In 1996, as a small group of technology executives were giving the world the term “cloud computing”, in Nigeria a small technology company was opening its doors for the first time.
That company, Signal Alliance, will later this year celebrate its 25 years anniversary. In hindsight, coming into the cloud market and information technology (IT) industry at the time it did was a great decision given that it gave an opportunity to get into a market that has come to be a major contributor to the Nigerian economy.
At 25 years old, Signal Alliance is beginning a new phase of life. The company is on the verge of completing a holding company (holdco) structure that will see it become even a bigger player in the IT sector.
The proposed holdco structure would have three subsidiaries – one focused on cloud business, another on technology consulting while the third, Sasware, which is already operating as a venturing company, would harmonize current investments and further invest in tech start-ups and tech-enabled businesses.
Signal Alliance is looking to make an emphatic statement in the tech ecosystem in Nigeria. Foreign investors have dominated the venture activities in Nigeria and Africa and they are increasing their positions in the Nigerian tech market. Last year, Stripe, the second-largest payment company in the world, acquired Nigerian-based payment gateway company, Paystack. Nigerian startups also dominated the venture capital activities in Africa in 2019 only to fall behind South Africa in 2020 due to the impact of the COVID-19 pandemic.
There are also local venture capital firms and equity funds that are springing up and positioning for the market. In January, Iyinoluwa Aboyeji, founder and CEO of Future Africa, a new venture capital that launched in 2020 said it has returned $3.7 million to some of the firm’s limited partners and invested over $1 million in 16 startups.
“There is a need to consolidate and grow our investments in technology-enabled start-ups,” Collins Onuegbu, Executive Vice Chairman of the company said. “Diversification of our business portfolio is imperative, and we believe that these activities, in line with our medium to long term strategy would produce compelling returns. Size and efficiency are key factors for our new outlook.”
Onuegbu also believes the tech market in Nigeria is still evolving despite the strides it has made in recent years. There is still a lot of room for growth and the company is being positioned to be part of that growth process. In the coming months, it will be looking to either acquire a majority stake in promising ventures or minority interest.
“There is no more sitting on the fence while the good deals get done. We need to gain a foothold in the tech space venturing in Nigeria and are targeting 50 tech and tech-enabled companies within a 3-year horizon,” Onuegbu said. He is also a director at the Lagos Angels Network, a group of well-connected and highly knowledgeable individuals who invest in early-stage entrepreneurs.
Signal Alliance would also be looking to grow its cloud market position. It is a market Signal Alliance knows very well given its partnership with Microsoft.
Microsoft is the second-largest cloud provider in the world behind Amazon and leads the Software as a Service (SaaS) segment of the market with a 17 percent market share and an impressive annual growth of 34 percent. The cloud market in Africa is growing and in 2019 rose to an estimated $1.7 billion valuation with players like Microsoft maintaining market dominance.
Signal Alliance is a Gold LSP Partner of Microsoft; among the other three partners in Nigeria and intends to utilise this partnership for its cloud business focus. The company expects that the holding company structure would give it the latitude to capture a significant share of the market despite tough competition.
“Despite handling much of Microsoft’s Azure cloud business in Nigeria, we are determined to grow the cloud business significantly, extending outside the shores of Nigeria,” Onuegbu said.
Beyond venture capital and cloud, Signal Alliance is also eyeing the intellectual property market, IT security, and managed services. The third subsidiary of Signal Alliance will focus on these segments. Its future trajectory is to grow technology and technology-enabled businesses, taking advantage of opportunities in the diversifying Nigerian economy.
“The world is adopting cloud services; consumption has grown tremendously in the past few years. It is important we segregate our cloud business to effectively push growth northwards. Value-added services are the driving force of our technology consulting,” Onuegbu said.