A new report by TLP Advisory has highlighted the significant challenges faced by Nigerian startups, with 51 per cent of those surveyed reporting difficulties in securing funding, primarily due to currency volatility and limited access to investors.

The report, titled “A Decade of the Nigerian Venture Ecosystem: Numbers, Insights & Stories”, was launched recently and offers an in-depth look at the evolution of Nigeria’s startup ecosystem over the past decade.

The study noted that, while 2021 saw a record $3bn in venture capital investments, securing funding remains a critical issue for many startups.

The report emphasised the role of angel investors, who have become essential sources of funding during this difficult period.

“51 per cent of startups surveyed reported difficulties in securing funding, largely due to currency volatility and limited access to investors. Angel investors have proven essential during this period,” the survey highlighted.

TLP Advisory, which has worked on some of the continent’s largest deals in the technology sector, also noted that regulatory hurdles and talent retention remain major challenges for Nigerian startups.

The report called for deeper collaboration between startups and corporations, increased investment in talent development, and greater engagement with policymakers to create a more supportive business environment.

The document also acknowledged key figures in the ecosystem, including early investors like Olumide Soyombo’s Leadpath, as well as enablers such as CcHUB and Lagos Angel Network, who have been instrumental in the growth of Nigeria’s venture ecosystem.

The co-Founder of TLP Advisory, Odunoluwa Longe, commented, “Despite the current tough macroeconomic climes, engaging with participants in this project ignited in me renewed hope and optimism for our ecosystem.

“We embarked on this project as our way of celebrating the ecosystem that made us, and this report reflects both the resilience and the evolution of the Nigerian tech ecosystem. It’s not just about technology; it’s about building a future where founders, investors, and the public sector work together to make Nigeria a leader in innovation and digital solutions.

“Over the past decade, we’ve witnessed, and have been part of, incredible success stories born from collaboration and adaptability, and we believe the best is yet to come.”

The Executive Director of FATE Foundation, Adenike Adeyemi, stated, “The most unexpected challenge for entrepreneurs in Nigeria has been the unstable and inconsistent regulatory and business environment.

“Founders here often have to navigate unique complexities, and a supportive policy framework is essential for unlocking their full potential.”

Speaking to the need for proactive policy engagement, the Founder of Ventures Platform, Kola Aina, noted, “The ecosystem must become more deliberate and take the job of engaging in government policy design more seriously, ensuring we shape the policiest hat govern our industry.”

Punch

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TECHDIGEST – Startup Genome has said Lagos State technology ecosystem worth about $8.4bn as of the end of 2022.

It stated this in the figures released in its report titled, ‘The global startup ecosystem report 2023’. The policy advisory and research organisation noted that this was below the global average of $34.6bn.

Startup Genome explained that its report provided insights into leading startup ecosystems, emerging trends, and key challenges facing entrepreneurs.

According to it, Lagos was home to about 400 startups, 88 per cent of the country’s total. It said, “With 24 million residents, Lagos is Africa’s biggest metropolitan area as well as one of its leading commercial hubs. It’s also an established and fast-growing tech hub, home to more than 400 startups, 88 per cent of Nigeria’s total.

“Total early-stage funding into the ecosystem from the second half of 2020 to 2022’s year-end was $824m, a little below the global average of $970m. Total venture capital funding was $3.3bn (below the global average of $6.6bn) and the median Series A round was $15m (which was more than the global average of $6m).

The firm highlighted that the average software engineer’s salary in Lagos was $9k (which was below the global average of ($46k).

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Commenting on the talent base of the city, the firm said, “The median age in Nigeria is 18.1 years and the nation is home to 82 per cent of the continent’s telecom subscribers.

“The Africa Developer Report 2021 from Google and Accenture notes that Nigeria added 5,000 new software developers from 2020 to 2021, for a total of 89,000. Tech talent flocks to Lagos for career opportunities. As a consequence, global firms are increasingly looking to the city to fill their talent gaps.”

Fintechs have the largest spread in the city, with over 90 per cent of Fintechs in the country based in Lagos. Also, they raised 49 per cent of total investment in 2022.

“Nigeria introduced a cashless policy in 2012, and this has only spurred the development of Fintech startups. Over 90 per cent are based in Lagos, with most focused-on lending and payments. Fintechs accounted for 49 per cent of investment in 2022,” the firm added.

Commenting on the Lagos ecosystem, the Executive Director, FATE Foundation, Adenike Adeyemi, said, “Lagos is home to dynamic and resilient startups that, despite a challenging macro environment, continue to lead innovation across many sectors, including financial services, health, climate change, and education. They do so not just within Nigeria but across the continent.”

According to the firm, no sub-Saharan ecosystems made it into the top 30 + runners-up ranking, but it did not mean the region was without significant activity. It noted that Sub-Saharan Africa was up 227 per cent in early-stage funding amount and up 43.8 per cent in early-stage deal count from 2018 to 2022.

Despite the region missing out of the top 30+, Lagos held its place in the 51–60 range of the emerging ecosystems ranking.

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