The journey for Nigerian startups is fraught with challenges, as a new report by TLP Advisory reveals only 15% earn over ₦250 million annually.
High costs, limited funding, and economic instability leave over half unprofitable, highlighting the struggles within the nation’s tech ecosystem.
A new report by TLP Advisory, A Decade of the Nigerian Venture Ecosystem 2024—Numbers, Insights & Stories, highlights the challenges Nigerian startups face.
Challenges And Opportunities In Nigeria’s Startup Ecosystem
Firstly, only 15 per cent of these businesses earn more than ₦250 million (£195,000) annually, while 30 per cent generate between ₦50 million and ₦200 million, and nearly half earn less than ₦10 million.
Moreover, 51 per cent of startups report operating at a loss, making profitability elusive.
In terms of funding, the tech ecosystem faces increasing difficulties, with investments dropping from $1.75 billion in 2021 to $500 million in 2023.
Over 20 percent of founders identify limited access to finance as their biggest hurdle, while others cite inadequate marketing, government policies, and flawed business models.
Read Also: Lagos State Targets ₦1.97trn Revenue For 2025 Budget
Interestingly, the report shows that early-stage startups raise more funding, with 81 per cent securing capital within their first four years.
Angel investors, including friends and family, provide 43 per cent of funding, followed by venture capital (24 per cent) and debt financing (18 per cent).
However, 54 per cent of startups have never raised any capital, highlighting systemic barriers.
In addition, currency devaluation has further strained businesses.
Companies earning in naira struggle to meet the expectations of investors funding in dollars.
Despite these challenges, 80 per cent of founders emphasise the importance of company culture.
They view collaboration, open communication, and innovation as key to resilience.
The report urges policymakers to improve infrastructure, create supportive policies, and provide access to finance to nurture a thriving Nigerian startup ecosystem.
