Tech startups in Nigeria are at the frontiers of the tech revolution on the continent.
The tech startup scene in Nigeria is at the forefront of the continent’s tech brilliance. While it dropped last year from its leading position on the continent regarding funding figures, Nigeria’s pivotal role in Africa’s technological evolution remains incontrovertible.
This guide pulls the curtains back on the country's tech startup scene. We’ll help you to understand the financial maze and identify the forces fueling growth. Together, we’ll decipher the DNA of success in Africa’s largest tech startup ecosystem, with proven steps to launch a successful startup.
Let’s get started.
Despite a horde of challenges, such as erratic electricity supply, abrupt policy changes, runaway inflation, and declining forex rates, Nigeria hosts Africa's most advanced startup ecosystem. The country ranks close to the top 100 (105th) countries for starting a business and 15th in terms of getting credit. It’s also undergoing some positive regulatory reforms and its GDP has outperformed expectations in the past few years.
Nigerian startups have proven themselves as catalysts for change, even in rough times. They create jobs, drive innovation, and address pressing societal issues such as financial inclusion, poverty, and healthcare.
Number of funded startups in Nigeria by year.
Despite last year’s bleak funding figures, Nigeria still hosts the best-funded tech startup scene on the continent. Thanks to the funding windfall from previous years, a vast population, and robust economy, the country boasts a staggering 124 funded startups — nearly a third of Africa's total. Key players like Co-Creation Hub, LeadPath, Spark, and accelerators have been pivotal to burgeoning startups, funding and offering support to many of them.
Tech startup subsectors in Nigeria ranked by market share
Over the years, fintech has always led the pack of startup subsectors, though it experienced a significant decline last year. Other key sectors are eCommerce, Edtech, and Agritech.
Fintech dominates the tech scene with the largest size of funding and the number of funded startups. Nigeria’s Fintech startups offer various financial services, from digital payments and lending platforms to blockchain solutions.
The e-commerce and retail tech sector is witnessing an increasing number of funded startups. Startups here leverage technology to reshape online shopping experiences, including optimising supply chain operations and connecting consumers with diverse products and services.
The e-health sector is experiencing remarkable growth, sprawling with telemedicine platforms, health information systems, and remote patient monitoring devices.
The edtech sector is also growing rapidly. These startups are harnessing the power of technology to democratise access to quality education. Their main offerings include online learning platforms, digital content creation tools, and personalised learning experiences.
These are the main sectors leveraging innovation and funding to reshape the country's evolving consumer demands and technological advancements.
Nigeria's tech startup ecosystem is gaining recognition on the global stage. The country’s recent ascent (now ranked 61st globally and second in Africa) reflects its emergence as a powerhouse of innovation.
Lagos broke into the global top 100 cities for startups a few years back.
The influence of the global startup environment weighs heavily on Nigeria’s tech startup ecosystem. Over 60% of venture capital funding for Nigerian startups comes from the United States, and 80% of companies here are incorporated there. Many startup founders in Nigeria have extensive experience in established global ventures.
Despite facing local challenges, Nigerian online businesses are making waves locally and internationally, positioning themselves as key players in the global tech arena.
Amount of funding raised by Nigeria's tech startups by year.
Nigeria's tech startup ecosystem has experienced significant shifts in funding dynamics, reflecting challenges and opportunities in the financial terrain. In 2023, Nigerian startups raised a total of US$399,909,000 – down 59% from 2022. Despite this decline, the average round size remained relatively robust compared to previous years, signalling resilience within the ecosystem.
Funding in 2023 exhibited a more balanced distribution across sectors than in previous years, where fintech enjoyed a massive market size. E-commerce, transport, and e-health sectors also attracted significant investment.
Funding in Nigeria's tech ecosystem is characterised by diverse models, with venture capitalists playing a pivotal role in financing early-stage ventures. But as startups adapt to evolving market conditions, they increasingly explore alternative avenues such as crowdfunding platforms, traditional debt funding, and strategic alliances. The potential for a rebound in funding and continued expansion remains high in the country’s startup ecosystem.
Despite the economic challenges experienced in 2023, investor and accelerator participation levels remain high in Nigeria. Here’s a quick highlight:
A huge percentage of these investors are home-grown, but foreign investment also plays a big part, highlighting Nigeria's increasing appeal on the global stage.
During a recent tech conference, the Consul General of the US in Nigeria, William Stevens, emphasised this global bilateral partnership. He noted that US investors like Techstars, Y-combinator, and 500 pulled off over 100 major deals despite the funding decline last year.
Nigeria's tech startup landscape has had its fair share of problems, facing drawbacks, particularly in securing adequate funding. The depreciation of Nigeria's currency against the dollar poses a major hurdle for startups raising funds in foreign currency. With revenue generated in local currency, these startups face challenges in making returns to foreign investors.
Furthermore, the absence of rounds exceeding US$1 million also reflects the current funding challenges.
Also, investors are redirecting their focus from growth-stage startups to early and late-stage ones, impacting the availability of capital for emerging ventures. Despite these obstacles, startups are finding alternatives to investor funding. Initiatives like the Federal Government’s Startup Act and organisations like the Lagos Angel Network continue to fuel the entrepreneurial spirit.
Lagos is the nucleus of Nigeria’s burgeoning tech industry. It houses about 88% of startups in Nigeria and is rising in ranks among startup cities worldwide. The city's magnetic pull for startups is undeniable, with its vibrant economy, robust infrastructure, and diverse talent pool. With its strategic location as Nigeria's commercial capital, Lagos provides any type of business with wide access to markets, investors, and resources.
From fintech giants like Flutterwave and Paystack to e-commerce trailblazers like Jumia, Lagos is home to many startups that have carved a niche on the global stage.
However, while Lagos leads the charge, Nigeria boasts many other cities at the forefront of Africa’s tech revolution. Nigeria has 5 cities among the global top 1000 for startups, more than any other African country. These cities, including Ibadan, Abuja, and Port Harcourt, boast growing communities and supportive infrastructure, signalling a broader trend of tech-driven growth and innovation across Nigeria.
As a future African growth engine, Lagos and the surrounding tech hubs offer plenty of untapped potential and opportunities for digital platforms to thrive.
Icons of successful startups in Nigeria
A few successful tech startups have been the major frontrunners in Nigeria’s tech ecosystem, securing substantial funding and garnering attention for their innovative solutions.
Nomba, a pioneering fintech startup based in Nigeria, raised a mammoth $30 million in series B round in 2023. Founded in 2016 by Yinka Adewale and Pelumi Aboluwarin, Nomba initially operated under the name Kudi, offering a chatbot platform to streamline payment processes. The company has evolved and rebranded to Nomba, focusing on customised payment solutions.
Formerly known as TeamApt, Moniepoint bootstrapped its way to series A. Just a year ago, the company announced a monumental $50 million raise, intended to expand its credit offerings. This follows a $5.5 million series A round in February 2019 from investors like Quantum Capital Partners.
Founded by Sim Shagaya, Konga swiftly garnered acclaim for its comprehensive offerings, which covered payment services, travel, health, and logistics.
The acquisition by Zinox in 2018 and the merger with Yudala formed what is arguably Africa's largest e-commerce and retail entity today. Konga's $41 million series C round in 2015, led by Naspers, took its funding to over $78 million.
Founded in 2020 by Delano and Jide Odunsi, Moove is a mobility/fintech company for vehicle financing in Africa and beyond. The company has raised over $300 million so far. Their latest funding round in 2023 was reportedly around $76 million. Their expansion plans include penetrating new markets in Africa, the Middle East, and Europe.
Flutterwave, founded by Olugbenga Agboola, is one of Africa's 7 unicorns. It has raised a total funding of $475 million to date. A remarkable $250 million Series D round in February 2022 tripled Flutterwave's valuation to over $3 billion and propelled its trajectory toward an Initial Public Offering (IPO).
Nigeria's digital banking disruptor, Kuda, has amassed over $180 million in funding, including $90 million in pre-seed, $10 million in seed, $25 million in Series A, and $55 million in Series B.
Securing a $33 million Series A round in August 2023, Nigeria’s fintech marvel Lemfi targets international expansion and product innovation. Its online platform aims to offer low-cost remittance solutions to immigrants across Europe, the Middle East, and Asia.
B2B E-commerce online platform Sabi has quickly become a key player in Africa's distribution ecosystem, having secured a significant $38 million in Series B funding in May 2023.
A remote outsourcing startup based in Lagos, Andela has raised over $300 million across five funding rounds to train developers across Africa for contract work with American employers.
OPay, a Nigerian payments tech startup backed by Opera, has raised over $570 million in funding. It experienced a surge in transactions amid COVID-19, securing a $50 million Series A and $120 million Series B in 2019. In August last year, it bagged an additional funding of $400 million in series C. These success stories exemplify the potential for entrepreneurial success in Nigeria, embodying the transformative impact of innovative ideas and resilience.
Launching a tech startup in Nigeria can be both exhilarating and daunting. Here are 7 expert tips to help you get started.
Start by identifying a pressing problem in the Nigerian market. Conduct thorough market research and gather feedback from potential customers to validate your idea.
Next, craft a comprehensive business plan to provide a roadmap for your startup's journey. Outline your startup's vision, target market and marketing strategy, business model, competitive landscape, and growth strategy.
Assemble a talented and diverse team with the skills, expertise, and commitment to bring your vision to life. Some key areas of expertise to fill include technical skills — proficiency in programming languages and software development, business acumen, marketing and sales expertise, and design and user experience.
Analyse your startup cost and explore various funding options, including bootstrapping, angel investors, venture capital, and grants. Build relationships with investors and demonstrate a clear path to profitability.
Focus on developing a minimum viable product (MVP) that addresses the core needs of your target audience. Iterate and refine your product based on user feedback and market insights.
Create a buzz around your startup by leveraging digital marketing, social media, and PR channels. Develop a compelling brand narrative and value proposition that resonates with your target audience.
Continuously monitor market trends and customer feedback to adapt your strategy and offerings accordingly.
By following these expert-vetted tips, you can boost your chances of launching a successful tech startup in Nigeria's vibrant ecosystem.
Nigeria offers a fertile ground for innovative tech business ideas. Aspiring tech entrepreneurs can capitalise on Nigeria's burgeoning tech scene by understanding the funding landscape, identifying hot sectors, and leveraging expert insights.
From problem identification and validation to product development, launch, and scaling, following the expert-vetted tips in this article can help you navigate the challenges and seize the moment. Now is the time to leverage the opportunities in Nigeria's tech startup landscape and pave the way for innovation, growth, and prosperity.
Become a part of Nigeria's vibrant tech ecosystem today. Join forces with FFA to shape the future of Nigeria’s digital economy.
