In the first three parts of this series, we followed the paperwork a Nigerian business needs as it grows: protecting relationships within the founding team, structuring relationships with clients, and managing obligations around personal data. The next stage is what happens when outside capital enters the picture.
Most Nigerian founders spend their first year or two with no fundraising documents at all, because there's nothing to document. It's just you, maybe a co-founder, bootstrapped or backed by friends-and-family money that moved through a bank transfer and a handshake. That's normal. The documents in this post don't matter yet at that stage, and pretending otherwise — drafting a term sheet before anyone's expressed interest in investing — is a waste of a founder's limited time and money.
The shift happens the moment a real investor says something like "we're interested, let's talk numbers." That's when founders discover, usually mid-conversation, that they don't actually understand the difference between a term sheet and a SAFE, or why a board resolution needs to exist before money can legally change hands. Nobody explains this in advance because it doesn't feel urgent until it suddenly is.
The first document that shows up is usually the Letter of Intent, and it exists to solve a simple problem: before anyone spends money on lawyers to draft binding agreements, both sides want to confirm they're roughly aligned on the big picture — what's being invested, roughly how much, on what general terms. An LOI is deliberately non-binding on the substance (though certain clauses inside it, like confidentiality, usually are binding). Its whole job is to prevent two parties from spending weeks and real legal fees only to discover they were never actually aligned on valuation or structure. If an investor pushes to skip this and go straight to a binding agreement, that's not automatically a red flag, but it does mean you're moving faster than most transactions typically move, and it's worth understanding why they're in a hurry.
The term sheet plays a similar role but is more specific to equity financing itself — it lays out valuation, amount raised, the type of security being issued, and investor rights, all without being the final legal document. Where this gets Nigeria-specific and genuinely useful to understand: SAFEs, which originated with Y Combinator in the US, aren't a foreign novelty anymore in Nigerian startup financing. They're actually used in Nigerian startup financing transactions and have become increasingly favoured by founders and early-stage investors for their convenience, simplicity, and cost efficiency compared to a full priced equity round. The appeal is the same reason they took off globally: a SAFE gives the company flexibility and no immediate financial obligation, unlike a convertible note, which accrues interest and carries a fixed maturity date the company is on the hook for regardless of how the business performs in the meantime.
But here's the part founders skip past too quickly: a SAFE is not itself a debt or equity instrument — it's a promise of equity if and only if a specific trigger event occurs, like a future priced round or an acquisition. If that trigger never happens, the investor never converts, and the arrangement sits in a kind of legal limbo. And because the Companies and Allied Matters Act 2020 is the primary law governing how Nigerian companies operate, a SAFE has to be reviewed against your company's constitution, any existing share purchase agreements, and the resolutions your board has actually passed — you can't just adopt a US-drafted SAFE template wholesale and assume it's enforceable the same way here. A SAFE that works fine in Delaware can create real ambiguity under Nigerian company law if the underlying share structure it assumes doesn't match how your company is actually set up.
This is where the Board Consent comes in, and it's the document founders treat as an afterthought right up until a lawyer asks for it and the round stalls. Under CAMA 2020, major corporate actions — issuing new shares, bringing on a new director, approving a financing round — generally require a documented board decision, not just founder agreement over WhatsApp. A written board resolution creates the legal record that the company actually authorized what's happening. Skip it, and you've got an investment that closed informally, with no clean paper trail proving the company's leadership approved the terms — which becomes a real problem the moment a future investor's due diligence team goes looking for it, or if a disagreement between founders surfaces later about whether a raise was properly approved.
Once actual shares are changing hands — not a future promise via SAFE, but real ownership transferring now — that's what a Stock Purchase Agreement formalizes. It's the document that specifies exactly what's being sold, at what price, and when the sale legally completes. This tends to show up either at a priced equity round or, further down the line, when a founder or early investor sells shares directly. It's less common in the earliest stages of a Nigerian startup's life than SAFEs or convertible notes, but it becomes the operative document the moment you move from "future equity" to "equity, right now."
One thing worth knowing that most fundraising templates online won't tell you: Nigeria has its own dedicated pathway that doesn't exist in the US playbooks these documents originated from. The Nigeria Startup Act 2022 established a Startup Investment Seed Fund, with a statutory allocation feeding it annually, specifically to be accessible to registered Nigerian startups. This is a genuine local resource distinct from the private SAFE/VC ecosystem discussed above — founders should verify current eligibility and access requirements directly with the relevant startup support agencies, as program mechanics can change. It's a reminder that the fundraising playbook founders inherit online is written for Silicon Valley's ecosystem, and Nigeria's own regulatory environment has features — good and complicating — that template doesn't account for.
The common thread across all five documents in this stage is the same lesson from the earlier posts in this series, just at higher stakes: the paperwork isn't the obstacle to raising money, it's what makes the money you raise actually yours, cleanly, without a dispute waiting to surface at your next round or your eventual exit. Founders who treat this stage as "we'll figure out the legal stuff once the deal is basically done" are the ones who find out, usually during their next raise's due diligence, that the first round left gaps a more careful investor won't tolerate.
That brings the series to an end — from the first agreements signed at the founding stage, through client and vendor relationships, data protection obligations, and finally the documents that accompany investment and changes in ownership. The point isn't to turn every Nigerian business into a legal department. It is to recognize that the right document, signed at the right time, can prevent a relatively small misunderstanding from becoming an expensive problem later.
