On NSIA's Technology Venture Capital Strategy

In this Balogun Harold Insights Series, we provide some commentary on the Nigeria Sovereign Investment Authority’s (NSIA) technology venture capital strategy and the broader role that sovereign institutions should play in developing strategic sectors of the economy.

We think that NSIA should not operate primarily as a blind-pool technology venture capital investor. While commitments to external fund managers can be a useful tool for portfolio diversification and accessing specialised expertise, they should not become the dominant model for deploying national capital.

A blind-pool structure essentially means that an institution commits capital before knowing the specific investments that will ultimately be made. The investment thesis is developed by the private fund manager, based on its own mandate, incentives, risk appetite, and view of market opportunities. For a sovereign institution whose role extends beyond financial returns to include national economic development, this creates a potential strategic limitation.

We believe that the NSIA, as a national investment institution, should build an internal venture capital machine of originating, evaluating, and pursuing investment theses aligned with Nigeria’s strategic venture capital interests, take a proactive view of the Nigerian economy and identify sectors and capabilities that are strategically important to the country’s long-term future. It should develop investment theses around those opportunities and pursue them deliberately, rather than waiting for external fund managers to originate ideas that happen to align with Nigeria’s interests.

For example, a Nigerian large language model (LLM) ecosystem could have significant implications for national competitiveness, digital sovereignty, data infrastructure, and gross domestic product, economic productivity. However, it is unlikely that many traditional venture capital managers would independently originate such a thesis because it may not fit conventional venture investment models or may require ecosystem development beyond the role of a typical GP. A sovereign institution, however, is uniquely positioned to identify such strategic gaps, assemble the necessary technical and commercial partners, and catalyse private investment around the opportunity.

Key Takeaways

1. National venture capital should not simply follow the market. It should help shape the market.Development finance institutions should not merely wait for commercially viable opportunities to emerge; they should actively identify market failures, industrial gaps, and future opportunities, then design financing structures to address them.

2. The same principle applies to institutions such as the Bank of Industry (BOI) who are increasingly committing to technology venture capital.

3. This approach does not mean abandoning external fund managers or blind-pool investments entirely. Rather, that the NSIA should primarily function as a thesis-driven venture capital sovereign investor building internal investment origination capabilities to identify emerging opportunities, develop investment theses, and proactively create investment pipelines rather than relying solely on opportunities presented by external managers.