 Alright welcome back. Now despite the development in the financial services industry, many businesses especially startups and SMEs are still unable to effectively raise capital to remain a go in concern or even take off in the first place. This is partly due to the stringent measures put in place by these fund providers to ensure that their limited capital is made available to organizations and invested in projects that will theoretically guarantee the best returns. Unfortunately, many organizations especially SMEs lack the capacity to scale through these hurdles because of their weak structures and the managerial inexperience of their founders and operators. Now my guest, Dalyntyn Onyagor has a diverse work experience in various companies and roles. He is currently the co-founder and CEO of Aladdin Digital and now that supports Africa's economy by providing an ecosystem of solutions for gig workers and SMEs. Prior to that they founded an advice blacklist in an alternative database for chronic debtors and fraudulent individuals reported by verified online lending firms in Nigeria. Dalyntyn also served as the MD of Ocash, Nigeria under Opera Software AS where they handled business development, product development, strategy formulation and education and people management. Many thanks for Demi Dalyntyn on business insights. A whole lot of people seem to have issues to differentiate in between startups and small businesses. They seem to misplace one for the other. Are there similarities? Are there key differences? Can you just enlighten us? Well thank you for having me. The term startup is about five to six years old in Nigeria. I can still remember some of the earlier startups. Basically in the financial side, when they started with these small loans, what they called Nando loans or digital loans, I remember the first time I applied for a loan on a mobile app and within a few minutes I got a lot. I was like, is this possible in Nigeria that somebody is not seeing you physically? There's not a counterfeits. You're not feeling the physical form and within five, ten minutes somebody is willing to give you 5000 error. So that was the beginning of a turnaround in terms of financial technology. But right now we have various types of startups. But let me try to differentiate between SMEs and startups. I had earlier this year one of my billionaire friends, I would say billionaire friend because he has an oil and gas company in the southeast. He turned over as over 10 billion. It was my classmate actually. We went to the same school in the same class. We both read mechanical engineering and he just started me on WhatsApp and said, please how do I convert my business to a startup? He's somebody who has almost probably 100 employees, a lot of tankers, he has petrol filling stations, doing billions in turnover a month, but he wanted to raise 10 million dollars. So he felt he had to convert his SME into a startup. So I sent him some documents. So it's very critical. People are getting confused. People hear startups start up and they say, but have you been doing business and paying salaries? How do I become a startup? What is so special about these startups? You hear startups raising as much as $90 million. You have startups raising as much as $50 million, say $5 million. Small boys, 27 years old, has a two, three-month startup, has raised $10 million. And you're wondering, I've been in business for 25 years before this boy was born. How am I not able to raise $10 million? So it's very critical that we explain what a startup is and what an SME is. A startup is a young business that is designed primarily to grow very fast. And normally they actually use technology to bring new innovations into the public in terms of innovation. Let me use the term Babin Saloon. While some SME, for example, is not about growing fast and SME is more predictable and also in short term more profitable. While startups are not actually profitable, they deal with more valuation. I will break that in very, very, very shortly. Now, for example, I can see a Babin Saloon in my area and I feel there's still one more need for a Babin Saloon in my area. So I will go ahead and replicate that same Babin Saloon, but I not provide a better environment, cozy environment, better professionals, better staff, customer care. Maybe when you come to my Babin Saloon, I give you a bottle of wine or tea or coffee. It's still a Babin Saloon. So that business model has been established for donkey years. You barb, you collect your revenue and so on and so forth. But all you're just doing is adding, you're just like, you know, not reinventing the way but say, but you're just adding some level of finish to what already exists. That is a small business because you're not going to be replicating that Babin Saloon across Lagos in the next two years or across Nigeria. But a startup can start up today with a new innovation in Babin. Maybe it's bringing in a new app or a new technology that has not been seen before, a novel idea in that same Babin industry. So that's why startups are different. So you are just replicating Babin Saloon, adding some small, small touch up here to make it different, differentiate yourself from the market. But a startup comes on with maybe an app that Babs will hear automatically or an app that does something very funny. So when they come, they are able to raise more capital because they are bringing technology and into innovation. And they are designed to take over the market in maximum five years. While you are only after making sure at the end of the month you can cover your debts, both short term debt and pay your salaries and make some money for yourself. So that's the difference between SMEs and startups. So let me stop there then you can take it from there. Alright, so basically from all I can just infer from what you have said, for startups they have the benefit of innovation and technology to do things differently that the ordinary small businesses cannot do. Exactly. So it's not about their paid up capital or their financial levels per se. Exactly. So like I said, startups, you know, the world startups usually ride on technology. There are different type of startups. There are great startups. You understand that there are those in insurance. That's what they call insure tech. There's FinTech. You know, there's food tech. There's also prop tech, property. So two days ago a friend of mine called me and he's designing a platform that's going to actually fragment your investment to real estate where you can use your $10,000 and you own a portion of your building. And it's all just on app. Just put your account, fund your wallet and look at different buildings and different rents and then apply $10,000. You're not a shareholder in a building. So what you cannot naturally do previously, they bring in new technologies, something using blockchain for example, to verify who is who and who has the particular, how much stock you have in that particular property. So that when it has time for dividend share, you know how much you're going to get. So prop tech is arising of FinTech, insure tech, food tech, aggregate tech. All these guys are just using technology to do the same things that we know differently. And they are designed to grow faster. So that's why they also raise significant amount of money because for you to actually grow fast to get to the next level, you need to raise a lot of money. Okay fine. So how does one create a startup as it is? The first key to creating a startup is what are you innovating? What brand new idea or novel idea do you have? Or even if it's not a novel idea, you have a version of something. For example, there are a lot of FinTechs today that do the same thing. There are a lot of apps today that give out nano loans, you know what I'm saying? Last time I checked, there are over 500 apps on Play Store that give loans today. And so they're all doing the same thing, you know what I'm saying? And they're all called startups, you know what I'm saying? But they are using, for example, the difference is that the way they actually verify their customers might be different. The technology behind, the way they onboard you and the way they verify you before they give you a loan, maybe novel to them or they may have a patent for that type of technology that verifies customer what they give a loan. But you, the end user may not see the difference. But the investor knows that this guy has built something that allows him to de-failure rate or what they call the depth ratio to reduce. Other guys will be having 80% depth when they give out loans, the bad loans is about 80%, but this guy has 2%. So we are sitting in the same industry, but it has improved this process in such a way that investors' monies are not lost when they invest in him, so that's different. So the key word there is innovation and who is your audience? What are you bringing to the table? And how fast can you actually iterate, launch, do product market fit? That means I'm able to say, okay, this my product has a market, there's an audience for it, someone is willing to pay for it, and you're able to scale very fast. So that's what differentiates a startup from a small business. Okay fine, that really settles it now. But let's talk about funding. In my intro, I talked about funding challenges for startups, for small business, even for large businesses on the trail. But let's just focus on startups and small businesses. Before now, it has always been going to the commercial bands and dropping some sort of collaterals and scaling all the hurdles before you can eventually get these finances that you need for your business or to even obscure your business. But lately they have been talked about people starting businesses from finances they got from family and friends. We've talked about crowdfunding and private equity. Can you just share some of this with us? Okay, so funding is actually open to both SMEs and startups. But just that startups have a brighter chance to raise more significant money. Before I came here today, I was looking at a crowdfunding site called WeFounder.com. We are actually listed on WeFounder.com. We're actually raising some money right now on WeFounder. So I looked at a particular startup. This guy has raised $981,000 in the last two to three months, almost a million dollars. And I looked at the product. He has not really launched his product. You already had that funding already. Yes, already you go to the platform, you go to WeFounder.com, you will see that all their names will go to life. Everybody can go and check them out. $981,000 raised through crowdfunding. People are investing $100, $300 because they believe in the idea. He only has 100 customers who have only done transactions for two weeks. Okay, let's take it one step at the other. For some people may not really understand, there's been so much talk about crowdfunding, crowdfunding. What is it really and how does it really operate and work? So what crowdfunding does is that it allows you as a startup. SM may not be able to do that. So it allows you to actually tap into the community. So you share your idea on their platform and people see your idea and they believe in your idea and they can pitch in as small as $100, which is about $100,000 to buy shares in your company. So they're actually counting on you, they're betting on you that you're going to be a successful startup. So that actually started mostly in America where they actually changed regulation in a few years ago to allow community rounds. Community rounds means that your customers, your family and friends and people in the public can actually become part of your company by just investing a small unit of $100 into your company and a lot of mega startups you know to their big companies started by crowdfunding. But for you to do that in most cases, you have to be a U.S. registered startup company. That's one of the advantages that startups have that SMEs don't have. A lot of these startups you see today, I don't want to call their names, they're all registered in the U.S. Even my own company Aladdin, who are headquarters in Delaware in the U.S. So we have to register a company in the U.S. and the U.K. So it has to be in the United States. Yes, because we have to get second approval in the U.S. You have to get, there's a whole documentation, the whole process that's involved. So it doesn't really come so easy. But it can be done. So I was among the first, my startup was the second startup in Africa to go on that platform and that was in 2021 when we entered on that platform. The second startup Aladdin to raise money through crowdfunding and we found that. But it was a whole lot of process, a lot of documentation, a lot of stuff. But it allows you to raise money easily from American people. I have a lot of American investors who just, oh, this is Africa. We like what you're doing in Africa. I'm giving you a thousand dollars. So give $10,000. So give $5,000. So crowdfunding is one channel. But beyond that also, venture capitalists are people who are actually designed to give you money as a startup. All right. They look at your proposer, they look at, they do do diligence on you, they look at your objections. They're not banks. They're just individual, what would I say, finance companies or investment companies. Some of them are actually family investments. So a big family that is wealthy can have somebody to manage a particular fund. It's a $50 million set aside to invest in fast-growing startups. So that's why it's quite difficult for SMEs are quite limited. They always go to commercial banks. But some startups now are not designing products to help SMEs with their working finance. So for example, you have maybe a PO or I know some startups actually give you up to $10 million for your PO. And then they just fund it for you and they take that money back in voice financing and stuff like that. But to raise real money like $10 million, $5 million for SMEs is quite difficult because the venture capitalists cannot see that speed. They can't see that speed to growth. They're asking you, when are you going to dominate Nigeria? When are you going to dominate? When are you going to move across Africa? When are you going to move to London? When are you going to have a London office? They have very small businesses, not thinking in that direction. All the time. So that's the difference. So really, this is a psychology between startup and SMEs. So you want to actually make that switch. First of all, you must have an innovative product that is able to scale extremely fast to attract venture capitalists, angels, crowdfunding and all these other things that are available. All right. So but for what you have said, it's not really something that's also common for the small businesses. But how are these forms of funding popular as in the level of popularity in Nigeria? For instance, you've talked about crowdfunding, that you have to have some present in the United States. What about for private equity and venture capital? Do you really need so much hurdles per se to scale? No, no, no. You can actually be a Nigerian entity. There are a lot of Nigerian companies that actually raise money from venture capital. But for most venture capitalists, because they're also looking at short term investment. So let me just give you a start-ups are not designed to be profitable. And I want to say this clearly because a lot of Nigerians are not designed to be profitable. They are designed for valuation, they are designed for exits mostly. That's why it took Uber. Uber was operating for years and Uber was never profitable. But it was valued above 50 billion dollars. The value of the company was about 50 billion dollars. It's when they did an IPO, when they went public, all right, that all the guys that invested for years cashed out. So that's a start of the value. They're actually designed to grow very fast. Their value increases. You can see, for example, let me use the popular one called Paystack. Paystack was bought by Stripe for 200 million dollars. And Paystack was just about four or five years old there. But imagine a four or five years company being purchased at the rate of 200 billion today for a company four or five years old. Because it grew so fast, you know, and then they could see the value and it's supporting thousands of businesses doing billions of Naira in transaction per day. That is what Stripe saw. And they saw the potential to spread across Africa. And they put 200 million dollars on the table. So on that thing again, I want to point out that a lot of SMEs are, they're actually startups in disguise. How so? Yeah, because some of them have innovated a lot of things. If you go online, you see people that have innovated some technologies that can be skilled across Africa. But because they have the SME mentality, they don't understand the startup ecosystem. They are losing out on venture capital. So they need some sort of reorientation? Yes, reorientation, a lot of training. So I'm actually thinking about it because there are a lot of SMEs that have done things very innovative in the medical line, some in the beauty side. So even if you go to someone who would have designed a bike or so, a guy online who designed his own type of bike. And I said, I'm using scrap metal. I'm very beautiful bikes. But you understand that? So if you go to a local investor, they will tell you, I will give you 100 million. But I want a return on investment in six months. A venture capitalist can give you 100 million. I will not call you online for the next two years. And you got to know, because as he's giving you that 200 million, he's giving 10 other startups 200 million. His calculation is that out of that 10, eight will fail, two will succeed. And the two that will succeed will give him back his money plus interest. So you can see that venture capital, they have a different mindset. But a Nigerian investor, a local investor will give you 50 million, you won't allow your rest. The chief will call you to VGC every two days to come and say, what happened to his 50 million? But the venture capital will give you 1 million dollars. And I'm sure they may not even call you. All they want is not your monthly report or quarterly report. Tell them how the business is going. Because they're betting on you that you're going to return that investment 10x. For example, someone, the guy that invested in Uber, the guy will say he got, I think he did absolutely something, 1,000 x his investment. Yes, one Uber, one public. He invested small money, but by the time Uber went public, he got the most 1,000 x. He became a millionaire and started investing in other startups from his one Uber investment. So that's how powerful a startup is. They give you the kind of, you know, when they exit the value of what you bought. You know, sometimes you can buy a startup when the startup is just one dollar per share. All right. And then by the time he's exiting, the value of that share is 70 dollars. So that's a 70x. So if there are so much advantages with the startups ecosystem and all of that, so how come the average Nigerian is not starting some sort of startup or something? Well, there is. I just, this is the evening, like if it's where I was in an event for startups. I mean, I saw startups everywhere. A lot of founders, they does this sticker, founder, founders. So someone was in there, over 20,000 startups already in Africa. And Nigeria is one of the leaders. One of the leaders in Africa is Nigeria. Nigeria gets significant amount of investment from other Silicon Valley or any other places. So the startup boom is already here. So people are now built and Nigerians are very, Africans are creative. Kenyans, Rwandans, people are creating a lot of stuff, right? So it's you that don't know, that don't know what really young people are creating startups everywhere, every day. So you see what we need to also educate millions of SMEs out there who have innovative stuff, but don't know how to package it. You know, I've heard a lot of people say, you can actually register your business for $500 in U.S. I mean, in United States, you can do it for $1,000. And then you have the U.S. bank account, because these are the things that those guys see. They don't want to invest in Nigerian entities. They want to invest in U.S. entities, where you pay your taxes, where you are fully regulated by sec and a whole lot of stuff. So that's why most startups have to register in the U.S. We have to attract foreign capital. Let's talk about Afro-global expansion. You know, there's a whole lot of issues happening globally with the wars everywhere. But let's talk about how this expansion is going in the midst of struggling and economy. Okay. So the honest, anybody who is smart will tell you that if you want to earn anything to the earning dollars, all right? So if you are a business that is still earning in Naira, you have a long way to go. And this cuts across both SMEs, startups, conglomerates, whoever you are. Okay. That's why a lot of people are living in the country. A lot of strategic investors, you know, about GSK, a lot of people. So if you earn in Naira and then you come back to a dollar, you realize you're not doing well. You can make a billion Naira, you think you are doing well. You can make that one billion to a dollar. And compared to the investments you have made and the loans you have taken to get to that level of revenue, you realize that you're not doing well. So the Afro-global concept is a concept that talks about how do I also penetrate other African countries? Or how do I actually also earn money from diaspora, from Africans in diaspora? I need to earn in pounds. I need to earn in dollar. So you don't, so you don't do that thing. So that's that thing. As a business, sit down in 2025 to yourself. How do I actually, you know, change this business to also earn dollar, you know, apart from Naira. Because I will earn Naira today. Today's black market 1200, I don't know. You can see what it means. So before even, it's also actually affecting a lot of startups too. You know, for example, all the startups who are in the payment space, you do payment, they charge you 15 Naira, 100 Naira. How many 15 Naira transactions will you do to get one dollar? See, the rise that now, so what are some of the most startups today are actually beginning to expand to Kenya. They're expanding to Rwanda. They are going to other African countries. Some are actually having a London office, you know, because now in London, they want to get some license to start getting transactions that can earn in pounds or in from Canadian dollars or stuff like that. So I call it the Afro-global. And there are a lot of opportunities. I mean, if you look at what Ruto, Kenyan president did and Kagame, which is the Rwandan president, where they say by end of December, they're going to open up their countries. It becomes visa free for all Africans. So he shows you that the direction is that we are going to become a borderless Africa. All right, borderless Africa is a situation whereby you can actually access any African country visa free. And once that happens, the barriers to trade begins to shrink. Exactly. So that's what people like Aladdin, like my company now, we are designing a pan-African payment system where you can send money in less than one million to Kenya. You can send money to Tanzania, to Rwanda. So because we're positioning ourselves to be that go-to platform in Africa where you can do payments across Africa and also outside Africa. So because it has to start thinking in that direction that I have to push on my business to stop talking about Naira transactions alone, you know, organic cities, because those two currencies are also, you know, very volatile. And some other African countries. So you need to start thinking about how do I expand those within Africa and also internationally. If you have to survive the struggling economy, everybody should learn to end outside Naira. That's a secret to 2024 if you have to survive. All right, thank you so much. All right. So Dalintin, as we wrap up this now very quickly now. So what's the future of startups in not just Nigeria and in Africa? And what is your advice for people who are actually going or thinking about getting into startups? So the first thing I will tell you is that the startups in the financial side is almost getting saturated. I keep saying that because they say people are doing the same things over and over again. So if you're actually going to start the startup, please think of other sectors. What can I do with other sectors? You are an expert in engineering. There are still innovations in engineering that we have not seen, agriculture, so many areas. But if you want to do a startup, come up with an innovation that is new or come up with maybe an improvement on an existing innovation that can actually, you know, disrupt the game. Once you have that and you have an audience, you are good to go. All right. So if at the SME, you have been struggling with your business, but you know that this idea is innovative. It can be a food drink or a new innovative food ring for health. Rather than you have patented, as small as that thing, you can end billions from it. All you need is somebody to package you and show you that this thing can naturally be a startup. People don't even know how to do PowerPoint slides. They don't even know how to do anything. So you don't even know how to package yourself to become a startup. There's an act. There's an added formula to becoming a startup, where you have an innovative idea, or else you end up being a small business. All right. Thank you so much. And that's indeed how much we can take on the show for today. My guest has been Darlentine Onyagore, he is the CEO and founder of Aladdin Digital. Many thanks for being a part of the show. Thank you very much for having me. All right. That's as much as we can take business insights or return to your screen. Same time, my name is Justin Acadone. Many thanks for being there.