Startups Told to Strengthen Legal Compliance as Investor Funding Gets Tighter

As access to startup funding becomes more difficult, founders have been advised to strengthen their businesses by building clear competitive advantages, proving real market demand and ensuring full regulatory and legal compliance.

Financial technology experts gave the advice at the fourth edition of Founders Meet and Chat in Lagos, where entrepreneurs and industry leaders discussed what startups need to do to attract investors and survive in a more demanding fundraising environment.

Speakers at the event stressed that having a promising idea is no longer enough to convince investors. Founders must be able to show measurable traction, demonstrate that customers are willing to pay for their products and prove that their businesses can remain competitive as market conditions change.

Investors Want More Than a Good Startup Idea

Managing Partner of BlackCrest, Osita James, said investors are paying closer attention to how startups intend to remain competitive and resilient when their original business strategies no longer deliver the expected results.

He urged founders to develop strong competitive advantages that can protect their businesses from growing competition and help them remain relevant over the long term.

James said one way startups can achieve this is by building an ecosystem of complementary products instead of depending entirely on a single product or service.

He also encouraged entrepreneurs to focus on business models capable of retaining customers for longer periods rather than relying heavily on one-time purchases.

“Investors want to know how you are building the competitive advantage that will allow you to remain resilient in the market, even if your current strategy is no longer working,” James said.

According to him, founders should spend significant time identifying the factors that could keep their businesses sustainable as their industries evolve.

Regulatory Compliance Could Make or Break Funding Deals

James also warned startup founders against overlooking legal and regulatory requirements while pursuing investment.

He explained that an attractive business proposition could still lose investor interest if the company lacks the necessary licences, approvals or strategic partnerships required to operate legally.

The warning is particularly important for startups in heavily regulated industries such as financial technology, where regulatory compliance can be a major consideration for investors.

James advised founders to seek proper legal guidance before entering important business transactions, partnerships or investment agreements.

Startups Must Prove That Customers Want Their Products

Speaking during a panel session on attracting investment, Midddleman Co-founder Omolara Sanni said entrepreneurs should concentrate on generating tangible results and demonstrating genuine market traction.

She noted that investors are increasingly interested in businesses that can provide evidence of demand rather than startups built around assumptions about what customers might eventually want.

Sanni encouraged founders to prioritise customer acquisition and develop products that people are actually prepared to pay for.

She also advised startups to consider alternative sources of capital, including grants, which can provide funding without requiring founders to give up part of their ownership or take on repayment pressure.

According to her, raising investment has become increasingly challenging, particularly for startups operating in emerging and highly competitive sectors.

Fundraising Should Be Treated as a Long-Term Process

Winner Attai, Chief Operating Officer and Co-founder of Winich Farms, said successful fundraising requires much more than attending networking events or preparing investment documents.

She urged founders to develop a convincing business story that clearly explains what the company does, the problem it solves, its market opportunity and why investors should believe in its growth potential.

Attai also advised entrepreneurs to identify the type of investors they want to approach before beginning the fundraising process.

She said startups should determine whether they are seeking impact-focused investors, backers interested in proven traction or financiers primarily concerned with financial returns and growth metrics.

Rather than treating fundraising as a quick process, Attai encouraged founders to approach it as a structured, long-term journey.

For startups operating in an increasingly competitive funding environment, the message from the Lagos event was clear: strong ideas alone may no longer be enough. Businesses that can demonstrate customer demand, build lasting competitive advantages and maintain proper legal and regulatory structures are likely to be better positioned when seeking capital.