business model can be tested and validated, a business plan can’t. A business plan is an assumption of where you want the business to go. A business model on the other hand must be tested and proven before it can be put to work. With a business plan, they try to impress investors. But with a business model, you want investors to partner with you.

Sixthly, foreign-educated founders prefer to own 1 percent of something that is working rather than 100 percent of something that isn’t working. Their pride comes from being part of something that will make a difference in the lives of people and change the world.

Their Nigerian-educated counterpart prefers 100 percent of something that isn’t working to 1 percent of something that is working. Their pride is in being the boss and in charge of everything. They want to run the show. They want to boss everyone around.

For us to improve how we run a business we have to improve our educational system. What do you think about this?

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