Securing investment is a goal for many Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. Whether it’s a loan from a bank, funding from a venture capitalist, or support from a grant-making body, every investor has one thing in common: they are looking for credible, structured, and scalable businesses. Unfortunately, many MSMEs struggle to attract funding because they are not investment-ready.
This article breaks down what investors look for in MSMEs and how Nigerian entrepreneurs can position their businesses for funding success.
1. Formal Business Registration
Investors rarely fund unregistered businesses. Having your business registered with the Corporate Affairs Commission (CAC) and obtaining a Tax Identification Number (TIN) signals that your enterprise is structured and credible.
Why It Matters:
- It gives your business a legal identity.
- It allows you to open a business bank account.
- It is often a requirement for grants, accelerator programmes, and investment applications.
What to Do:
- Register your business as a sole proprietorship or limited liability company.
- Apply for a TIN through the Federal Inland Revenue Service (FIRS).
- Keep your registration documents and certificates safe and updated.
2. Clear Business Model and Value Proposition
Investors want to understand how your business makes money and why customers choose you over others. A weak or unclear business model raises red flags.
What Investors Expect:
- A simple explanation of your revenue streams.
- Clear pricing, cost structure, and target market.
- Evidence that customers want and are willing to pay for your product or service.
What to Do:
- Be able to explain how you generate income.
- Identify your competitive edge (e.g. price, quality, speed, convenience).
- Track sales, customer feedback, and market demand.
3. Financial Records and Discipline
A common reason MSMEs fail to secure investment is poor financial record-keeping. No matter how great your idea is, investors want to see numbers, how much you earn, spend, and retain.
What Investors Expect:
- A basic income and expense record (even in Excel).
- Proof of consistent revenue, even if small.
- Ability to track growth and make informed projections.
What to Do:
- Use basic accounting tools like Wave or QuickBooks.
- Keep receipts, invoices, and bank statements.
- Separate personal finances from business transactions.
4. Scalability and Growth Potential
Investors want businesses that can grow and generate strong returns. If your business is tied solely to your physical presence or limited by geography, it may struggle to attract interest.
What Investors Look For:
- A plan to reach more customers or markets.
- Ability to expand operations, distribution, or offerings.
- Use of digital tools to scale more efficiently.
What to Do:
- Define how you will grow (more products, new cities, digital platforms).
- Highlight partnerships or systems that support scale.
- Track and report business growth over time.
5. Strong Leadership and Team
Many investors back people, not just ideas. They want to see a committed founder and a team that can execute the vision.
What Investors Look For:
- A passionate and knowledgeable founder.
- A team with complementary skills (e.g. operations, marketing, finance).
- Willingness to learn, adapt, and take advice.
What to Do:
- Document your team’s experience and roles.
- Invest in your personal development as a business leader.
- Build a small but reliable team, even if informal.
6. Legal and Regulatory Compliance
Beyond registration, MSMEs must comply with basic legal requirements. These include remitting taxes, following industry regulations, and ensuring customer safety.
What Investors Expect:
- That your business does not pose legal or reputational risks.
- That you have the right licences or approvals for your sector.
What to Do:
- File your taxes and request tax clearance annually.
- Understand sector-specific regulations (e.g. NAFDAC for food, SON for products).
- Keep records of all compliance steps and receipts.
7. Traction and Market Validation
Investors don’t fund dreams, they fund results. You must prove that your business is gaining traction in the market.
What Investors Look For:
- Number of paying customers or completed orders.
- Testimonials, repeat customers, and referrals.
- Social media engagement or website traffic.
What to Do:
- Track your customer growth monthly.
- Collect feedback and showcase real success stories.
- Use tools like Google Analytics or Meta Insights for digital performance.
8. Use of Funds
Investors want to know how you will use their money. If you cannot explain this clearly, they may assume you will misuse it.
What Investors Expect:
- A breakdown of how much you need and why.
- Alignment with business goals (e.g. inventory, staff, marketing).
What to Do:
- Create a simple use-of-funds chart.
- Prioritise high-impact areas that support growth.
Final Thoughts: Think Like an Investor
Before pitching to an investor, ask yourself:
- Would I invest in this business?
- Are the risks manageable?
- Can I trust this founder?
Getting noticed by investors isn’t about being the biggest business; it’s about being credible, structured, and ready to grow. Nigerian MSMEs that focus on good record-keeping, legal compliance, and consistent delivery have a much higher chance of being funded.
If you want to attract investors, don’t wait until you’re desperate. Start preparing today, build a track record, document your progress, and position your business to stand out. The right investor is out there. You just have to be ready when opportunity comes knocking.